Crossing The Chasm
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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)
      • 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
  • 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
    • 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.