Crossing the Chasm was first published in 1991 and it is a measure of its success that it has been reprinted twelve times. Over 300,000 copies have now been sold.Ithas become the bible for bringing cutting-edge products to progressively larger markets.
Geoffrey has itown consultantcompany : The Chasm groupThe deathcompetition :This book helps managers about the waycompanies do business with one another.Inside the tornado :This book helpsmarketers for makingtheir marketing strategyThe gorillagame :This book helpsinvestors to invest.Living on the fault line :Geoffrey Moore presented a compelling argument for usingshareholder value (or shareprice) as the key driver in management decisions.Escape velocity :It’s a definitive road map to help establishedcompaniescreatenext-generationgrowth: how to gain marketsharefromearlyadopters and frommainstreamconsumers
EarlymarketsThey want the truth without any tricksTheywant access to the most technically knowledgeable person to answer their question.Mainstream marketThis group of pragmatism care about :- the quality of the product they are buying the infrastructure of the supporting products and system interfaces the reliability of the service they are going to get.For them, the word risk means chance to waste money and timeConservativesTheir real goal in buying new-tech products is simply not to get delayed. Conservatives do not have high aspiration about their high-tech investments and so, will not support high price margin. They like to buy preassembled packageat a heavy discounted price. The price can be low because the R&D has long since been amortized.
InnovatorsTechnology is a central interest in their lifeThey make a technology purchase simply for the pleasure of exploring the new device propertiesThey are not many but winning them over at the outset of a marketing campaign is a necessary conditionEarlyadoptersThey are people who relate the potential benefits of new technologiesBuy new product concept very early, but unlike innovators, they are not technologistsTo be the first to get the new stuffEarly majorityShare some of the early adopters ability to relate to technology but they are driven by a strong sense of practicalityLate majorityWait until something has become an established standardThey’re not comfortable with their ability to handle a technology productsLaggardsDon’t want anything to do with new technologyThey use road map since their born and they don’t want to buy a GPS
You begin on the left of the curve, and you go througheach group until the right.First : innovatorsThen : earlyadoptersThen : earlymajorityThen : latemajorityand finally : laggardsEach gaprepresents an opportunity for marketing to lose , to miss the transition …..
So, the first categoryis the Chasm and itis the mostdifficult.Generally, company have a fastsucceswith an innovation withInnovators and earlyadopters, but whentheywant to reach the mainstream ….. Their sales go down
I’llintroducethisthemewith a sayingwhichistotallytruewhenitcomes to crossing the chasm:« If youdon’t know whereyou’regoing, youprobablywon’tgonnagetthere ».Whencrossing the chasm, we are in a situation wherewe have to take high riskdecisionswithlow data. That’swhat G. Moore wanted to solve in his book.To help youbetterunderstand, we are going to follow the World War II, D-Day Analogy. It was used by Moore to describe a four stage approach. His idea was to target the point of attack, assemble the invasion force, define the battle and launch the invasion.Let’s start with targeting the point of attack:The fundamental principle for crossing the chasm is to target a specific niche market as our point of attack and focus all our resources on achieving the dominant leadership position in that segment. That’s what happened in 1944. All the allied forces went from Great Britain to Normandy in order to secure beachheads.
We can also compare this situation with another analogy.As pragmatists tend to buy from market leaders, and as our number one marketing goal is to achieve a pragmatist installed base that can be used as a reference later, thus the only right strategy is to take a “big fish, small pond” approach.Winning at marketing means being the biggest fish in the pond. If we are very small, then we must search out a very tiny little pond.Of course, one single pond isn’t large enough to provide a sustaining market for the long term. Sooner or later, we would have to go “pond hopping.” thanks to the word-of-mouth help. That’s why, it’s better to target a pond closely related to the other ponds we want to hop into!
In this way, we could also use the “bowling pin” analogy. We target the first bowling pin not just because we can “knock it over” but because, in so doing, it will help knocking over the next ones (domino effect). It’s the same thing for crossing the chasm. We have to target one single segment which will knock over other segments, and thus it would lead to market expansion.
But be careful not to end like this, with a too small pond!!!To avoid that: we have to do a good segmentation.The good news is that, if this technique succeeds, we get installed by the pragmatists as the leader, and from then on, they conspire to help keep us there. This means that there are significant barriers to entry for any competitor, regardless of their size or the added features they have in their product.To sum up, Geoffrey Moore advises us to fulfill 2 requirements in this phase of the battle:Target customer: Is there a single, identifiable economic buyer for this offer, readily accessible to the sales channel we intend to use, and sufficiently well-funded to pay the price for the whole product?Compelling reason to buy: Are the economic consequences sufficient to mandate any reasonable economic buyer to fix the problem called out in the scenario?
