Crossing The Chasm
by Geoffrey Moore

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Crossing The Chasm

Crossing The Chasm – by Geoffrey Moore

‘Marketing and Selling disruptive products to mainstream customers’

If you want to build a new multi-million-dollar disruptive technology, your first step should be to read this book. Moore breaks down the market according to their psychographics into innovators, early adopters, early majority, late majority, laggards. Many new technologies can appeal to innovators and even to early adopters, but the ‘chasm’, where all the dead bodies lie of crushed hopes and dreams, is when companies try to cross over to the early majority.

If you’re building a business, its something you need to understand.

 

       Crossing the Chasm Book Summary:

 

   Introduction-The greatest peril in the development of a 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 predominately pragmatists. The gap between these two markets is often ignored and is called the chasm. Crossing the chasm must be the primary focus of any long term high tech marketing plan .A successful crossing is how high tech fortunes are made. The key in crossing the chasm – performing the acts that allow the shoots of the mainstream market to emerge.

Discovering the chasm

  • High tech marketing illusion

 This book was drafted in 1989. .The original research was the adoption of new strains of seed potatoes among American farmers. The electric vehicle was released by GM in 1999 but the market yawned and in 2013, Tesla was in the spotlight.

Technological Adoption Life Cycle

 Each group represents a psychographic profile. Innovators – pursue new technology products aggressively

Often make a purchase simply for exploring the new device’s properties and winning them from the outset of a marketing campaign is important.

Early adopters – Buy into new product concepts very early in the life cycle, but unlike innovators, they are not technologists.

Early majority – Driven by more of a sense of practicality. They know that many of these things pass as fads, so they wait and see what others do before they jump in themselves. 

Late majority – Are also pragmatists, they are not comfortable buying the new thing. As a result, they wait for something that has become an established standard.

Laggards – These people simply do not want anything to do with new technology.

 

High tech marketing model

A way to develop a high tech market is to work the curve from left to right first focusing on the innovators, the growing market segment. Then moving to the early adopters, early majority, the late majority  followed by the laggards

.The endorsement of innovators becomes an important tool for developing a credible pitch to the early adopters. Early adopters endorsement is a vital tool to pitch for an early majority and so on. High-profit margin is in the middle to late stages and is where high tech fortunes are made.

Illusion and Disillusion: Cracks in the bell curve 

There is a gap between any two psychographic groups. This symbolizes the dissociation between the two groups – that is the difficulty any group will have in accepting the new product if it is presented in the same way as it was delivered to the group in the immediate left.

The first crackbetween the innovators and early adopters 

  • When a hot new technological product cannot be readily translated into a major new benefit
  • The enthusiasts love it for its architecture, but nobody else can figure it out to use it

 The other crackbetween the early and late majority

  • The product has been absorbed between the mainstream

 Discovering the chasm 

  • The main crack is between the early adopters and the early majority
  • The early adopter is buying some kind of change event – looking to be the first to implement the change in the industry
  • The early majority wants to buy some kind of productivity improvement. They want evolution not revolution
  • Because the early majority is concerned with not to disrupt their organizations, moreover good references are critical for buying decision
  • But the only suitable reference for the early majority, it turns out, is another member of the early majority
  • Many companies fail as their managers do not recognize that something is fundamentally different between the sales of an early adopter to the sale of an early majority.

 High – tech marketing enlightenment

‘First, there is a mountain. Then there is no mountain. Then there is’ – Zen proverb

 First, there is a market, made up of innovators and early adopters, it is an early market full of enthusiasm and vision. Then there is no market, the chasm period during which the early market is still trying to digest its ambitious projects and the mainstream market waits to see if anything good will come out of them

.First principles A market is

A set of actual or potential customers, for a given set of products or services Who have a common set of needs or wants and provide a reference for each other when making a buying decision. No company can afford to pay for every marketing contact made. Every program must rely on some ongoing chain reaction effects, which is usually called “Word of Mouth.”

Innovators – the technological enthusiasts

The first people who adopt any new technology are those who appreciate the technology for its own sake. In business technology enthusiasts are the gatekeepers for any new technology. They are the ones who have the interest to learn about it and the ones everyone else deems competent to do an early evaluation. Innovators want the truth, without any tricks Access to the most technically knowledgeable person to answer questions. They also want to be first to get the new stuff. They can work scrupulously with non-disclosure to get early feedback.

