Tuesday, May 24, 2005
Crossing the Chasm
Crossing the Chasm
© 1991 by Geoffrey Moore
The point of greatest peril is making the transition from an early market dominated by a few visionary customers to a mainstream market dominated by a large block of customers who are pragmatists.
Technology Adoption Lifecycle: Innovators (5%), Early Adopters (10%), Early Majority (35%), Late Majority (35%), Laggards (15%).
Early Adopters do not make good references for early majority. Good references are critical to early majority.
The problem - sales are off, R&D is badly bogged down with special projects from custom work.
First there is a market, then there is no market, then there is!
A market is an actual or potential customer for a given product/service who have a common set of needs or wants and who reference each other when making a buying decision.
Visionaries are looking for a breakthrough. They usually can provide up front seed money. They like a pilot project orientation.
Pragmatists are early majority. They do not want to be pioneers. They never volunteer to be an early test site. The word risk is a negative word. When they buy, they care about the company they are buying from, the quality of the product they are buying, the infrastructure of supporting products and system interfaces, and the reliability of the service they are going to get. They like to see competition. They are reasonably price sensitive. You must be patient. You need to show up at industry conferences and have articles in the magazines they read. You need to have partnerships with other players in the industry.
Conservatives buy because they believe they MUST to stay up with the rest of the world. Just because they use such products does not mean they have to like them. Conservatives like pre-assembled packages at a heavily discounted price. The products they understand serve a specific function.
The conservative marketplace serves as a great place to take trailing edge technology and repackage at a discount. The other key is to line up a low overhead distribution system to get package to target market effectively.
The importance of the product itself is highest with the technology enthusiast and lowest with the conservative. The longer the product is in the market, the more important the service element.
The chasm is a bad place to be - between early adopters and early majority. It is filled with unpleasant folk, from disenchanted current customers to nasty competitors and unsavory investors. Here are the perils:
Lack of customers - as early market is saturated and not into early majority yet.
There is a year of work to catch up to promises made to secure the deal in the first place. Visionaries each have a unique dream leading to unique demands for customization, which in turn will overtax an already burdened product development group.
You must win entry to the mainstream, despite whatever resistance is posed. So, if we are going to be warlike, we might as well be so explicitly.
The goal is to enter and take control of mainstream market. We must assemble an invasion force composed other products and companies. Target: focus an overabundance of support into a confined market niche. The efficiency of marketing process is related to the “boundedness” of the market segment being addressed. The more tightly bound it is, the easier it is to create and introduce messages into it, and the faster these messages travel by word of mouth.
Most companies fail because they lose their FOCUS, chasing every opportunity that presents itself, but finding themselves unable to deliver a salable proposition to any true pragmatist buyer.
The consequences for being “sales-driven” during the chasm period are fatal. You must be market-driven - define the niche, and attack it. The sales effort must be focused on one or two key markets. Word of mouth is critical, and this is based on where people gather and are active.
Winning over one or two customers in each of 5 or 10 different segments will create no word of mouth. This lack of word of mouth makes selling product much harder, adding to cost and unpredictability of sales. Pragmatist buyers want to buy from market leaders.
Mainstream customers want to be “owned” it simplifies their buying decision - they demand attention, but they are on your side.
Focus exclusively on achieving a dominant position in one or two narrowly bounded market segments.
Define the theme of the market and make your competitor catch up to your defined theme.
Target customer profile: personal profiles, technical resources, a day in the life (before), a day in the life (after)
Value triad: product, target customer, target application.
To cross the chasm, you must target a market segment defined around a MUST-HAVE value proposition. It enables a dramatic competitive advantage in an area of prime operational focus. It radically improves productivity. It reduces current total operating costs.
Marketing is WARFARE, not WORDFARE.
Focus on wiring the marketplace for your product. Make it so your product is the only reasonable buying proposition.
The whole product consists of the generic product, the expected product, the augmented product, and the potential product. Pragmatists evaluate and buy whole products. Whole product planning is critical.
