Natural Entrepreneur: How to Cross the Market Chasm

this is a layer

Marketing

How to Cross the Market Chasm

Define a beachhead and conquer it before moving on

In a previous article we described the challenge faced by emerging technology products where the first few customers are visionary early adopters, and very different from more lucrative mainstream customers. In the book "Crossing the Chasm" (first published in 1991) high-tech marketing guru Geoffrey Moore offers a prescription for successfully traversing the chasm between these two types of customers as your company grows.

This issue sponsored by:

To cross the chasm, Moore advocates that a company focus on a single market, a beachhead, win domination over this small specific market, and then use it as a springboard to win adjacent extended markets. (See the D-Day analogy, below)

One prerequisite for crossing the chasm is to address the business user rather than the IT folks. Moore describes this as Applications vs. Platforms.

"For actual chasm crossing, applications have a huge advantage. That is because disruptive innovations are more likely to be championed by end users than by the technology professionals that operate the current infrastructure. Applications are what an end user sees…

And if the application fixes a broken, mission-critical business process, they can insist on its deployment in spite of an IT department's reluctance… To accelerate the adoption of platforms, then, vendors must clothe them in applications clothing. That is, they must tie them directly to an application in order to gain the end-user sponsorship necessary to secure a beachhead."

Briefly, the way to cross the chasm requires the following steps (Moore spends an entire chapter on each of these):

Target the point of attack:

"Target a specific market niche as your point of attack and focus all your resources on achieving the dominant leadership position in that segment." This includes identifying the primary market identifiers: target customer, compelling reason to buy, whole product (see below), and competition; and secondary market factors: partners and allies, distribution, pricing, positioning, next target customer.

Assemble an invasion force:

Create the whole product, "by thinking through your customer's problems-- and solutions-- in their entirety". This includes the core product plus everything else you need to achieve your compelling reason to buy, including additional software, hardware, systems integration, installation and debugging, training and support, standards and procedures, etc. These may be provided in-house or by using partners and alliances.

Define the battle:

That is, create the competition, define positioning, develop the elevator pitch, build this into all your company communications.

"1. Focus the competition within the market segment established by your must-have value proposition…

2. Create the competition around what, for a pragmatist buyer, represents a reasonable and reasonably comprehensive set of alternative ways of achieving this value proposition. Do not tamper with this set artificially excluding a reasonable competitor…

3. Focus your communications by reducing your fundamental competitive claim to a two-sentence formula…in every piece of company communications… always be sure to reinforce the second sentence of this claim, the one that identifies your primary competition and how you are differentiated from it…

4. Demonstrate the validity of your competitive claim… [to conclude you are] the indisputable leader"

Launch the invasion:

Establish distribution and pricing. "The direct sales force is optimized for creating demand. At its center is the consultative salesperson who works with the client in needs analysis and then, supported by a team of application and technology specialists, develops and proposes solutions, which, after additional interaction with the customer, and a competitive procurement, turn into purchase orders. This is a very expensive way to sell…Direct sales is the optimal channel for high tech. It is also the best channel for crossing the chasm."

The key to moving beyond one’s initial target niche is, to select strategic target market segments to begin with. That is, target a segment that, by virtue of its other connections, creates an entry point into a larger segment.

The D-Day Analogy -- Fighting Your Way into the Mainstream

The perils of the chasm make this a life-or-death situation for you. You must win entry to the mainstream, despite whatever resistance is posed. So, if we are going to be warlike, we might as well be so explicitly. For guidance… [we look at] the Allied invasion of Normandy on D Day, June 6, 1944…

Our long-term goal is to enter and take control of a mainstream market (Eisenhower’s Europe) that is currently dominated by an entrenched competitor (the Axis). For our product to wrest the mainstream market from this competitor, we must assemble an invasion force comprising other products and companies (the Allies). By way of entry into this market, our immediate goal is to transition from an early market base (England) to a strategic target market segment in the mainstream (the beaches of Normandy). Separating us from our goal is the chasm (the English Channel). We are going to cross that chasm as fast as we can with an invasion force focused directly and exclusively on the point of attack (D Day). Once we force the competitor out of our targeted niche markets (secure the beachhead), then we will move out to take over additional market segments (districts of France) on the way toward overall market domination (liberation of Europe)…

The key to the Normandy advantage, what allows the fledgling enterprise to win over pragmatist customers in advance of broader market acceptance, is focusing an overabundance of support into a confined market niche. By simplifying the initial challenge, the enterprise can effectively develop a solid base of references, collateral, and internal procedures and documentation by virtue of a restricted set of market variables. The efficiency of the marketing process, at this point, is a function of the “boundedness” of the market segment being addressed. The more tightly bound it is, the easier it is to create and introduce messages into it, and the faster these messages travel by word of mouth.

Geoffrey Moore, “Crossing the Chasm (second edition)”, pg 66

-- by Jonathan Linowes

Geoffrey A. Moore, Crossing the Chasm, Marketing and Selling High-Tech Products to Mainstream Customer (second edition), HarperCollins Publishers, New York, 1999

Upcoming Events

Feb 21 (8-9:30a): NH Forum on the Future, NHHTC, CR Sparks, Bedford, NH

March 1 (6:30-8:30p): Women's Business Center and MicroCredit-NH Networking Event, Bank of America, Portsmouth, NH

March 6 (10a-noon): Growth Capital Resources in New Hampshire, City of Nashua, Office of Economic Development, Daniel Webster College, Nashua, NH

March 8: (12pm -1pm) Break the Rules and Close More Sales, Amoskeag Business Incubator, Manchester, NH

March 16: Peak Pitch (pitch your plan to invstors on the chairlift), Mt. Sunapee, NH ($)

March 22: Breaking Trends in Web Develoment, UVCIA, Hanover, NH ($)

View Ads