Crossing the Chasm Abhishek Nag Applications Engineer Duration : 60 minutes

About the book Geoffrey A Moore, Regis Mc Kenna Inc ., The Chasm Group Written in 1990, published in 1991 Originally, total sales target – 5000 Volume till 1997 – 175,000 Re-written in 1998, re-published in 1999 Assertion – high-tech products need radically different marketing strategies

Geoffrey A Moore, Regis Mc Kenna Inc ., The Chasm Group

Written in 1990, published in 1991

Originally, total sales target – 5000

Volume till 1997 – 175,000

Re-written in 1998, re-published in 1999

Assertion – high-tech products need radically different marketing strategies

What is a market? A set of actual or potential customers for a given set of products/services who have a common set of needs/wants who reference each other

A set of actual or potential customers

for a given set of products/services

who have a common set of needs/wants

who reference each other

The Technology Adoption Life Cycle (Pre Chasm)

Psychographic profile – ‘Innovators’ The “techies”, “geeks”, “propeller heads”, “nerds”… Appreciate technology for its own sake Make great critics Will forgive some design shortcomings if they see promise Expect low prices References for the early adopters Dos Technology should capture their imagination No lies

The “techies”, “geeks”, “propeller heads”, “nerds”…

Appreciate technology for its own sake

Make great critics

Will forgive some design shortcomings if they see promise

Expect low prices

References for the early adopters

Dos

Technology should capture their imagination

No lies

Psychographic profile – ‘Early Adopters’ The visionaries Driven by a “dream” Match emerging technology to strategic opportunity Not looking for improvements but for breakthroughs Look for “order of magnitude” ROIs Can be used as vehicles for gaining visibility Dos To be managed by a small top-level sales force

The visionaries

Driven by a “dream”

Match emerging technology to strategic opportunity

Not looking for improvements but for breakthroughs

Look for “order of magnitude” ROIs

Can be used as vehicles for gaining visibility

Dos

To be managed by a small top-level sales force

Psychographic profile – ‘The Early Majority’ Pragmatists Represent the bulk of market volume Look for incremental, measurable, predictable progress Averse to risk taking. Want turnkey solutions Would mostly buy from the market leader Tend to communicate with more like themselves Require proven solutions which fit seamlessly into their current operations Once won, loyal for a long time

Pragmatists

Represent the bulk of market volume

Look for incremental, measurable, predictable progress

Averse to risk taking. Want turnkey solutions

Would mostly buy from the market leader

Tend to communicate with more like themselves

Require proven solutions which fit seamlessly into their current operations

Once won, loyal for a long time

Psychographic profile – ‘The Late Majority’ The conservatives Like to stick to something that works for them Will not adopt a technology unless they are left with no option Dos Offer “preassembled package” solution to a problem Understand their values, and work to serve them

The conservatives

Like to stick to something that works for them

Will not adopt a technology unless they are left with no option

Dos

Offer “preassembled package” solution to a problem

Understand their values, and work to serve them

Psychographic profile – ‘The Laggards’ Skeptics Do not participate in the market Dos Neutralize their influence Learn what they have to teach

Skeptics

Do not participate in the market

Dos

Neutralize their influence

Learn what they have to teach

How the model fits together

A high-tech parable

So, what went wrong in the TALC model?

Cracks in the model

Cracks in the model

Cracks in the model

The Chasm

Why is there a chasm? Visionaries want revolution Pragmatists want evolution Visionaries want to set the standards Pragmatists want to adopt only de facto standards Visionaries are not considered to be good references by pragmatists Pragmatists only reference from fellow pragmatists Dance Night Syndrome

Visionaries want revolution

Pragmatists want evolution

Visionaries want to set the standards

Pragmatists want to adopt only de facto standards

Visionaries are not considered to be good references by pragmatists

Pragmatists only reference from fellow pragmatists

Dance Night Syndrome

The D Day Analogy

The solution – Normandy!

Fighting ones way into the mainstream Long term – take control of the mainstream market (takeover Europe) Currently dominated by the entrenched competitor (the Axis) Required to assemble an invasion force of other services and companies (the Allies) Transition from an early market base (England)… … to a strategic target market segment in the mainstream (Normandy)

Long term – take control of the mainstream market (takeover Europe)

Currently dominated by the entrenched competitor (the Axis)

Required to assemble an invasion force of other services and companies (the Allies)

Transition from an early market base (England)…

… to a strategic target market segment in the mainstream (Normandy)

Niche market vs. sales – driven strategy Ensure that first customers in the mainstream get “whole product” Foment word of mouth Market leadership in a segment There is life outside a niche

Ensure that first customers in the mainstream get “whole product”

Foment word of mouth

Market leadership in a segment

There is life outside a niche

Applications vs. platform (the challenge for NI) Applications have a huge advantage Disruptive innovations championed by the end user Platforms are spread over the current infrastructure Often require a re-engineering The pragmatists nightmare NI (Virtual Instrumentation – not just a platform, a paradigm Required, a re-engineering of thought Immense FUD

Applications have a huge advantage

Disruptive innovations championed by the end user

Platforms are spread over the current infrastructure

Often require a re-engineering

The pragmatists nightmare

NI (Virtual Instrumentation – not just a platform, a paradigm

Required, a re-engineering of thought

Immense FUD

So, it begins!

