Read: April 2012
Rating: 7.5/10
Crossing the Chasm by Geoffrey Moore is a classic book about marketing and selling disruptive products to mainstream customers. You've inevitably heard of the adoption curve: innovators, early adopters, early majority, late majority, and laggards. Geoffrey is the guy that came up with the stuff. This book should be read by anyone who wants to market dispruptive technology, whether in high-tech or not. I'm only giving the book a 7.5, mostly because I think I've read too much of this stuff during business school already- but it's inevitably the source of many other materials by a number of authors and still worth reading. The book isn't all theory- Geoffrey also provides valuable information in actually implementing things to cross the chasm without failing.
My Notes
The point of greatest peril in the development of high-tech market lies in making the transition from an early market dominated by a few visionary customers to a mainstream market dominated by a large block of customers who are predominantly pragmatists in orientation.
Discontinuous (disruptive) innovations versus continuous (sustainable) innovations
Innovators -> Early Adopters -> Early Majority -> Late Majority -> Laggards
Cracks between:
Innovators and Early Adopters
Early Majority and Late Majority: The early majority is willing and able to become technologically competent, where necessary; the late majority, much less so
Chasm between:
Early Adopters and Early Majority
The early adopter is buying a change agent- they want to be the first to implement this change in their industry
The early majority want to buy a productivity improvement for existing operations- evolution, not revolution
When promoters of high-tech products try to make the transition from a market base made up of visionary early adopters to penetrate the next adoption segment, the pragmatist early majority, they are effectively operating without a reference base and without a support base within a market that is highly reference oriented and highly support oriented
Managers need to recognize that there is something fundamentally different between a sale to an early adopter and a sale to the early majority, even when the company name on the check reads the same
Marketing = taking actions to create, grow, maintain, or defend markets
Early market = Innovators and early adopters
Mainstream market = Early majority and late majority
Innovators - Technology Enthusiasts
Ones who really appreciate your product, will spend hours with it, will forgive its terrible documentation, slow performance, and more
The need:
the truth, without tricks
access to knowledgeable person(s) to answer their questions
ability to be first to get the new stuff
want to get it cheap
Easy to do business with, assuming you have latest and greatest technology and don’t need to make much money
Early Adopters - Visionaries
Driven by a dream, not the technology itself
Looking for breakthroughs, not improvements
Derives value from the strategic leap forward technology enables, but not the technology itself
Least price-sensitive segment
Hard to please
In a hurry
You must be able to have management of expectations with them
Problems of Early Market
Company has no expertise
Company sells the visionary before it has a product (vaporware)
Failure to communicate leap in benefits
Early Majority - Pragmatists
Risk is a negative word in their vocabulary
When buying:
They care about the company
They care about the quality of the product
They care about the infrastructure of supporting products and system interfaces
They care about the reliability of the service they are going to get
Want a market-leading product, due to its aftermarket vendors services
Price sensitive
Requires patience
Late Majority - Conservatives
They find something that works for them, and stick with it
Fear high tech a little
Like preassembled packages, with everything bundled, at a heavily discounted price
How to lose a mainstream market
Stop investing in the market, cease R&D to match the competition, and milk it for money to invest elsewhere
Shoot yourself in the flagship product
Laggards - Skeptics
They exist to block purchases
Neutralize their influence
Four fundamental characteristics of visionaries that alienate pragmatists
Lack of respect for the value of colleagues’ experiences
Greater interest in technology than industry
Failure to recognize the importance of existing product infrastructure
Overall disruptiveness
Perils of the Chasm
Lack of new customers
To enter the mainstream market is an act of aggression
Cross the chasm by targeting a very specific niche market where you can dominate from the outset, force your competitors out of that market niche, and then use it as a base for broader operations
Most companies fail to cross the chasm because they lose their focus, chasing every opportunity that presents itself, but finding themselves unable to deliver a salable proposition to any true pragmatist buyer
The consequences of being sales-driven during the chasm period are fatal
Achieve market leadership
Applications are naturally vertical
Platforms are naturally horizontal
Make a total commitment to the niche, and then do your best to meet everyone else’s needs with whatever resources you have left over
When markets go mass, platforms have the advantage
“If you don’t know where you are going, you probably aren’t going to get there”
You have to make a high-risk, low data decision
You need to understand that informed intuition, rather than analytical reason, is the most trustworthy decision-making tool to use
Use characterizations
Market Development Strategy Checklist
Target customer
Compelling reason to buy
Whole product
Partners and allies
Distribution
Pricing
Competition
Positioning
Next target customer
Commit to one- and only one- beachhead target
Show stopper issues for crossing the chasm:
Target customer
Compelling reason to buy
Whole Product
Competition
Chasm-crosing is not the end, but rather the beginning, of mainstream market development
Target Market Selection Process
Develop a library of target-customer scenarios
Appoint subcommittee to make the target market selection
Number and publish the scenarios in a one-page per scenario format
Each member of the subcommittee to privately rate each scenario
Rank order the results
The Whole Product Model
Generic Product
Expected Product
Augmented Product
Potential Product
Think about anything you would need to achieve your compelling reason to buy
Any force can defeat any other force- if it can define the battle
Your goal is to position your product as the indisputable correct buying choice
Four domains of value in high-tech marketing:
Technology - technology enthusiasts
Product - visionaries
Market - pragmatist
Company - conservative
Make products easier to buy, rather than easier to sell
Positioning:
is a noun, not a verb
single largest influence on the buying decision
exists in people’s heads, not in your words
people are highly conservative about changes in positioning
Positioning process:
Claim
Evidence
Communications
Feedback and adjustment
Positioning with an elevator pitch
High-tech distribution channels:
Direct sales
Two-tier retail
One-tier retail
Internet retail
Two-tier value-added reselling
National roll-ups
OEMs
System Integrators
Distribution-oriented Pricing
Customer-oriented pricing
Vendor-oriented pricing
Distribution-oriented pricing
Beyond the Chasm
Hockey stick curves are created by spreadsheets, a software tool that many have argued has driven some of the worst investment decisions of the past two decades
The discipline of profitability teaches you to "just say no" early and often