In this stage, Geoffrey Moore explains that there is a gap between the marketing promise made to the customer- the compelling value proposition –and the ability of the shipped product to fulfill that promise. For that gap to be overcome, the product must be augmented by a variety of services and ancillary products to become the so called: “Whole Product”.In short, winning the whole product battle means winning the war. And, because perception contributes to that reality, looking like you are winning the whole product battle is a key weapon to win the war.Whole product: The whole product model identifies four different perceptions of product : The Generic product, the Expected product , the Augmented product and the Potential product.At the introduction of a new product, the marketing battle takes place at the level of the generic product. This is the hero in the battle for the early market. But as marketplaces develop, as we enter the mainstream market, products in the center become more and more alike, and the battle shifts increasingly to the outer circles.2. Partners & Allies: Do we already have relationships begun with the other companies needed to fulfill the whole product?
“Unfortunately, where there is no competition, there is no market“This sentence from G. Moore summarizes quite well this step.Pragmatist buyers do not like to buy until there is both established competition and an established leader. This is the condition showing that the market has matured sufficiently to support a reasonable whole product infrastructure around an identifiedcenterpiece.In sum, the pragmatists can buy only if they can compare.Competition, therefore, becomes a fundamental condition for purchase.
That’swhy thecompany has to first createcompetition and then position itsproduct in the market place.Competition:Positioning: Is the company credible as a provider of products and services to the target niche.In the following graph, there’s an explanation of the positioning evolution during the product adoption life cycle.These are the two “natural” marketing processes in high tech— developingthe early market and developing the mainstream market. We can develop anearly market by demonstrating a strong technology advantage and convertingit to product credibility, and you develop a mainstream marketby demonstrating a market leadership advantage and converting it tocompanycredibility.By contrast, the “chasm transition” represents an unnatural process.Crossing the chasm requires moving from an environment of supportamong the visionaries back into one of skepticism among the pragmatists.It also means moving from the familiar ground of product-orientedissues to the unfamiliar ground of market-oriented ones, and from thefamiliar audience of specialists to the unfamiliar audienceof uninterestedgeneralists.
And finallycomes the D day. The moment whenwelaunch the attack.There are 2 really important thingsduringthisperiodthatwe have to deal with:Distribution:The number-one objective when crossing the chasm is to secure a channel into the mainstream market with which the pragmatist customer will be comfortable.The right choice of distribution channel for crossing the chasm is to:1.Use direct sales and support as a demand-creation channel to penetrate the initial target segment and then,2.Once the segment has become aware of your presence and leadership, to transition to the most efficient fulfillment channel for your offer.Pricing: Is the price of the whole product consistent with the target customer’s budget and with the value gained by fixing the broken process? Do all the partners, including the distribution channel, get compensated sufficiently to keep their attention and loyalty?Prices vary dramatically depending on customers psychographics: Visionaries are relatively price insensitive (value-basedpricing). The conservatives want low pricing (cost-basedpricing), pragmatists are focused on competition-basedpricing (the key pricing strategy is premium margin above a norm set by comparison).
Among the books talking about the samesubject, there are 4 old best sellersfrom gurus, and one one more recent.2 of them are dedicated to marketing.And 2 othersdedicated to business growththroughinnovativeproducts & services. One is for startups inspired by the leanmanufacturingapproach and the others are more for bigestablishedcompanies.In the exact sameregionalmap as « Crossing the chasm », wecanfind William Davidow’s book: « Marketing High Technology ». He tells in his book how to fight the marketing battle in the intensely competitive world of high-tech companies.More generally, Theodore Levitt’s book called “The marketing Imagination” talks about new products. He is referenced in “Crossing the chasm” because he introduced the concept of “Whole Product”. He explains in his book how to maximize the product life cycle and achieve the delicate balance between innovation and imitation.Inspired by lessons from lean manufacturing, themostrecent book called « The lean startup » by Eric Ries, describes how startups canavoidfailing in theirattempt to discover a successful path to a sustainable businessunder conditions of extremeuncertainty.Christensen's “The innovators dilemma” examined how focusing on profits can destroy even well-run corporations, while “The innovators solution” focuses on companies expanding by being "disruptors" who are able to outpace their entrenched competition.
