Crossing The Chasm


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A book presentation I'd done a long time back.

Published in: Business

Crossing The Chasm

  1. 1. Crossing the Chasm Abhishek Nag Applications Engineer Duration : 60 minutes
  2. 3. About the book <ul><ul><li>Geoffrey A Moore, Regis Mc Kenna Inc ., The Chasm Group </li></ul></ul><ul><ul><li>Written in 1990, published in 1991 </li></ul></ul><ul><ul><li>Originally, total sales target – 5000 </li></ul></ul><ul><ul><li>Volume till 1997 – 175,000 </li></ul></ul><ul><ul><li>Re-written in 1998, re-published in 1999 </li></ul></ul><ul><ul><li>Assertion – high-tech products need radically different marketing strategies </li></ul></ul>
  3. 4. What is a market? <ul><ul><li>A set of actual or potential customers </li></ul></ul><ul><ul><li>for a given set of products/services </li></ul></ul><ul><ul><li>who have a common set of needs/wants </li></ul></ul><ul><ul><li>who reference each other </li></ul></ul>
  4. 5. The Technology Adoption Life Cycle (Pre Chasm)
  5. 6. Psychographic profile – ‘Innovators’ <ul><ul><li>The “techies”, “geeks”, “propeller heads”, “nerds”… </li></ul></ul><ul><ul><li>Appreciate technology for its own sake </li></ul></ul><ul><ul><li>Make great critics </li></ul></ul><ul><ul><li>Will forgive some design shortcomings if they see promise </li></ul></ul><ul><ul><li>Expect low prices </li></ul></ul><ul><ul><li>References for the early adopters </li></ul></ul><ul><ul><li>Dos </li></ul></ul><ul><ul><ul><li>Technology should capture their imagination </li></ul></ul></ul><ul><ul><ul><li>No lies </li></ul></ul></ul>
  6. 7. Psychographic profile – ‘Early Adopters’ <ul><ul><li>The visionaries </li></ul></ul><ul><ul><li>Driven by a “dream” </li></ul></ul><ul><ul><li>Match emerging technology to strategic opportunity </li></ul></ul><ul><ul><li>Not looking for improvements but for breakthroughs </li></ul></ul><ul><ul><li>Look for “order of magnitude” ROIs </li></ul></ul><ul><ul><li>Can be used as vehicles for gaining visibility </li></ul></ul><ul><ul><li>Dos </li></ul></ul><ul><ul><ul><li>To be managed by a small top-level sales force </li></ul></ul></ul>
  7. 8. Psychographic profile – ‘The Early Majority’ <ul><ul><li>Pragmatists </li></ul></ul><ul><ul><li>Represent the bulk of market volume </li></ul></ul><ul><ul><li>Look for incremental, measurable, predictable progress </li></ul></ul><ul><ul><li>Averse to risk taking. Want turnkey solutions </li></ul></ul><ul><ul><li>Would mostly buy from the market leader </li></ul></ul><ul><ul><li>Tend to communicate with more like themselves </li></ul></ul><ul><ul><li>Require proven solutions which fit seamlessly into their current operations </li></ul></ul><ul><ul><li>Once won, loyal for a long time </li></ul></ul>
  8. 9. Psychographic profile – ‘The Late Majority’ <ul><ul><li>The conservatives </li></ul></ul><ul><ul><li>Like to stick to something that works for them </li></ul></ul><ul><ul><li>Will not adopt a technology unless they are left with no option </li></ul></ul><ul><ul><li>Dos </li></ul></ul><ul><ul><ul><li>Offer “preassembled package” solution to a problem </li></ul></ul></ul><ul><ul><ul><li>Understand their values, and work to serve them </li></ul></ul></ul>
  9. 10. Psychographic profile – ‘The Laggards’ <ul><ul><li>Skeptics </li></ul></ul><ul><ul><li>Do not participate in the market </li></ul></ul><ul><ul><li>Dos </li></ul></ul><ul><ul><ul><li>Neutralize their influence </li></ul></ul></ul><ul><ul><ul><li>Learn what they have to teach </li></ul></ul></ul>
  10. 11. How the model fits together
  11. 12. A high-tech parable
  12. 13. So, what went wrong in the TALC model?
