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Crossing the Chasm was created as a guide for marketing high tech products to a mainstream market. It is very insightful into the intricacies of the high tech market, and I believe the author possesses a very thorough knowledge of the business. Though the book is aimed toward the entrepreneur wishing to overhaul his or her marketing strategy and filled with assumptions of prior business knowledge, I was able to sort through whatever I did not fully understand to learn a lot about business, marketing, and the high tech industry. The book focuses on the development of a dominating large-scale product, but many of the principles that I learned in this book could be applied to not only a general awareness of business in the world around me, but also to a smaller-scope local technology-related business I plan to start soon.
The main thesis of the book is the existence of a gap between the early technological market, supported by visionary customers, and a mainstream market, supported by more pragmatic customers. It refutes a more common model that envisions mainstream market growth following immediately behind early market success. By analyzing the common characteristics of visionaries and pragmatics, the book explains why this gap in the growth of a high tech business occurs, what the perils are that are associated with this gap, and how to maneuver through it as quickly and as decisively as possible.
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The book first divides the market for high tech products into five psychographic profiles (a mix between psychological and demographic profiles.) These are
1) Innovators � Innovators are very tech-savvy individuals who want to be the first to own any new piece of technology. They are also referred to as Technology Enthusiasts.
) Early Adopters � Early adopters appreciate the benefits of technology and often want to incorporate new emerging technologies into their businesses. They want to use technology to get ahead in business. They are also referred to as Innovators.
) Early Majorities � Members of this group want to use modern technology only when it is a definite and low cost improvement to their current situation. They make up about 1/ of the entire market for high tech products. They are also referred to as Pragmatists.
4) Late Majorities � Members of this group generally dislike new technology and only buy new innovative products when everybody else is doing it. They also represent about 1/ of the entire market and are referred to as Conservatives.
5) Laggards � Members of this group tend to switch to a new technology only when forced to do so because they cannot be profitable without it, or because it is the industry standard and they are forced to abide. Laggards are also called Skeptics.
These five groups essentially make up what the author calls the Technology Adoption Life Cycle. This is a theory that technology, specifically innovative technology, sells in stages based on the psychographic profiles of its customers. The size of the market of each profile is represented on a bell-curve � with early adopters and late majorities within one standard deviation of the mean, early adopters and laggards within two standard deviations, and innovators within three standard deviations. The “chasm” is
the gaping hole seen in between the Early Adapters and the Early Majority. This bell curve is typically worked from left to right, meaning the first customers of a business are the Innovators, followed by the Early Adapters, and so on. The endorsement of the previous group in the life cycle is important to the sale to the next group. This works because each group in this model tends to give some esteem to the preceding group.
The first crack in the graph, between the Innovators and the Early Adapters, represents is a small obstacle in the marketing shift. This is a functionality issue. By this point the technology enthusiasts have already proclaimed the new technology as nifty and innovative, (hopefully), but it now must also have some apparent functionality in a process of some sort. It should allow the user to do something never before possible or at least much better than ever before.
The other noteworthy crack in the graph (excluding the chasm) is in between the early and late majority. This is mostly a competency issue. Both psychographic groups are very similar in that they will only buy a very holistic, trustworthy product that gives a complete solution to their problem, but the latter group will often be much less technologically literate than the former. The shift in the marketing of the product to the Late Majority should make sure to put high emphasis on ease of use and technical support.
The early majority does not follow the same pattern as the other groups by taking heed of endorsements from the preceding group. This is a result of some fundamental differences between the Early Adapters, or visionaries, and the Early Majorities, or pragmatists. These are best understood by their contrasting reactions to what we call discontinuous innovations. Discontinuous innovations are innovations that would require one to change his or her behavior, methods, or technology. Unlike continuous innovations, such as upgrades to existing products, discontinuous innovations cause a change in traditions, which the pragmatists see as unnecessary and reckless. Visionaries embrace discontinuous innovations because they see them as opportunities to get an edge in business or to obtain some other ambition. Since innovative high tech products are usually quite discontinuous, visionaries are a relatively easy group with which to make the first large wave of sales, and the discontinuity is a huge barrier when marketing to pragmatists.
