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Crossing The Chasm
 

Crossing The Chasm

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    Crossing The Chasm Crossing The Chasm Presentation Transcript

    • Crossing The Chasm Srini Kumar * 4/12/06
    • What is a market?
      • A set of actual or potential customers
      • For a given set of products or services
      • Who have a common set of needs or wants (which constitutes their demand )
      • Who reference each other when making a buying decision.
      • The last point is the absolute key to successful high-tech marketing.
    • A Crack In The Adoption Curve
      • Between Early Adopters and Early Majority there is a large chasm
      • The latter group has trouble accepting a new product if it is presented in the same way – REPACKAGE THE PRODUCT FOR THE LARGER EARLY MAJORITY
      • Most high tech ventures fail to cross the chasm and sales peter out
    • Who Are Early Adopters?
      • Driven By A Dream
        • They match an emerging technology to a strategic opportunity
        • The core goal is a BUSINESS goal, not a technology goal
        • The innovation helps them take a quantum leap forward in how business is conducted in their industry or by their customers
      • They want an “order of magnitude” improvement and will take risks to get it
    • Visionaries
      • Easy To Sell
        • Willing To Start Out On A Pilot Project
        • Going Where No Man Has Gone Before
        • They See Implementation As A Project
      • Very Hard To Please
        • Because They Are Buying A Dream
      • The payoff for your firm: please the Visionaries and you will be seen as a High Flyer with a Hot Product
    • Who Are The Early Majority?
      • They care about:
        • The company they are buying from
        • The quality of the product they are buying
        • The infrastructure of supporting products
        • The ease of system interfaces
        • The reliability of the service
      • Vertically oriented
        • They communicate with others like themselves in their own industry
        • References and relationships are very important
        • Won’t buy from you until you’re established
    • Pragmatists
      • Tend to be very loyal once they’ve tried a service and found it satisfying
      • They may even go out of their way to make sure your firm succeeds
      • When this happens, the cost of sales goes way down
      • The leverage on incremental R&D to support any given customer goes up
    • What Pragmatists Want
      • They like to see competition
      • They buy from proven market leaders
      • They want THIRD PARTIES to build around your MARKET-LEADING PRODUCTS
      • They do not really like visionaries all that much: they don’t really trust them
    • How To Market To Pragmatists
      • You must be patient
      • Show up to industry tradeshows/conferences
      • Be mentioned in magazines they read
      • Be installed in other companies in their industry
      • Develop applications specific to their industry
      • Have partnerships and alliances with other firms in their industry
      • Earn a reputation for quality and service
    • Why Pragmatists Don’t Like Visionaries
      • Lack of respect for their colleagues’ experiences – they are renegades.
      • Taking greater interest in technology than in the nuts&bolts of their industry.
      • Failing to recognize the importance of the existing product infrastructure.
      • Overall disruptiveness is annoying.
    • To Cross The Chasm, Find The Beachhead
      • A single market that you can use as a springboard to adjacent extended markets to win: D-Day Analogy
      • Who Will Be Your Champions?
        • If you’re an APPLICATION: END USERS because they’re the ones who see it
      • Fix a broken, mission-critical business process so they can insist on deployment despite IT reluctance
      • End-User Sponsorship Secures A Beachhead
    • The D-Day Analogy
      • The perils of the chasm: the life or death of the firm
      • You must win entry to the mainstream, despite any possible resistance
      • Long-term goal: to enter and take control of a mainstream market that is currently dominated by an entrenched competitor.
    • The D-Day Analogy (cont’d)
      • To enter the market we must conquer, we need an early market base (England)
      • We must aim at a strategic target market segment (Normandy beaches)
      • Separating us from our goal is the chasm (the English Channel)
      • Cross the chasm as fast as we can with an invasion force focused directly on the point of attack
    • The D-Day Analogy (cont’d)
      • SECURE THE BEACHHEAD
        • Force The Competitor Out Of Our Targeted Niche Markets Through Focused Marketing
      • Move out to take over additional and adjacent market segments
      • Eventually will achieve Overall Market Domination – they will struggle to protect a shrinking base of sales
    • Why The D-Day Analogy?
      • The fledgling enterprise can WIN OVER PRAGMATIST CUSTOMERS in advance of broader market acceptance – messages travel through word of mouth
      • Focus an overabundance of support into a confined market niche: makes targeting your firm’s messaging much easier than trying to please everyone
      • Simplifies the initial challenge – a restricted set of market variables that makes it easier to be perfect
      • Develop a solid base of references, collateral, and internal procedures and operational resources for the firm and therefore wins sales over incumbents
      • Tightly bound segments: easier to create messages
    • Steps To Cross The Chasm
      • Target The Point Of Attack
      • Assemble An Invasion Force
      • Define The Battle
      • Launch The Invasion
    • 1) Target The Point Of Attack
