2. Crossing the Chasm (1991, revised 1999)
A marketing book by Geoffrey A. Moore that focuses on the
specifics of marketing high tech products during the early
start up period. Moore's exploration and expansion of the
diffusions of innovations model has had a significant and
lasting impact on high tech entrepreneurship. In 2006, Tom
Byers, Faculty Director of Stanford Technology Ventures
Program, described it as "still the bible for entrepreneurial
marketing 15 years later". The book's success has led to a
series of follow-up books and a consulting company, The
5. The Purpose of this Presentation
Contemporary Concepts in Marketing
We will go over
Technology Adoption Life Cycle (TALC)
Marketing Strategies: Beachhead, Bowling Alley
Compelling reason to buy
6. Why did this topic come up?
Imagine you have your startup and you get funding, you
build product and you start selling
First few customers show up
Lots of enthusiasm for your product
Sales start growing faster before you build a real sales force
You invest in a sales team and a SVP of Sales
Marketing prepares material
Sales start growing, and all seems well…
The sales stop! First a slow down, then no more sales
You fire the SVP of sales
You are yelling at sales people daily…
7. Welcome to the Chasm
You have entered a nightmare
Your expenses are high
Revenues dry up
Team is demoralized
Life becomes depressing
You will most likely never survive this…
9. Tech Marketing – Few Claims! Yes/No?
Marketing technology is not the same as marketing
Participation in ICT Exhibitions
does it increase sales?
Is it a public relations and a communication means to orient and
maintain relationship with your customers about your products and
Where would you advertise a technology product?
Procter and Gamble Company uses certain tools in marketing fast
moving consumer goods.
Would you advertise it?
Marketing and Sales do mean different things?
10. The classical Diffusion Theory
Everett Rogers (1962)
Found that for most members of a social system, the
adoption-decision depends heavily on the adoptiondecisions of the other members of the system.
The more people adopt an innovation, the lower the
The result is an S-curve shaped pattern of innovation
Synthesized research on adoption of innovation from
several fields: Anthropology, Early sociology, Rural
sociology, Education, Industrial sociology, Medical
19. Innovators –Technology Enthusiasts
• Learn about new technologies for their own sake
• Strong aptitude for technical information
• Like to alpha test new products
• Can ignore any missing elements
• Do whatever they can to help
• Want unrestricted access to top technical people
• Want no-profit pricing (preferably free)
Key Role: Gatekeeper to the Early Adopter
20. Early Adopters –The Visionaries
• Gain dramatic competitive advantage via revolutionary breakthrough
• Great imaginations for strategic applications
• Attracted by high-risk, high-reward propositions
• Will help supply the missing elements
• Perceive order-of-magnitude gains –so not price sensitive
• Want rapid time-to-market
• Demand high degree of customization and support
Key Role: Fund the development of the early market
21. Early Majority –Pragmatists
• Gain sustainable productivity improvements via evolutionary change
• Astute managers of mission-critical applications
• Understand real-world issues and tradeoffs
• Focus on proven applications
• Like to go with the market leader
• Insist on good references from trusted colleagues
• Want to see the solution in production at the reference site
Key Role: Bulwark of the mainstream market
22. Late Majority –Conservatives
• Just stay even with the competition
• Avoid competitive disadvantage
• Better with people than technology
• Risk averse
• Highly reliant on a single, trusted advisor
• Need completely pre-assembled solutions
• Would benefit from value-added services but do not want to pay for them
Key Role: Extend product life cycles
23. Laggards – Skeptics
• Maintain status-quo
• Good at debunking marketing hype
• Disbelieve productivity-improvement arguments -Believe in the law of
• Like taking a contrarian position
• Seek to block purchases of new technology
• Not a customer
• Can be formidable opposition to early adoption
Key Role: Retard the development of high-tech markets
29. Crack 1
Early Adopters do talk to Innovators. Still Crack 1
Problem: Innovators like cool technology products that
cannot be readily translated into major new business
benefits. Early Adopters want competitive advantage.