There are four basic characteristics of visionaries that alienate pragmatists
1) Visionaries tend to have a lack of respect for the value of the colleagues’ experiences. Visionaries don’t want to be like their colleagues. The fact that the technology they wish to use is not well tested means that their competitors haven’t discovered it yet. Pragmatists see this as foolish because of the high respect they give their colleagues’ experiences.
) Visionaries tend to take greater interest in technology than they do in their industry. They are bored with the details of their own industry and want to discuss technology with people of different industries. The pragmatists would usually rather stay within the confines of their own industry.
) Visionaries often fail to recognize the importance of the existing product infrastructure. Pragmatists use the standards of others in order to be compatible, so that the industry can be productive.
4) Visionaries are generally disruptive. They don’t generally stick around long. If a project fails, they move on to the next one, leaving the pragmatists to clean up the mess.
In the second chapter, the book thoroughly discusses the definition of a market. A market is described as a set of actual or potential customers for a given set of products or services who have a common set of needs/wants, and who reference each other when making a buying decision. Special attention is given to the portion that I have bolded. The book states that the references of products that high tech markets share are an important part of the definition of a high tech market and later uses to build some important principles on. The next four paragraphs sum up a basic marketing strategy for the first four psychographic groups. (The author considers the fifth group to be too fruitless to cater to at any point in the high tech marketing process.)
Marketing to the first group, innovators, is rather straightforward. These technology enthusiasts want the truth, without gimmicks or tricks or fancy advertising campaigns. This is the single most important attribute of a product to the innovators. They also want highly technical support, want to be the first to have the product (beta versions, etc.), and feel that all technology should be inexpensive for the consumer.
Marketing to the second group, visionaries can yield very lucrative results. Visionaries are often very high-budget people who want to make a lot of money quickly by using high tech processes. They are willing to work with relatively unproven technology and take large risks. To market to visionaries, the single most important thing to remember is to pay attention to their dream. If one can understand the dreams of the visionaries, and successfully market to them, they may give the company its first “big break.”
The mainstream technology market (the third and fourth groups) is very similar to any other market, especially a business-to-business market, in that it is dominated by the early majority. The early majority contains the bulk of the money in the mainstream technology market. Because of its large size and of the fact that it does not draw as much attention to itself as the Early Adapter market, the Early Majority is harder to characterize. There are, however, some identifiable trends in this market. These Pragmatists like slow steady growth. They prioritize a reliable product that they can live with for a long time. It is hard to break into their lives because they tend to communicate only within their own industry. They will usually buy only from an established company in their industry, but it is very difficult for a high tech product to become established in their industry if they will not yet buy from the product manufacturer. In order to market to them, one must completely know their industry and converse very specifically about their problems, (particularly the problems one’s company thinks his or her product could fix.) The pragmatists are hard to win over by the high tech industry, but once a union is made, they tend to be very loyal to the relationship.
The Late Majority (the conservatives) are rarely developed as profitably as possible because the high tech industry does not understand their apathy toward high tech products. They strongly dislike discontinuous innovations because they make life harder. They are confused and frustrated by incompatibility. This created strong demand for bundled products that have already been thoroughly tested together and work. Their main criterion is that they are provided with the whole solution, with every element of that solution taken care of. This group is important to the long-term success of a business since they will gladly accept well-tested trailing-edge (older) products. This phyghographic group is a great means with which to bundle and ship out masses of older technology and leftovers that the other groups would not accept.
According to Moore, once the initial base of visionaries is nearly saturated, overhead will begin to overtake income. New companies will start to creep in and take the rest of the business away. The technology must be developed for the next level, (and quickly.) The second half of the book deals with the specific strategy of this period where the company will begin to cross the chasm. According to the book, the only way to enter into the new territory of the Early Majority with probable success is to attack the new territory on a niche basis. This means to first focus on a very specific goal in the mainstream market. All marketing should be specifically directed toward the business of one very small market or company, and utter domination should be the only satisfactory result. This is called the “big fish, little pond” approach to be a giant in a smaller industry. Once this is accomplished, the company will have a beachhead from which to attack new markets. A software based technology is much more suited to this kind of niche marketing than a hardware based technology because it is naturally vertical. Hardware, being naturally horizontal, or cross-niche, seems as if it should be best marketed to a broad market all at once. This is not, however, the case. New hardware would have to be many times greater, a total revolution, to have any chance of a mass implementation as the new de facto standard in several industries at once.