Crossing the chasm presentation
CANTERINO SimonBOSSU NicolasBRILLET DE CANDE Tristan Team’Agine – Crossing the chasm 1
Geoffrey Moore He is an author and consultant in high-tech Books written by Geoffrey MooreCrossing the Chasm, Harperbusiness, 1991Inside the tornado, Strategies for Developing, Leveraging, andSurviving Hypergrowth Markets, HarperBusiness, 1995The death of competition, Harperbusiness, 1996The Gorilla Game: Picking Winners in High Technology,HarperBusiness, 1999Living on the fault line: Managing for Shareholder Value in AnyEconomy, HarperBusiness, 2002Escape Velocity: Free Your Companys Future from the Pull ofthe Past, HarperBusiness, 2011 Team’Agine – Crossing the chasm 2
Veille technologique Veille strat égique Prévision et Management stratégique Diversificat io n prospective de la technologie technologique Techn ologie St ratégie dent rep rise et management Prévisio n Evaluation strat égique Philosophie Gestion et pro sp ect ive Histoire et de la et sélection socio-écono mique Epistémologie R&D de projets Ant icipat ion Econo miede la Technique Modèles Facteur de succès dinnovation ou déchec Gestion des projets Diffusion de R&D Produits nouveaux Marketing Gestion de projets Marketing de Sociologie de industriel consommation linnovation LE MARKETING DE LINNOVATION SYSTEME TECHNOLOGIQUE TECHNIQUE Marketing des Produits à Haute Technologie SYSTÈME Team’Agine – Crossing the chasm SOCIO-ECONOMIQUE 3
This book insists on 3 themes : Technology Adoption life cycle Problem : The chasm Solutions: Crossing the chasm Team’Agine – Crossing the chasm 4
Early majorityLate majority 34 % 34 % Early adopters Laggards2.5 % 13.5 % 16 %Innovators 5
Innovators Early adopters Early majority Late majority LaggardsCentral interest Buy new product Strong sense of Wait until something Don’t want concept very early practicality has become an anything to doPleasure of established standard with newexploring the new Not technologists technologydevice properties Not comfortable First to get the new with technology stuff Pragmatists Technology enthusiast Conservatives Visionaries Team’Agine – Crossing the chasm 6
2 principles with this curve : • You begin to sell on the left of the curve • Each group accepts an innovation if the previous group has accepted it before But there are some problems …. There are gaps between each group ! Gaps are divided into 2 categories Team’Agine – Crossing the chasm 7
What is a Chasm ? A huge gap Where in the curve ? Between early adpters and early majority Why ? 2 groups have not the same expectancy Early majority wants a productivity improvement Team’Agine – Crossing the chasm 8
But in addition with the chasm there are also cracks … But only 2 …. Early majority Innovators 1 2 Early adopters Late majority 1 - Between innovators and early adopters Why ? : the technology product cannot be translated into a major benefit 2 - Between early majority and late majority Why ? : late majority is less competent with technology than the early majority Team’Agine – Crossing the chasm 9
Target point of attack “If you don’t know where you are going, you probably aren’t going to get there.” Team’Agine – Crossing the chasm 10
Target point of attack Team’Agine – Crossing the chasm 11
Target point of attack Team’Agine – Crossing the chasm 12
Target point of attack 1. Target customer 2. Compelling reason to buy Team’Agine – Crossing the chasm 13
Assemble invasion force Team’Agine – Crossing the chasm 14
Assemble invasion force Perceived Quality 1. Whole product After sales service Guarantee Word of mouth Performances Training 2. Partners and allies Price Services OptionsIntangible elements Packaging Reputation Caracteristics Delivering Financing Diponibility Organization Company credibility Team’Agine – Crossing the chasm 15
Define the battle “Unfortunately, where there is no competition, there is no market” Team’Agine – Crossing the chasm 16
Define the battle 1. Creating competition 2. Position product Team’Agine – Crossing the chasm 17
Launch the attack1. Distribution- Direct sales and support- Transition to the most efficient one1. Pricing- Visionaries: value-based pricing- Pragmatists: competition-based pricing- Conservatives: cost-based pricing Team’Agine – Crossing the chasm 18
Simple concepts Few pictures and graphics => not very entertainingGood metaphores A bit oldAdress most of the Sometimes hard to readissues high tech American orientedcompanies meet Really specific => For small start-up technology firms eyeing their first steps to full scale commercialisation Team’Agine – Crossing the chasm 20