Desktop Video Conferencing
Solution: The product must be made to enable a valuable
strategic leap forward.
30. Crack 2
Late Majority talks to Early Majority. Still Crack 2
Problem: The Early Majority is willing and able to become
technically competent when needed. The Late Majority is
Scanners and Video Editing Programs
Telephone transferring systems
Solution: Ensure very high user-friendlieness to ensure ease of
32. Fundamental flaw
The Chasm is a time of great despair, when the excitement
of the early market wanes, but the mainstream market is
still not comfortable with the immaturity of the solutions
available (in the Chasm sales falter and plummet
A fundamental flaw is the notion that rapid mainstream
growth could follow continuously on the early market
success. customer development teaches that the rules to
the left of the Chasm are unique and different. Why?
34. Dominated by early
adopters and insiders.
The “chasm” is the gulf that exists
between the two distinct market-places
for technology products: 2 very different
segments of buyers…
35. Dominated by early
adopters and insiders.
But getting from one side of the chasm
to the other is anything but easy!
Why do we want to get there?
37. The chasm
The Early Majority does not talk to the Early
Adopters. Hence a huge Chasm.
The Early Adopters is buying a revolutionary change agent
Expect a clear discontinuity between the old and the new
Expect clear strategic advantages
Tolerate bugs and glitches
The Early Majority is buying evolutionary productivity
Want to minimize the discontinuity with the old way
Wants innovations to enhance established business processes
Expect a more or less bug free product
38. Different value delivered
It is new to the
• It is the fastest
• It is the easiest to
• It has elegant
• It has unigue
It is the de facto
• It has the largest
• It has most third party
• It has great quality of
• It has a low cost of
39. Different Buying Behavior
Willing to take risk
Rely on horizontal
• Want to buy from
• Want rich techsupport
Wants very little risk
• Relies on vertical
• Wants to buy from
• Wants one point of
40. What Pragmatists think of Visionaries
The visionaries love technology but are bored with the
mundane details of their own industry, which is the
everyday work of us pragmatists.
The visionaries want to build systems from the ground up
and do not appreciate the importance of networks,
systems and processes already in place.
The visionaries seem to do all the fun things. They get all
the funds and all the attention for their blue sky projects.
If they fail, it is us pragmatists who have to clean up the
mess. If they succeed, the disruptive change is just too
much to handle.
Pragmatists don’t trust visionaries as references!
41. Catch 22
“The pragmatists will use only those products that are
already used by a majority of pragmatists. And generally
look to one and other as references. So, how can we get
them to use a new product?”
42. Discovering that you are in the chasm
Visionary markets saturates, or visionaries abandon
Too late for revolutionary competitive advantage
There are other cool disruptive things out there
Pragmatists see no reason to buy yet
Too early for anything to be ”in production”
No herd of references has yet formed
43. Behavior of Early Clients and %
When All “Innovators” and “Early Adopters” are Served ….
The company drops into Chasm
Who are my first “5” customers – and why will they buy
Who are my next “50” customers and why will they buy
Who are my next “500” customers and why will they buy
44. Why Sales Falter
Companies target sales opportunity to “early adopters” in 4 – 5 segments instead of
focusing on a single target customer
The idea of focusing intensively on whichever opportunity comes in first is what
becomes attractive to companies
Then a “wish list” is painstakingly extracted & recorded from each segment
The key requirements gets developed for the next release, true to its intent, it has
something for everybody. Unfortunately, it has everything for nobody.
That is, no one had 100% of its whole product requirements fulfilled.
We never finished any one customer’s list.
But that is precisely the requirement that pragmatist insist upon before they
e.g. while the visionaries (early adopters) accept 80% of the product, the pragmatist wants to see the
remaining 20% fulfilled.
Without the complete product, there is no hope for mainstream
45. Crossing the chasm
• 80% of many solutions –100% of none
• Pragmatists won’t buy 80% solutions!