  • Enthusiasts are like kindling, they help start the fire. They need to be cherished for that
  • The way to cherish them is to let them in on the secret, to let them play with it and implement improvements, they suggest

 

Early adopters – the visionaries

Visionaries are the rare breed who have the insight to match the emerging technology to a strategic opportunity. The temperament to translate this insight into a high visibility high-risk project, and the charisma to get the rest of their organization to buy into that project

.E.g Reed Hastings, CEO of Netflix committed to outsourcing the computing for the entire business to Amazon.

  • Ted McConnell and Proctor and Gamble committed to direct all digital advertising worldwide via Audience Sciences ad spend management system
  • In every case, these people take significant business risks with what at the time was unproven technology and/or unproven company in order to achieve breakthrough improvements in productivity and customer service.

 Visionaries are not looking for improvement, they are looking for a fundamental breakthrough

  • The key difference to an enthusiast, a visionary focuses on value not from the systems technology, but rather from the strategic leap that the technology can enable
  • As a buying group, they are easy to sell but very hard to please. They are buying a dream, that to some degree will always be a dream
  • They are always in a hurry, feeling that the window of opportunity is closing

 Dynamics of early markets:-

Visionary executives consult with the technological enthusiast of their choice to verify that the vision is actually achievable

.A big problem is encountered when overly ambitious expectations are met with undercapitalization – or eyes are bigger than the stomach.

Early majority – the pragmatists:-

Hard to categorize as they do not have the visionaries penchant for drawing attention to themselves

The word risk is a negative one in their vocabulary – it does not connote opportunity or excitement but rather the chance to waste money and time. They will undertake risks when required but they first put in place safety nets. If pragmatists are hard to win over, they are loyal once won

Pragmatists tend to be vertically orientated, meaning they communicate more with others like themselves within their own industry, than do early adopters. This means it is very tough to break into a new industry selling to pragmatists. To market to the pragmatists, you must be patient

  • You need to show up at the industry-specific conferences and trade shows that you attend
  • You need to have earned a reputation for quality and service.

 Late majority – the conservatives:-

For every pragmatist, there is a conservative

.They are against discontinuous innovation

They believe far more in tradition than in progress.They email rather than text, still on black berry’s, they neither tweet or post and their newspaper arrive at their door. Eventually, they do succumb to the new paradigm to stay part of the rest of the world

 Conservatives like to buy preassembled packages, with everything bundled, at a heavily discounted price. The last thing they want to hear is that the software they just bought does not support the home network they just installed. Generally, the conservative market is perceived as a burden rather than an opportunity.

Laggards – the skeptics:-

Make about 1/6th of the adoption life cycle.Do not participate in the high tech market place, except to block purchases. The primary function of marketing is to neutralize their influence. Rather than going straight to rebuttal, why not explore the merits in the skeptic argument?

Ultimately, the skeptic service provided to high tech marketers is to continually point out the discrepancies between the sales claims and the delivered product. These discrepancies create opportunities for the customer to fail.

Why the chasm?

The floor in the model is it implies a continuous smooth transition. Visionaries have little self-awareness about the impact of their disruptiveness. From a pragmatist’s point of view, visionaries are the people who come in and soak up all the budget on their pet projects. If the project fails, visionaries always seem to be a step ahead of the disaster, getting out of town while they can, leaving the pragmatists to clean up the mess.

  • Visionaries, successful or not,  do not stick around long. They leap-frogging up the corporate ladder and across corporations.
  • Pragmatists, on the other hand, are committed to long term
  • All in all, it is easy to see why pragmatists do not reference visionaries in their buying decisions, hence the chasm.

 

  • crossing the chasm

The chasm is a bad place to be

.At the start, in the early markets, there are big orders and big promises. The trend is now reversed in the chasm and you are accelerating into negative cash flow.

You must get into the mainstream market soon, establishing long term relationships with pragmatist buyers, for only through these you can control your destiny.