In order for a company to market to a specific niche, this niche must first be defined. Some high tech products are originally designed for a very small, specific niche; but most are not, and this niche must be sought. Since little quantitative data is available at this point with which to choose the target niche, the book suggests the use of what are called Target Customer Characterizations. These are hypothetical scenarios in which a specific industry, or market segment, has a specific problem that the new technology could solve. These are purely hypothetical uses, which the R&D and marketing teams create to characterize potential niches for the technology. The book suggests using the following Market Development Strategy Checklist to sort out the best Target Customer Characterizations
· Target customer � Is there a single, identifiable economic buyer for this offer?
· Compelling reason to buy � Is this a low risk, high gain opportunity for the buyer? Is it needed in the industry NOW?
· Whole Product � Does the solution completely fix the buyer’s compelling reason to buy?
· Competition � Is there another company that has already crossed the chasm and is occupying this space?
· Partners and Allies � Do we already have relationships with the other companies needed to help us fulfill the whole product?
· Distribution � Do we have a sales channel in place that can call on the target customer?
· Pricing � Is the price of the product consistent with the customer’s budget?
· Positioning � Is the company credible as a provider of products and services to the target niche?
· Next Target Customer � will this customer have a good “bowling pin effect” if sales are successful? (Will it facilitate entry into adjacent niches?)
The first four items on this list are pivotal. Failing any one of the first four items is grounds to dismiss the Target Customer Characterization as the beachhead niche. The last five are considered “nice-to-haves.” Once there is a suitable beachhead that fits a good portion of the criteria, marketing efforts should all be focused there.
A very important advocate in marketing to the target niche is competition. We discussed earlier that a very important factor in a purchase by a pragmatist is the credibility of the company from which they are purchasing. If they see that the company has valid competition, they are more likely to take the company seriously. If a company is truly entering directly from the chasm into unclaimed territory, there will not yet be clear, direct competition. Therefore there is need to find some competing forces that could be construed as such. There are two types of competition that can both be exploited by the marketing team if done so carefully.
The first type is the competition of whatever process or product the niche company is currently using to accomplish technological company wishes to fix, or in other words, the current process that is to be replaced with the new technology. Whatever this current solution is will show the amount of money currently in the budget to accomplish this task, and the amount of money that will likely be used to defray the high tech company.
The second type of competition (that may or may not exist) is the companies that provide similar high tech products to your own, even though they may not by trying to occupy the same niche that you are trying to occupy.
Positioning is the attributes and associations that a people have of a company. The book gives four primary stages by which a company can achieve the positioning it wants to have
1) Name it and frame it � Give it a good definition. (This is the minimum amount of positioning needed in order for a tech enthusiast to buy.)
) Who and what for � Who will use it, and for what purpose? (This is the minimum amount of positioning needed in order for a visionary to buy.)
) Competition and Differentiation � Place your company in a comparative context. (This is the minimum amount of positioning needed in order to sell to a pragmatist.)
4) Financials and Futures � Reassure them that you will continue to exist and invest in your own product. (This is the final extension of positioning needed in order to sell to a conservative.)
This positioning of a company is shaped by creating an undisputable claim of the undisputable market leadership of the company in a short two-sentence format, finding concrete evidence to support this claim, and communicating this claim to the right audience in the right sequence of the right versions of the message. When the competition tries to deflate the position of the company by poking holes in the claim, these should be responded to. This will give the target markets a specific idea of what the company is about that (hopefully) stays exactly the same through all communications and marketing. The claim should be laid out as follows
For (the target customers, beachhead segment only)
Who are dissatisfied with (the current market alternative, or the first type of competition mentioned earlier)
Our product is (the new product category)
That provides (key problem-solving ability).
Unlike (the product alternative, or the second type of competition mentioned earlier)
We have assembled (the key whole product features for the specific application).
Test your positioning by making sure you can explain your product in the time it takes to ride up an elevator. The author calls this the Elevator Test.
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