Conventional solution (tends to fail)
• Committing to the most common enhancement requests
• Never completely satisfying any one customer segment’s needs
”D-day” solution (more likely to succeed)
• Focus all efforts on a single ”beach head” segment with a compelling reason to
buy, develop a whole product, become a market leader
• Then leverage product and user references to attack other segments
The consequence of being sales-driven instead of strategy-driven in the chasm is
fatal –Focus !!!
48. ”D-day” invasion strategy & tactics
Target the point of attack
Segmentation–isolate target customers and their compelling reason
Assemble the invasion force
Differentiation–develop the ”whole product” and choose allies to
Define the battle
Positioning–reate the competition(if there is none, you still need one)
and position yourself
Launch the invasion
Distribution and Pricing–select your distribution channel and set your
49. Target the point of attack Segmentation
Target a specific market segment: Target customer (user,
• Compelling reason to buy?
• Whole product?
• Next target customer
Focus all resources of achieving a dominant leadership position–
to become a Big Fish in a Small Pond!
50. Selecting a Niche Market - Beachhead
Is the target customer well funded and are they
accessible to our sales force?
Do they have a compelling reason to buy?
Can we today, with the help of partners, deliver a whole
product to fulfill the reason to buy?
Is there no entrenched competition that could prevent us
from getting a fair shot at this business?
If we win this segment, can we leverage it to enter
51. Assemble the invasion force Differentiation
Think through the customer’s problems–and solutions–in
Develop the “whole product”, including the generic
product plus everything else you need to address your
customers’ compelling reason to buy.
These may be provided in-house or by using partners and
52. What is a Whole Product
In marketing, a whole product
is a generic product
augmented by everything that
is needed for the customer to
have a compelling reason to
It's All About Risk In high tech,
products are often more costly and
complicated, so the customer has
more at stake. Therefore market
adoption of a technology product
is dependent upon helping
customers reduce perceived risk.
53. Define the battle - Positioning
Positioning is key to make buying easy Define your
category and position (market leader!)
Be clear about who will use it and for what?
Show competition and differentiation (pragmatists
demand a comparative context)
Ensure staying power
54. Defining the Value Proposition
For….(target customers, beachhead segment)
Who are dissatisfied with… (current market or internal
Our product is a … (new product category)
That provides… (key problem solving capacity)
Unlike… (current product alternative)
We have assembled… (key whole product features)
55. Launch the invasion (Distribution and
Secure access to a customer-oriented distribution channel
Direct sales is often the optimal channel for high tech, and
typically the best initial channel for crossing the chasm
Reward your channel during the Chasm phase!
Set pricing at the market leader price-point
Customers will (almost) only see channel and price!
58. Beyond the Chasm I (Tornado)
As more niche markets are successfully penetrated, the solution is perceived to be
less of a niche product and more of an all-purpose solution. This creates
momentum around the technology, and the hyper growth phase of the Tornado
begins. The Tornado is a period of hyper growth when the pragmatic buyers flock
en masse to adopt the technology as the standard. The product focus has also
shifted away from the problems of the end user and toward the infrastructure buyer
that can implement the technology to solve their problems. Successful companies
with technology in the Tornado "just ship" the product and focus less on the
customer because this is a hyper growth phase where market share is determined
and leadership is established. A leader is needed to create stability in the market,
and the company that sets the standard for the technology will reap tremendous
financial rewards. Companies create value in the Tornado phase by balancing
product leadership and operational excellence, or the ability to successfully
execute the business plan.
59. Beyond the Chasm II (The main street)
Main Street represents a time when the purchasing fury has
subsided and supply and demand is brought to
equilibrium. Moore describes the entrance into Main Street
as a "calamitous" experience. Revenue shortfall, loss of
talented employees, and shareholder lawsuits due to a
floundering stock price are not uncommon. However, if a
corporation comes to terms with the fact that Main Street
is an inevitable part of the life cycle, it can be quite
profitable. To ensure success, corporate strategy must shift
once again toward a combination of customer intimacy
and operational excellence.
60. Crossing the Chasm!
1. Target the point of
2. Assemble the
3. Define the battle
4. Launch the invasion
How hard can it be?