Every additional new target customer will put additional new demands on the whole product.
Tactical alliances are designed to accelerate the formation of whole product infrastructure within a specific target market segment.
Whole product: define your area, shade areas covered by alliance partners.
Define the battle: The fundamental rule of engagement is that any force can defeat any other force; if it can define the battle. A pragmatist wants to see strong competition. Where there is no competition, there is no market.
Market-centric is based on largest installed base, most third party supporters, de facto standard, cost of ownership, quality of product.
Name it and frame it. Potential customers cannot buy what they cannot name, nor can they seek out the product unless they know what category to look under.
When crossing the chasm. Our immediate goal is to create mainstream demand. The goal is to take the burden of whole product off of the channel in order to free it up to spend more time creating and fulfilling demand for the product. The problem for VARs is that when business is booming they slow down their selling efforts to work off some of the backlog, thereby flattening what otherwise should be a meteoric rise.
They expect to pay a premium price for market leader, perhaps as much as 30%. Distribution oriented pricing: Is it priced to sell? It is worthwhile to sell? Most visionary products are priced too high. It must be that price does not become an issue in the sales process. Set pricing at the market leader price point and build a high reward into the channel. A reward that will be phased out as the product becomes truly established in the mainstream.
The enterprise must stop “being itself” and move to the post-chasm world.
You must move from being a pioneer to becoming a settler. Different types of people are needed.
The visionary people become a liability once you have crossed the chasm. They cannot stop making the visionary sale. A sale is predicated on delivering custom implementations of the whole product.
They have one goal - to transform a visionary customer relationship into a potential beachhead for entry into the mainstream vertical market.
R&D must begin to focus on whole product R&D, not visionary R&D. This is called maintenance in the software world. Product life cycles are shorter but whole product life cycles are as long as ever.
Summary: target the point of attack, assemble the invasion force, define the battle, and launch the invasion.
Amazon: http://www.amazon.com/exec/obidos/ASIN/0887305199
© 1991 by Geoffrey Moore
The point of greatest peril is making the transition from an early market dominated by a few visionary customers to a mainstream market dominated by a large block of customers who are pragmatists.
Technology Adoption Lifecycle: Innovators (5%), Early Adopters (10%), Early Majority (35%), Late Majority (35%), Laggards (15%).
Early Adopters do not make good references for early majority. Good references are critical to early majority.
The problem - sales are off, R&D is badly bogged down with special projects from custom work.
First there is a market, then there is no market, then there is!
A market is an actual or potential customer for a given product/service who have a common set of needs or wants and who reference each other when making a buying decision.
Visionaries are looking for a breakthrough. They usually can provide up front seed money. They like a pilot project orientation.
Pragmatists are early majority. They do not want to be pioneers. They never volunteer to be an early test site. The word risk is a negative word. When they buy, they care about the company they are buying from, the quality of the product they are buying, the infrastructure of supporting products and system interfaces, and the reliability of the service they are going to get. They like to see competition. They are reasonably price sensitive. You must be patient. You need to show up at industry conferences and have articles in the magazines they read. You need to have partnerships with other players in the industry.
Conservatives buy because they believe they MUST to stay up with the rest of the world. Just because they use such products does not mean they have to like them. Conservatives like pre-assembled packages at a heavily discounted price. The products they understand serve a specific function.
The conservative marketplace serves as a great place to take trailing edge technology and repackage at a discount. The other key is to line up a low overhead distribution system to get package to target market effectively.
The importance of the product itself is highest with the technology enthusiast and lowest with the conservative. The longer the product is in the market, the more important the service element.
The chasm is a bad place to be - between early adopters and early majority. It is filled with unpleasant folk, from disenchanted current customers to nasty competitors and unsavory investors. Here are the perils:
Lack of customers - as early market is saturated and not into early majority yet.
