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08 - 20150922-2 Crossing The Chasm

This document discusses crossing the chasm between early adopters of technology and the mainstream market. It outlines Rogers' diffusion of innovation theory and identifies different types of adopters. Key points are managing early adopters to help open new markets, focusing on a niche to cross the chasm, and becoming the standard in that niche before expanding to new markets.

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Brent Shulman
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45 views

08 - 20150922-2 Crossing The Chasm

This document discusses crossing the chasm between early adopters of technology and the mainstream market. It outlines Rogers' diffusion of innovation theory and identifies different types of adopters. Key points are managing early adopters to help open new markets, focusing on a niche to cross the chasm, and becoming the standard in that niche before expanding to new markets.

Uploaded by

Brent Shulman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 11

EAS545: Engineering Entrepreneurship I

#finalexam

Crossing the Chasm


Geoffrey Moore
High-Tech Mainstream Marketing

Sources:
G.A. Moore, Crossing the Chasm and Inside the Tornado
T.V. Bonoma & B.P. Shapiro, Segmenting the Industrial Market

Upon introduction, products move along an


S-curve life cycle

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EAS545: Engineering Entrepreneurship I

% of potential adopters who make first purchase

Rogers Diffusion of Innovation emphasizes


the revenue opportunity of the majority

34%

2.5%

September 22, 2015

34%

13.5%

16%

EAS545

E. Rogers, Diffusion of Innovations3

Word of mouth marketing wins

the number one source of information


referenced by buyers in high-tech markets.
(remember the Bass Diffusion Model and higher value of q, the coefficient of imitation)

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EAS545: Engineering Entrepreneurship I

High Tech Market

Potential customers for a given product


Having a common set of needs or wants
Who reference each other when deciding
or do they?

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Mainstream Pragmatists will not


reference Early Market Visionaries
due to dramatic differences.

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The Technology Adoption Life Cycle exhibits


a significant Chasm

G.A.Moore, Crossing the Chasm

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Psychographics can help us define and


describe a segments behavior

Psychology + Demographics
Each group represents a unique psychographic profile.
Explains why one group responds differently from
another.

Drivers of demand differ


across groups.

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1. Innovators focus on technology

Technology enthusiasts.
Provide objective feedback.
Will recognize competitive
technical advantage.
Endorsement reassures
others that it works.

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2. Early Adopters focus on competitive


advantage

Visionaries:View new technology as strategic


opportunity
Willing to take risk.
The least price sensitive of all
groups.
Easy to sell, but hard to please.
Project oriented: youre a
team member.

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EAS545: Engineering Entrepreneurship I

Managing the Early Adopter is critical to


early success

Often you dont find them, they find you.

Seed the technical press

Understand and market to the dream.

Give them confidence you can do it.


Manage expectations.

Do not commit to the unachievable


Divide project into phases with a product for each.

Frequent contact with


VP-level executives

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Early Adopters provide startup technology


companies with important early benefits

Key to opening a market segment.


High visibility

Serve as a high profile reference.


Attract the business press.
Attract additional customers.

Hidden source of venture capital.


Early burst of revenue.

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EAS545: Engineering Entrepreneurship I

3. Early Majority provide significant revenue


opportunity with less tolerance for risk

Pragmatists.

Risk managers.

Accepting of new technology if practical.


Require well established references.
Intolerant of bugs & glitches.

Want the industry


standard from the
industry leader.

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3. Early Majority provide significant revenue


opportunity with less tolerance for risk

Reasonably price sensitive.


Care who they are buying from.

Buyers have stable, career commitments.


Want to minimize vendors (points of control).

3rd party aftermarket developers follow the market


leader.

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EAS545: Engineering Entrepreneurship I

% of potential adopters who make first purchase

The Chasm separates the Early


from the Mainstream Market

The Early
Market

The Mainstream
Market

G.A.Moore, Crossing the Chasm

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Early Majority provides significant benefits


to technology companies

Across the chasm: key to profits and growth in mainstream


market.

Hard to win over, but loyal once won.

Self-referencing to 1/3 of market.


Accepted as leaders by the conservative late majority.
Vested interest in your success.
Adverse to switching away.
Creates barriers to entry for competitors.

Standardization benefits

Increased sales and lower costs of


sales
Increased leverage on incremental
R&D
Service is simplified

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EAS545: Engineering Entrepreneurship I

Crossing the Chasm requires focus

Window of opportunity

Be the first to market ... with the RIGHT product.


Be the market leader (the industry standard).

Segment! Segment! Segment!

Isolate the psychographics esp. self-referencing.


Leverage word-of-mouth communication.
Focus on achieving dominance in a NICHE market segment (a
small pond).

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Remember our criteria for segmentation

Homogeneous psychographics
Identifiable
Accessible
Significant size

Tightly-bound and self-referencing

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To Cross the Chasm, secure a beachhead

Focus on the target.

Be conversant in their business.


Industry-specific trade shows, magazines, etc.
Market industry-specific applications.
Form partnerships with established channels.
Establish trust/reputation for quality & service.

Become the obvious supplier of choice.

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Once across the Chasm, stay there

Create a reference-able customer base

Satisfy their buying objectives


Deliver a whole product

Then go pond hopping.

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EAS545: Engineering Entrepreneurship I

4. Late Majority provide significant


opportunity for profits

Conservatives buy well-established technology from wellestablished companies

Theyll wait for it

Follow the early majority.


Highly profitable 1/3 of market.

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Keys to the Chasm

Majority of revenue comes from the Early and Late Majority


Word of mouth is the number one source of information in
high technology industry; however,
Mainstream pragmatists (Majority and later) may not listen to
visionaries (Innovators and Early Adopters)
The key is to
segment
the market and
attack

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