1. Crossing
the Chasm
By Muhamad SHABAREK
Damascus, 28/11/2013

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
Chasm Group.

3. The Adventure Trip

4. Preparing for the Trip
Who is here & expectations

5. The Purpose of this Presentation
•
Contemporary Concepts in Marketing
•
We will go over
•
•
•
•
•
Technology Adoption Life Cycle (TALC)
Marketing Strategies: Beachhead, Bowling Alley
Value Proposition
Compelling reason to buy
Whole Product

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
(pronounced: Kazm)
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You have entered a nightmare
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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?
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Marketing technology is not the same as marketing
consumer goods.
•
•
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
services?
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
perceived risk.
•
The result is an S-curve shaped pattern of innovation
diffusion.
•
Synthesized research on adoption of innovation from
several fields: Anthropology, Early sociology, Rural
sociology, Education, Industrial sociology, Medical
sociology

11. The Technology Adoption Lifecycle
•
The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
* Reused from Geoffrey Moore, Dealing with Darwin © 2005, TCG Advisors LLC

12. The Technology Adoption Lifecycle
•
The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
* Reused from Geoffrey Moore, Dealing with Darwin © 2005, TCG Advisors LLC

13. The Technology Adoption Lifecycle
•
The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
* Reused from Geoffrey Moore, Dealing with Darwin © 2005, TCG Advisors LLC

14. The Technology Adoption Lifecycle
•
The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
* Reused from Geoffrey Moore, Dealing with Darwin © 2005, TCG Advisors LLC

15. The Technology Adoption Lifecycle
•
The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
* Reused from Geoffrey Moore, Dealing with Darwin © 2005, TCG Advisors LLC

16. Adoption of new Products

18. Governing Model
Pragmatists:
Stick with the herd!
Conservatives:
Hold on!
Visionaries:
Get ahead of the herd!
Skeptics:
No way!
Techies:
Innovators
Early
Early Majority
Late Majority
Laggards

19. Innovators –Technology Enthusiasts
Primary Motivation:
• Learn about new technologies for their own sake
Key Characteristics:
• Strong aptitude for technical information
• Like to alpha test new products
• Can ignore any missing elements
• Do whatever they can to help
Challenges:
• 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
Primary Motivation:
• Gain dramatic competitive advantage via revolutionary breakthrough
Key Characteristics:
• 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
Challenges:
• 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
Primary Motivation:
• Gain sustainable productivity improvements via evolutionary change
Key Characteristics:
• Astute managers of mission-critical applications
• Understand real-world issues and tradeoffs
• Focus on proven applications
• Like to go with the market leader
Challenges:
• 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
Primary Motivation:
• Just stay even with the competition
• Avoid competitive disadvantage
Key Characteristics:
• Better with people than technology
• Risk averse
• Price-sensitive
• Highly reliant on a single, trusted advisor
Challenges:
• 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
Primary Motivation:
• Maintain status-quo
Key Characteristics:
• Good at debunking marketing hype
• Disbelieve productivity-improvement arguments -Believe in the law of
unintended consequences
• Like taking a contrarian position
• Seek to block purchases of new technology
Challenges:
• Not a customer
• Can be formidable opposition to early adoption
Key Role: Retard the development of high-tech markets

24. Law of Diffusion of
Innovations

27. Implications for Sales & Marketing
Customer goal:
Competitive Advantage
Solve problem
Adopt the obvious
Extend paradigm
Customer need:
Potential of technology
Complete solution
Make safe choice
Better value
Vendor goal:
Strategy:
Validate technology
Segment share
Market share
Profitability
Segment focus
Show ROI
Set standards
Relationship mgmt.
Demo the technology
Technology proficiency
Customer Intimacy Closing deals

28. Crack 1 & 2

29. Crack 1
Early Adopters do talk to Innovators. Still Crack 1
occurs.
Problem: Innovators like cool technology products that
cannot be readily translated into major new business
benefits. Early Adopters want competitive advantage.
•
Esperanto
•
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
occurs.
Problem: The Early Majority is willing and able to become
technically competent when needed. The Late Majority is
not.
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Scanners and Video Editing Programs
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Telephone transferring systems
Solution: Ensure very high user-friendlieness to ensure ease of
adoption.

32. Fundamental flaw
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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?