      • A specific market niche upon which your firm must focus all of its resources
      • You must achieve the dominant leadership position in that segment
      • Identify the Primary Market Identifiers
        • Target customer
        • Compelling Reason To Buy
        • Whole Product
        • Competition
      • Also: Partners/Allies, Distribution, Pricing, Positioning, and Target Customer
    • 2) Assemble An Invasion Force
      • Create the WHOLE PRODUCT
        • Think through your customers’ problems – and solutions – in their entirety
        • Core product PLUS everything else you need to achieve your compelling goals
        • Additional software, hardware, systems integration, installation, debugging, training and support, procedures
      • May be provided by you or a partner
    • 3) Define The Battle
      • Create Competition
        • Identify Their Weakness: There’s The Battle
      • Define Positioning
      • Develop the Elevator Pitch
        • A Two-Sentence Formula
      • Build All Of This Into Your Marketing And Signalling Communications
      • Focus The Competitive Posturing Around Your Key Strengths And Build Those Competencies
      • Demonstrate The Validity Of Your Claim
    • 4) Launch The Invasion
      • Distribution And Pricing
        • The direct sales force is optimized for creating demand
        • Consultative Salesperson who works with the clients in Needs Analysis
        • Supported by Application Technology Specialists who develop solutions
        • Additional interaction with the customer is built in; competitive pricing b/c of lifetime value
        • A very expensive way to sell, but this is how you can CROSS THE CHASM
    • Select Strategic Target Market Segments First
      • Target a segment that creates an entry point into a larger segment.
      • Provide compelling EVIDENCE to back up your POSITIONING to FOUR TYPES:
        • Specialist Supporters: Focus On Product
        • Generalist Supporters: Focus On Company
        • Specialist Skeptics: Focus On Technology
        • Generalist Skeptics: Focus On Market
    • Specialist Supporters: Focus On Product
      • Benchmarks
      • Product Reviews
      • Design Wins
      • Initial Sales Volumes
      • Trade Press Coverage
      • Visionary Endorsements
    • Generalist Supporters: Focus On Company
      • Revenues And Profits
      • Strategic Partners
      • Top Tier Customers
      • Full Product Line
      • Business Press Coverage
      • Financial Analyst Endorsements
    • Specialist Skeptics: Focus On Technology
      • Architecture
      • Schematics
      • Demos
      • Trials
      • Upgrade Path
      • Compatibility
      • Technology Press Coverage
      • Guru Endorsements
    • Generalist Skeptics: Focus On Market
      • Market Share
      • Third Party Support
      • Standards Certification
      • Applications Proliferation
      • Vertical Press Coverage
      • Industry Analyst Endorsements
    • Managers Must Choose Niche Marketing Strategy
      • Be brave: Make Niche Commitments
      • Have A Strong Will About Niches
      • A Niche Strategy Is ALWAYS Best
      • Do Not Pretend That You Can’t Afford To Pay Attention To Single Niches
      • Niches Are More Important Than The Pursuit Of All Sales From All Angles
      • You Must Be MARKET-DRIVEN, not merely SALES-DRIVEN
    • Being Sales-Driven During The Chasm Will Destroy Your Firm
      • The sole goal of your firm during the chasm must be securing a BEACHHEAD in a MAINSTREAM MARKET
      • You must create a PRAGMATIST consumer base – visionaries are not DEMANDING ENOUGH of your product and service
      • Our first customers must be COMPLETELY SATISFIED after dealing with your firm
      • We must provide the WHOLE PRODUCT
      • FOCUS ON ONE OR TWO NICHE MARKETS
    • Breaking Into A New Market
      • Establish A Strong Word-Of-Mouth Reputation Among Buyers
      • Seed The Communications Process
        • Pragmatists communicate along industry lines: professional associations
        • Win over a whole SEGMENT at a time
        • Segments make sales PREDICTABLE
      • This Creates The Feeling Of Your Firm As THE MARKET LEADER (for that segment)
    • Be The Market Leader Faster
      • Simple Mathematics: You Need The Largest Market Share WITHIN THAT NICHE
      • Provide The Whole Product For Your Selected Niche And Satisfy Them Completely & Forever
      • If You Want Market Leadership Fast, CHOOSE VERY SMALL PONDS AND BECOME THE BIG FISH IN THEM – don’t sell to the whole market
      • Focus exclusively on market leadership within one or two carefully selected market segments... OR ELSE LOSE EVERYTHING!!!
    • The Sales-Driven Company Will Fail During Year Three
      • Despite expansion of sales function, the sales for that year are disappointing
      • Prolonged Sales Struggles
      • Significant Price Compromises
      • Fewer Sales Than Expected
      • Growth In Expenses Is Larger Than Growth In Revenue
      • R&D Is Bogged Down In Existing System
    • Panic For The Sales-Driven Firm
      • Salespeople complaints
        • Holes In The Product Line
        • Our Offering Is Overpriced, Full Of Bugs, And Does Not Meet Customer Desires
      • Engineers Beg Innocence: They Have Met Their Release Schedule
      • Politics Start To Bog Down The Firm
      • Whip The Slaves -> Turnover -> Dilution
      • THEY MISTAKE THE EARLY LEAD IN SALES FOR A PERMANENT ADVANTAGE IN THE MARKET
    • THE MORAL OF THE STORY
      • A ramp in sales leading smoothly “up the curve” is in fact an initial blip: the early market – and not the first indications of an emerging mainstream market.
      • Recognize that there is something fundamentally different between a sale to an early adopter and a sale to the early majority.