Red Ocean Pricing Model: A Case Study

Introduction
Competition in any industry plays a critical role in the direction that any company takes. Primarily, companies and other firms look for ways to position their products and services in such a way that they yield higher market share. Actually, firms optimize and capitalize on their strategic advantage and minimize their weaknesses to woo more customers into their turf. Nevertheless, an increase in market players within the same industry makes it harder for these firms to continue gaining market share. On the contrary, firms either reach a stagnation point or continue to decrease their market share. Consequently, these firms opt to increase the quality of services provided and subsequently increase the pricing model to meet the cost …show more content…
Primarily, the red ocean strategy has a specialized focus on customers. For instance, within the healthcare industry, the primary focus for healthcare providers is to receive and take care of as many customers as possible. Central to this business model is an establishment of an industry that defines the market need and a plethora of market players. Both public and private healthcare service providers fall into the category of red ocean strategy for a number of reasons. First, these health service providers focus on current customers (Raman, 2014). The more times that the customers visit their healthcare facilities, the better the revenue increases. Although healthcare facilities seek to reduce the number of times that customers or patients visit their healthcare facilities, they also rely on recurrent visits to maintain their costs, notwithstanding the need to increase the profit margin. Consequently, the more customers the health facility can attract and retain the better it becomes in terms of profitability. Consequently, every effort made by these healthcare providers is to increase the quality of care in the pretext that clients will make these facilities as the ultimate destinations for service