There is a year of work to catch up to promises made to secure the deal in the first place. Visionaries each have a unique dream leading to unique demands for customization, which in turn will overtax an already burdened product development group.
You must win entry to the mainstream, despite whatever resistance is posed. So, if we are going to be warlike, we might as well be so explicitly.
The goal is to enter and take control of mainstream market. We must assemble an invasion force composed other products and companies. Target: focus an overabundance of support into a confined market niche. The efficiency of marketing process is related to the “boundedness” of the market segment being addressed. The more tightly bound it is, the easier it is to create and introduce messages into it, and the faster these messages travel by word of mouth.
Most companies fail because they lose their FOCUS, chasing every opportunity that presents itself, but finding themselves unable to deliver a salable proposition to any true pragmatist buyer.
The consequences for being “sales-driven” during the chasm period are fatal. You must be market-driven - define the niche, and attack it. The sales effort must be focused on one or two key markets. Word of mouth is critical, and this is based on where people gather and are active.
Winning over one or two customers in each of 5 or 10 different segments will create no word of mouth. This lack of word of mouth makes selling product much harder, adding to cost and unpredictability of sales. Pragmatist buyers want to buy from market leaders.
Mainstream customers want to be “owned” it simplifies their buying decision - they demand attention, but they are on your side.
Focus exclusively on achieving a dominant position in one or two narrowly bounded market segments.
Define the theme of the market and make your competitor catch up to your defined theme.
Target customer profile: personal profiles, technical resources, a day in the life (before), a day in the life (after)
Value triad: product, target customer, target application.
To cross the chasm, you must target a market segment defined around a MUST-HAVE value proposition. It enables a dramatic competitive advantage in an area of prime operational focus. It radically improves productivity. It reduces current total operating costs.
Marketing is WARFARE, not WORDFARE.
Focus on wiring the marketplace for your product. Make it so your product is the only reasonable buying proposition.
The whole product consists of the generic product, the expected product, the augmented product, and the potential product. Pragmatists evaluate and buy whole products. Whole product planning is critical.
Every additional new target customer will put additional new demands on the whole product.
Tactical alliances are designed to accelerate the formation of whole product infrastructure within a specific target market segment.
Whole product: define your area, shade areas covered by alliance partners.
Define the battle: The fundamental rule of engagement is that any force can defeat any other force; if it can define the battle. A pragmatist wants to see strong competition. Where there is no competition, there is no market.
Market-centric is based on largest installed base, most third party supporters, de facto standard, cost of ownership, quality of product.
Name it and frame it. Potential customers cannot buy what they cannot name, nor can they seek out the product unless they know what category to look under.
When crossing the chasm. Our immediate goal is to create mainstream demand. The goal is to take the burden of whole product off of the channel in order to free it up to spend more time creating and fulfilling demand for the product. The problem for VARs is that when business is booming they slow down their selling efforts to work off some of the backlog, thereby flattening what otherwise should be a meteoric rise.
They expect to pay a premium price for market leader, perhaps as much as 30%. Distribution oriented pricing: Is it priced to sell? It is worthwhile to sell? Most visionary products are priced too high. It must be that price does not become an issue in the sales process. Set pricing at the market leader price point and build a high reward into the channel. A reward that will be phased out as the product becomes truly established in the mainstream.
The enterprise must stop “being itself” and move to the post-chasm world.
You must move from being a pioneer to becoming a settler. Different types of people are needed.
The visionary people become a liability once you have crossed the chasm. They cannot stop making the visionary sale. A sale is predicated on delivering custom implementations of the whole product.
They have one goal - to transform a visionary customer relationship into a potential beachhead for entry into the mainstream vertical market.
R&D must begin to focus on whole product R&D, not visionary R&D. This is called maintenance in the software world. Product life cycles are shorter but whole product life cycles are as long as ever.
Summary: target the point of attack, assemble the invasion force, define the battle, and launch the invasion.
Amazon: http://www.amazon.com/exec/obidos/ASIN/0887305199