  13. 14. Cracks in the model
  14. 15. Cracks in the model
  15. 16. Cracks in the model
  16. 17. The Chasm
  17. 18. Why is there a chasm? <ul><ul><li>Visionaries want revolution </li></ul></ul><ul><ul><li>Pragmatists want evolution </li></ul></ul><ul><ul><li>Visionaries want to set the standards </li></ul></ul><ul><ul><li>Pragmatists want to adopt only de facto standards </li></ul></ul><ul><ul><li>Visionaries are not considered to be good references by pragmatists </li></ul></ul><ul><ul><li>Pragmatists only reference from fellow pragmatists </li></ul></ul><ul><ul><li>Dance Night Syndrome </li></ul></ul>
  18. 19. The D Day Analogy
  19. 20. The solution – Normandy!
  20. 21. Fighting ones way into the mainstream <ul><ul><li>Long term – take control of the mainstream market (takeover Europe) </li></ul></ul><ul><ul><li>Currently dominated by the entrenched competitor (the Axis) </li></ul></ul><ul><ul><li>Required to assemble an invasion force of other services and companies (the Allies) </li></ul></ul><ul><ul><li>Transition from an early market base (England)… </li></ul></ul><ul><ul><li>… to a strategic target market segment in the mainstream (Normandy) </li></ul></ul>
  21. 22. Niche market vs. sales – driven strategy <ul><ul><li>Ensure that first customers in the mainstream get “whole product” </li></ul></ul><ul><ul><li>Foment word of mouth </li></ul></ul><ul><ul><li>Market leadership in a segment </li></ul></ul><ul><ul><li>There is life outside a niche </li></ul></ul>
  22. 23. Applications vs. platform (the challenge for NI) <ul><ul><li>Applications have a huge advantage </li></ul></ul><ul><ul><ul><li>Disruptive innovations championed by the end user </li></ul></ul></ul><ul><ul><li>Platforms are spread over the current infrastructure </li></ul></ul><ul><ul><ul><li>Often require a re-engineering </li></ul></ul></ul><ul><ul><ul><li>The pragmatists nightmare </li></ul></ul></ul><ul><ul><li>NI (Virtual Instrumentation – not just a platform, a paradigm </li></ul></ul><ul><ul><ul><li>Required, a re-engineering of thought </li></ul></ul></ul><ul><ul><ul><li>Immense FUD </li></ul></ul></ul>
  23. 24. So, it begins!
  24. 25. Target the point of attack <ul><ul><li>High risk, low data decision </li></ul></ul><ul><ul><li>Use informed intuition </li></ul></ul><ul><ul><li>Once identified, commit to it </li></ul></ul>
  25. 26. Assemble the invasion force <ul><ul><li>The ‘Whole Product’ concept </li></ul></ul>Generic Product Expected Product Augmented Product Potential Product
  26. 27. Assemble the invasion force <ul><ul><li>The ‘Whole Product’ concept </li></ul></ul>Generic Product (DAQ) Expected Product (Datalogging S/W) Augmented Product Potential Product
  27. 28. Assemble the invasion force <ul><ul><li>The ‘Whole Product’ concept </li></ul></ul>Generic Product (DAQ) Expected Product (Datalogging S/W) Augmented Product (LabVIEW) Potential Product
  28. 29. Assemble the invasion force <ul><ul><li>The ‘Whole Product’ concept </li></ul></ul>Generic Product (DAQ) Expected Product (Datalogging S/W) Augmented Product (LabVIEW) Potential Product (Systems Solutions, Alliance Members etc.)