33. Crossing the Chasm and
Entering the Tornado

34. Dominated by early
adopters and insiders.
Techies” and
“Visionaries”
The
Chasm
“Pragmatists” and
“Conservatives”
Mainstream
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.
Techies” and
“Visionaries”
The
Chasm
“Pragmatists” and
“Conservatives”
Mainstream
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.
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The Early Adopters is buying a revolutionary change agent
•
•
•
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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
improvement
•
•
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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
market
• It is the fastest
product
• It is the easiest to
use
• It has elegant
architecture
• It has unigue
functionality
•
It is the de facto
standard
• It has the largest
installed base
• It has most third party
supporters
• It has great quality of
support
• It has a low cost of
ownership
•
Visionary
Pragmatist

39. Different Buying Behavior
Willing to take risk
Rely on horizontal
references: other
industries &
techies
• Want to buy from
new firms
• Want rich techsupport
•
•
Wants very little risk
• Relies on vertical
references within
their industry
• Wants to buy from
market leaders
• Wants one point of
contact
•
Visionary
Pragmatist

40. What Pragmatists think of Visionaries
1.
The visionaries love technology but are bored with the
mundane details of their own industry, which is the
everyday work of us pragmatists.
2.
The visionaries want to build systems from the ground up
and do not appreciate the importance of networks,
systems and processes already in place.
3.
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
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“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
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Too late for revolutionary competitive advantage
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There are other cool disruptive things out there
Pragmatists see no reason to buy yet
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Too early for anything to be ”in production”
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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
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Who are my first “5” customers – and why will they buy
from me?
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Who are my next “50” customers and why will they buy
from me?
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Who are my next “500” customers and why will they buy
from me?

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
•
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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.
•
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That is, no one had 100% of its whole product requirements fulfilled.
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We never finished any one customer’s list.
But that is precisely the requirement that pragmatist insist upon before they
purchase
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e.g. while the visionaries (early adopters) accept 80% of the product, the pragmatist wants to see the
remaining 20% fulfilled.
•
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Without the complete product, there is no hope for mainstream

45. Crossing the chasm
The problem
• 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 !!!

46. D-Day- Omaha Beach

47. The D-Day Analogy
Today

48. ”D-day” invasion strategy & tactics
1.
Target the point of attack
Segmentation–isolate target customers and their compelling reason
to buy
2.
Assemble the invasion force
Differentiation–develop the ”whole product” and choose allies to
realize this
3.
Define the battle
Positioning–reate the competition(if there is none, you still need one)
and position yourself
4.
Launch the invasion
Distribution and Pricing–select your distribution channel and set your
price

49. Target the point of attack Segmentation
Target a specific market segment: Target customer (user,
tech., econ.)?
• Compelling reason to buy?
• Whole product?
• Competition?
• Partners
• Distribution
• Pricing
• Positioning
• Next target customer
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Focus all resources of achieving a dominant leadership position–
to become a Big Fish in a Small Pond!

50. Selecting a Niche Market - Beachhead
1.
Is the target customer well funded and are they
accessible to our sales force?
2.
Do they have a compelling reason to buy?
3.
Can we today, with the help of partners, deliver a whole
product to fulfill the reason to buy?
4.
Is there no entrenched competition that could prevent us
from getting a fair shot at this business?
5.
If we win this segment, can we leverage it to enter
additional segment?

51. Assemble the invasion force Differentiation
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Think through the customer’s problems–and solutions–in
their entirety.
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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
alliances.

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
buy.
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
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Positioning is key to make buying easy Define your
category and position (market leader!)
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Be clear about who will use it and for what?
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Show competition and differentiation (pragmatists
demand a comparative context)
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Ensure staying power

54. Defining the Value Proposition
Statement
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For….(target customers, beachhead segment)
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Who are dissatisfied with… (current market or internal
alternative)
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Our product is a … (new product category)
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That provides… (key problem solving capacity)
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Unlike… (current product alternative)
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We have assembled… (key whole product features)

55. Launch the invasion (Distribution and
Pricing)
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Secure access to a customer-oriented distribution channel
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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!
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Set pricing at the market leader price-point
Customers will (almost) only see channel and price!

56. What Comes after
the beachhead?
Bowling Alley

57. Bowling Alley Market Development

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
attack
2. Assemble the
invasion force
3. Define the battle
4. Launch the invasion
How hard can it be?
Thanks you!