Target the point of attack High risk, low data decision Use informed intuition Once identified, commit to it

High risk, low data decision

Use informed intuition

Once identified, commit to it

Assemble the invasion force The ‘Whole Product’ concept Generic Product Expected Product Augmented Product Potential Product

The ‘Whole Product’ concept

Assemble the invasion force The ‘Whole Product’ concept Generic Product (DAQ) Expected Product (Datalogging S/W) Augmented Product Potential Product

The ‘Whole Product’ concept

Assemble the invasion force The ‘Whole Product’ concept Generic Product (DAQ) Expected Product (Datalogging S/W) Augmented Product (LabVIEW) Potential Product

The ‘Whole Product’ concept

Assemble the invasion force The ‘Whole Product’ concept Generic Product (DAQ) Expected Product (Datalogging S/W) Augmented Product (LabVIEW) Potential Product (Systems Solutions, Alliance Members etc.)

The ‘Whole Product’ concept

Define the battle Interest Attitude

Product Centric Fastest product Easiest to use Elegant Architecture Price Unique Functionality Market Centric Largest installed base Most third party suppliers De facto standard Cost of ownership Quality of support

Product Centric

Fastest product

Easiest to use

Elegant Architecture

Price

Unique Functionality

Market Centric

Largest installed base

Most third party suppliers

De facto standard

Cost of ownership

Quality of support

Launch the invasion – distribution and pricing Secure a channel with which the pragmatist is comfortable Options Direct sales Two tier retail VARs (two tier) OEMs (two tier) Direct sales – optimal for high-tech

Secure a channel with which the pragmatist is comfortable

Options

Direct sales

Two tier retail

VARs (two tier)

OEMs (two tier)

Direct sales – optimal for high-tech

Direct Sales Optimized for creating demand Consultative salesperson at its center Needs analysis for the client Develops and proposes solutions with the aid of application and technology specialists Turns solutions into purchase orders Expensive way to sell Cost of selling built into price NI, perceived as a “high-cost” company

Optimized for creating demand

Consultative salesperson at its center

Needs analysis for the client

Develops and proposes solutions with the aid of application and technology specialists

Turns solutions into purchase orders

Expensive way to sell

Cost of selling built into price

NI, perceived as a “high-cost” company

Direct Sales (preconditions) Broadly comprehensive and reasonably competitive solution for the customer Volume and predictability of revenue for the vendor (NI) There is a price point below which this method of distribution cannot work

Broadly comprehensive and reasonably competitive solution for the customer

Volume and predictability of revenue for the vendor (NI)

There is a price point below which this method of distribution cannot work

Retails Sales Optimal when demand is to be met, not created Non consultative selling Structurally unsuited for crossing the chasm Should be used after chasm has been crossed E.g. Trident Tech Labs

Optimal when demand is to be met, not created

Non consultative selling

Structurally unsuited for crossing the chasm

Should be used after chasm has been crossed

E.g. Trident Tech Labs

VARs and OEMs VARs Limited marketing capabilities Good for customized high-tech solutions based on product OEMs Leverage the direct sales force of an established player Requires creative selling

VARs

Limited marketing capabilities

Good for customized high-tech solutions based on product

OEMs

Leverage the direct sales force of an established player

Requires creative selling

Summary Fundamental flaw in prevailing high-tech marketing model The chasm is perilous, but, crossable Strategy – D Day type invasion Target the point of attack Assemble the invasion force Define the battle Launch the invasion

Fundamental flaw in prevailing high-tech marketing model

The chasm is perilous, but, crossable

Strategy – D Day type invasion

Target the point of attack

Assemble the invasion force

Define the battle

Launch the invasion

Companion books The Innovators Dilemma and The Innovators Solution - Clayton M. Christensen The Chasm Companion : A Fieldbook to Crossing the Chasm and Inside the Tornado – Paul Wiefels

The Innovators Dilemma and The Innovators Solution - Clayton M. Christensen

The Chasm Companion : A Fieldbook to Crossing the Chasm and Inside the Tornado – Paul Wiefels

Answers

Thank you!