Fighting your way into mainstream 

  • This is not a time to focus on being nice. The perils of the chasm make it life or death
  • We are going to cross the chasm as fast as possible focusing on one point of attack (D-Day)
  • Once we force the competitor out of our targeted niche markets (secure the beachhead)
  • We will then move to take over adjacent market segments (districts of France)
  • On the way to total market domination (liberation of Western Europe)

 Concentrate an overwhelmingly superior force on a highly focused target

Most companies fail because – once confronted with the immensity of opportunity, represented by a mainstream market, they lose their focus chasing every opportunity that presents itselves but finding themselves unable to deliver to any true pragmatist buyer

 How to start a fire

Trying to cross a chasm without taking a niche market approach is like trying to light a fire without kindling

Sooner or later the paper will all be used up and the log would not be burning

Word of mouth is the number one source of information that buyers do count both at the beginning and the end. The segment targeting company can expect word of mouth leverage early in its crossing the chasm marketing effort, whereas the sales-driven company will get it much later if at all.

Taking the pin

  • Niche marketing needs to be highly leveraged
  • The more serious the problem, the faster the target niche will pull you out of the chasm
  • Once out, your opportunities expand into other niches
  • The bowling pin model allows you both to focus on the immediate market, keeping the burn rate down and the market effort targeted, while still keeping in view the larger win.

 Keys to consider when targeting a beachhead segment:- 

  • Big enough to matter
  • Small enough to win
  • Good fit with your crown jewels

 

  • Target the point of attack

The fundamental principle of crossing the chasm is to target the specific niche market as a point of your attack, focus all your resources on achieving a dominant leadership position in that segment as quickly as possible

High risk low data decision:-

Make the decision on informed intuition rather than analytical reason. When faced with decisions in the chasm, it is usually best to make them quickly. Get into the new flow and plan to course correct going forward. When you do pick, go hard in the direction chosen regardless of doubts. The good news is that you do not have to pick the optimal beachhead to be successful, what you must do is win the beachhead you have picked

  • Assemble the invasion force:-
  • I have always found you get more in this world with a kind word and a gun than you do with just a kind word” – Willie Sutton.If you are committing an act of aggression, you better have the force to back it up 

 

Rule 1 – leverage point of disruption (make sure that you have a target market segment by a problem that gives it a truly compelling reason to buy)

 

2 – Big enough to matter, small enough to lead

3 – Surround your disruptive core product with a whole product that solves the customer’s problem from end to end

 

 

  • Define the battle:-

To take the beachhead, we need to understand who or what the competition is. What is their relationship to our target customer and how we can best position ourselves to drive them out of the target market segment? Any force can beat another force if it can define the battle. Unfortunately, where there is no competition, there is no market. We need to rethink the significance of competition as it relates to the chasm. Pragmatic buyers do not like to buy until there is both established competition and an established leader, for that is a signal that the market has matured sufficiently to support a reasonable whole product. They loath to buy if they are unable to compare.

Creating the competition:

  • It begins with positioning your product within a buying category that has already some established credibility with the pragmatist buyers
  • That category should be populated with other reasonable buying choices
  • Within this universe, your goal is to position your product as the indisputable correct buying choice

 Positioning Strategies:

  1. Name it and frame it – potential customers cannot buy what they cannot name or look at what category it is under
  2. Competition and differentiation
  3. Financials and futures – customers cannot be completely secure buying it until they know it is from a vendor with staying power
  • Launch the invasion:-

Customer-oriented distribution Who is buying? 

  1. Enterprise executives, making big-ticket purchasing decision
  2. End users – making low-cost purchasing decisions
  3. Department heads medium cost

 The pricing goal should be: 

  • Set the pricing at the market leader price point, reinforcing claims of market leadership, and build a disproportionally high reward for the channel into the price margin
  • The reward is phased out as the product becomes established in the mainstream

 Crossing the chasm behind (conclusion):-

  • Revenue development looks more like a staircase than a hockey stick
  • At the start, the pioneers are the ones who do great deeds, but post chasm no more needs to be done
  • Their brilliance fuels the early market and without them, there would be no such thing as high tech
  • However, they are unlikely to corporate with the compromises needed.

The Book named crossing the Chasm is a wonderful book to read.

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