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 Information > Strategic Planning > Crossing The Chasm
Strategic Planning
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"As you can see, the components of the life cycle [Revised Technology Adoption Life Cycle] are unchanged, but between any two psychographic groups has been introduced a gap. This symbolizes the dissociation between the two groups — that is, the difficulty any group will have in accepting a new product if it is presented in the same way as it was to the group to its immediate left. Each of these gaps represents an opportunity for marketing to lose momentum, to miss the transition to the next segment, thereby never to gain the promised land of profit-margin leadership
in the middle of the bell curve."
Geoffrey Moore, Crossing the Chasm
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Crossing the Chasm
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The success of a company can hinge on its marketing ability to plan and execute a product release. The volatile nature of high-tech marketing perhaps best exemplifies this challenge. Geoffrey A. Moore is author of the of the book, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers (John Wiley & Sons, 1991), His consulting firm is TCG-Advisors.
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Moore begins by defining a commonly accepted high-tech marketing model — which he refers to as "The Technology Adoption Life Cycle". The model has five divisions of an idealized bell curve, each representing a group of buyers or market segment to whom a product is sold during its life cycle: Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. These categories describe market segments which distinct psychographic characteristics and buying patterns. When a new product is released, it typically moves through the Technology Adoption Life Cycle, until its useful life is expired. Although products are not guaranteed to follow this logical path, most naturally will.
| Innovators |
Innovators are technology enthusiasts. They are motivated to be the first to try out a new technology, but they represent just a tiny portion of the marketplace.
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| Early Adopters |
Early Adopters, also known as visionaries, are somewhat motivated to try out new technologies. They appreciate a product's potential to give their organization a competitive advantage. They represent a larger slice of the market, and they tend to have much more influence in an organization than do Innovators.
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| Early Majority |
The Early Majority, sometimes called pragmatists, represent the bulk of the market. They tend to buy in to new technologies only after they perceive solid references and safety measures that guard against potential failures. Securing the pragmatist buyer is the most important marketing challenge.
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| Late Majority |
The Late Majority, or conservatives, are also a very large portion of the market. They are extremely cautious when buying into a new technology. They want to see proof of results before they will accept a product's usefulness. |
| Laggards |
Laggards are skeptics who would prefer to avoid new technologies altogether. They will buy only if they really must.
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Moore's insight is that the adoption cycle is actually fragmented by small breaks or "chasms" in which the nature of the perceived benefits of a product are re-defined by the marketplace.
The first chasm divides the Early Adopters from the Early Majority. As the title of Moore's book implies, this chasm is significant enough to warrant a full-scale effort to move a product from one market segment to another. Moore argues that many companies get so caught up in their early market success that they don't anticipate the chasm, and their products then fail owing to an inability to traverse the gap.
The difficulty exists because the Early Majority, by their very nature, need good references before buying into a new technology, and Early Adopters do not make good references. The chasm then becomes a treacherous hazard.
Moore proposes a four-stage approach to crossing the chasm. He calls it the "D-Day strategy", a reference to the Allied invasion of Normandy in WW II. Four steps allow an organization to successfully attract pragmatist buyers, and to build a significant market share for their new product.
| Target the point of attack |
- Targeting the point of attack refers to defining the target market. During this stage, organizations should develop an array of customer profiles.
- They should then define and rate each customer's compelling reason to buy, based on a must-have value proposition.
- The key to winning over pragmatist buyers (Early Majority) is to provide a product that they truly feel they need. Marketing to a group that has no use for a product is pointless.
- The ratings for the customer profiles will help in the development of potential market segments. The market segments can then be prioritized for the planned attack.
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| Assemble the invasion force |
- Assembling the invasion force means preparing the new product as a "whole product;" that is, a product that delivers everything promised to a customer.
- A "whole product" may include supporting services and ancillary products. To carry out this stage, companies need partners and allies to assist them in defining and delivering the whole product. Nevertheless, it is important to keep things simple and to develop relationships with partners slowly and carefully.
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| Define the battle |
- The key to defining the battle, and to successfully marketing a high-tech product, is to create the product's competition. As odd as this sounds, Moore believes that a pragmatist buyer is more interested in a product that is positioned among other, competing alternatives.
- A supposedly new and exciting innovation may suffer in a market by itself. Creating the competition simply means that an organization should plan to position its product among similar product offerings to the same customers.
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| Launch the invasion |
- When launching a marketing campaign, organizations must obtain access to a customer-oriented distribution channel, one that is most likely to attract the pragmatist buyer.
- The product should be priced to reflect the fact that the product will be a market leader. Leadership pricing does not mean that the product should be cheaper than its competition. Rather, it should be comparably priced.
- As a product is accepted into the mainstream, margins become higher and the price of the product can begin to drop to reflect the lower cost of sales. The more attractive pricing will eventually draw the more conservative and hesitant buyers.
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Crossing the Chasm can be a useful tool for a company developing a mainstream marketing strategy. Although written with the high-tech industry in mind, Crossing the Chasm offers concepts and ideas that can certainly be applied to other marketing opportunities.
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Crossing
The Chasm |
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