Sunday, September 26, 2010

A synopsis - Crossing the Chasm by Geoffrey A. Moore

Crossing the Chasm is more than a title to one of the most amazing works of Geoffrey A. Moore. It is an effective management process for bringing cutting edge high tech products to progressively larger markets. Though Microsoft is a different story all together, but the discipline behind Bill Gates becoming a billionaire is something to give a though to. The book deals with some marketing logic of entering the mainstream market and emerging to be a market leader in the field of high tech product markets.

Technology Adoption Life Cycle: There are 5 different markets shown in this model:

  1. Innovators – Technology Enthusiasts
  2. Early Adopters – Visionaries 
  3. Early Majority – Pragmatists
  4. Late Majority – Conservatives
  5. Laggards – Skeptics

Psychographics of these customers groups:

Innovators – The Technology Enthusiasts: These people are the first to adopt any new technology to appreciate and try out something new. This is not a big market where the big bucks are present but this is a market where the product gets tested and reviewed. Innovators would use it to just see if it works.

Early Adopters – The Visionaries: This is where we find a driving force to a more strategic opportunity of an emerging technology. Visionaries are looking for a breakthrough and not just improvement, which promises to deliver their big dream. They can visualize the potential of a high tech product and its magnitude. Visionaries give high tech products a breakthrough into the market and it is not so easy satisfy their needs. A proper marketing plan is required to match the dreams of these early adopters because they will help to move up the life cycle.

Early Majority – Pragmatists: This is where the mainstream market begins and the money is right here. Pragmatists are the main decision makers who would decide whether the high tech product would stay in the market. They would adopt a new high tech product after much speculations and reviews. They are price sensitive and would pay the modest amount for a premium product. They would like to wait for the right solution rather than take an instant decision of adopting any product. They would analyze all competing products before selecting one and would go through a complete round of testing before they fully adopt it.

Late Majority – Conservatives: This base of customers is the ones who would like to use a high tech product after it has stayed in the market for a long time. They would use a much established product which has forums built around it, and are not the ones who like to change if their current solutions are delivering the necessary results. They need a complete package rather than going for small bits here and there.

Laggards – The Skeptics: The laggards do not participate in the high tech product marketplace and are not very effective users of technology.

The Chasm – As we have seen the different phases of the technology adoption life cycle, it is not so easy to have a smooth transition from one phase to the next. There are chasms between every phase and that is something the high tech product company has cross. Though there are small chasms between each phase the great chasm lies between the Early Adopter (Visionaries) and the Early Majority (Pragmatists). This chasm is something that is going to decide the fate of the high tech product and its existence in the market space. The transition between visionaries and pragmatists cannot be ignored.

How to cross this chasm – There is analogy made with the D-Day i.e. when Allied Forces crossed the English Channel (the chasm) to enter Europe during the 2nd World War. Like the D-Day a high tech product has to cross the chasm by selecting a niche market and then becoming the market leader of that niche by capitalizing in that market. Then this niche should be used as a base for further capitalization of other mainstream markets. That is the strategy that is going to work out if one needs to cross the chasm. One has to create a customer base of pragmatists who will reference about the product and help the market grow. Thus they have to be completely satisfied and their buying objectives must be met. Their word of mouth will spread the fire.

Point the Target – Thus we have to target one customer in that the pragmatist section and find out the compelling reason for that customer to buy our high tech product. Based on this we have to create a whole product which is services included with the base product. There is another way to enter the market in which we partner with an existing company in that market and use them as allies in targeting the customer. We should also check that there is no other competing product already addressing the problems of the target customer. Then we have to choose a sales and distribution channel and make a pricing strategy which benefits all the partners. This deal will help in the positioning of the new high tech product in the pragmatist market where resistance has to be overcome as soon as possible.

Define the battle – Defining the battle is an important criterion where the competitor has to be moved from its position. One who has the battle defined properly i.e. who the customers are, what are their competitive advantages, how can we disrupt their base by providing more than what they provide; we can definitely create a foothold in the market base. Moreover understanding of the technology issues arising in this market needs to be addressed properly because this market consists of specialists who know in and out of the technology. This is a market-centric value system.

Launch the invasion – Customer oriented distribution and pricing is going to lure the customers in this launch strategy. We should hire sales personnel for direct sales from this market who knows the pain points of these customers and the technology at the back of his hand. Direct sales and support should be used as the primary weapon for targeting at the initial stages. Once the segment is aware of the presence of this high tech product, we can transit to a more efficient method of channeling.

Conclusion – Crossing the chasm is an overall experience a high tech product has to go through before it has entered a mainstream market and created a demand for the product. By this time the market is fully aware of the existence of such a product and during its stay in this market if pragmatists the revenue of the company increases and there are multiple forums and support communities created around the product base. It is the most difficult stage of the technology adoption life cycle and many companies are unable to cross this chasm a lot of times. This leads to the death of the high tech products before it enters the mainstream market and gets established as a major player. Thus target-define-launch strategy of crossing the chasm is going to decide the next big mainstream high tech product. But that’s not the end; maintaining the position in this market is still important; otherwise some other high tech product is going take advantage and remove us from competition.

To find a full version of the book online check: Crossing The Chasm - Geoffrey A. Moore