  29. 30. Define the battle Interest Attitude
  30. 31. <ul><ul><li>Product Centric </li></ul></ul><ul><ul><ul><li>Fastest product </li></ul></ul></ul><ul><ul><ul><li>Easiest to use </li></ul></ul></ul><ul><ul><ul><li>Elegant Architecture </li></ul></ul></ul><ul><ul><ul><li>Price </li></ul></ul></ul><ul><ul><ul><li>Unique Functionality </li></ul></ul></ul><ul><ul><li>Market Centric </li></ul></ul><ul><ul><ul><li>Largest installed base </li></ul></ul></ul><ul><ul><ul><li>Most third party suppliers </li></ul></ul></ul><ul><ul><ul><li>De facto standard </li></ul></ul></ul><ul><ul><ul><li>Cost of ownership </li></ul></ul></ul><ul><ul><ul><li>Quality of support </li></ul></ul></ul>
  31. 32. Launch the invasion – distribution and pricing <ul><ul><li>Secure a channel with which the pragmatist is comfortable </li></ul></ul><ul><ul><li>Options </li></ul></ul><ul><ul><ul><li>Direct sales </li></ul></ul></ul><ul><ul><ul><li>Two tier retail </li></ul></ul></ul><ul><ul><ul><li>VARs (two tier) </li></ul></ul></ul><ul><ul><ul><li>OEMs (two tier) </li></ul></ul></ul><ul><ul><li>Direct sales – optimal for high-tech </li></ul></ul>
  32. 33. Direct Sales <ul><ul><li>Optimized for creating demand </li></ul></ul><ul><ul><li>Consultative salesperson at its center </li></ul></ul><ul><ul><ul><li>Needs analysis for the client </li></ul></ul></ul><ul><ul><ul><li>Develops and proposes solutions with the aid of application and technology specialists </li></ul></ul></ul><ul><ul><ul><li>Turns solutions into purchase orders </li></ul></ul></ul><ul><ul><li>Expensive way to sell </li></ul></ul><ul><ul><ul><li>Cost of selling built into price </li></ul></ul></ul><ul><ul><ul><li>NI, perceived as a “high-cost” company </li></ul></ul></ul>
  33. 34. Direct Sales (preconditions) <ul><ul><li>Broadly comprehensive and reasonably competitive solution for the customer </li></ul></ul><ul><ul><li>Volume and predictability of revenue for the vendor (NI) </li></ul></ul><ul><ul><li>There is a price point below which this method of distribution cannot work </li></ul></ul>
  34. 35. Retails Sales <ul><ul><li>Optimal when demand is to be met, not created </li></ul></ul><ul><ul><li>Non consultative selling </li></ul></ul><ul><ul><li>Structurally unsuited for crossing the chasm </li></ul></ul><ul><ul><li>Should be used after chasm has been crossed </li></ul></ul><ul><ul><li>E.g. Trident Tech Labs </li></ul></ul>
  35. 36. VARs and OEMs <ul><ul><li>VARs </li></ul></ul><ul><ul><ul><li>Limited marketing capabilities </li></ul></ul></ul><ul><ul><ul><li>Good for customized high-tech solutions based on product </li></ul></ul></ul><ul><ul><li>OEMs </li></ul></ul><ul><ul><ul><li>Leverage the direct sales force of an established player </li></ul></ul></ul><ul><ul><ul><li>Requires creative selling </li></ul></ul></ul>
  36. 37. Summary <ul><ul><li>Fundamental flaw in prevailing high-tech marketing model </li></ul></ul><ul><ul><li>The chasm is perilous, but, crossable </li></ul></ul><ul><ul><li>Strategy – D Day type invasion </li></ul></ul><ul><ul><ul><li>Target the point of attack </li></ul></ul></ul><ul><ul><ul><li>Assemble the invasion force </li></ul></ul></ul><ul><ul><ul><li>Define the battle </li></ul></ul></ul><ul><ul><ul><li>Launch the invasion </li></ul></ul></ul>
  37. 38. Companion books <ul><ul><li>The Innovators Dilemma and The Innovators Solution - Clayton M. Christensen </li></ul></ul><ul><ul><li>The Chasm Companion : A Fieldbook to Crossing the Chasm and Inside the Tornado – Paul Wiefels </li></ul></ul>
  38. 39. Answers
  39. 40. Thank you!