Crossing the Chasm:

Marketing and Selling High-Tech Products to Mainstream Customer

Geoffrey A. Moore

Introduction

If Bill Gates Can Be a Billionaire

This chapter starts off by saying that “If Bill Gates can be a billionaire...” then anyone can be a billionaire with the correct product and the correct marketing approach. High technology fields can be, despite numerous disappointments, still be a great get-rich opportunity. With all this money to be made with high technology products, how do some entrepreneurs become unsuccessful in their technology ventures? There are so many different types of products that are so similar yet so different. “How can we say that Oracle is better than Sybase, Microsoft Word is better than Word Perfect, Cisco routers better than Bay Networks, or that Pentium is better than Power PC?” (Moore, Page 4). Many of times the less successful product is often arguably superior, yet that product lacks the marketing approach of the more successful product and then they end up missing much of the market share. There are no clear cut reasons why ventures succeed and fail, but the high-tech inventiveness and marketing expertise are crucial for the U.S. strategy for global competitiveness. The more clear the marketing strategy of a corporation, then the better they can disperse their name and product to consumers.

“Our current model for how to develop a high-tech market is almost-but not quite-right” (Page 5). The title of this book is “Crossing the Chasm.” The chasm refers to the gap between the early market and the main stream market. The early market dominated by a few visionary customers to a main stream market dominated by a large block of customers who are pragmatists in orientation. Crossing this gap or chasm must be a primary focus of any long-term high-tech marketing plan.

This transition is extremely difficult and many companies struggle to bridge the gap and push their product from the early market to the main-stream market. This book reviews the different principles that a company must take in to consideration when trying to get their product to the main stream market so that they can increase their revenue. As they go to cross the chasm, if you will, there are numerous predators that would prey upon the product. There is urgency for everyone in the company, not just the sales and marketing staff, to focus on the efforts to bring this product to the main stream. Marketing has brought almost every product, which can be viewed as a fad (something with no known market value or purpose, and generate enthusiasm from the consumers.

Chapter 1

High-Tech Marketing Illusions

A key concept when developing a product from start to finish is to understand the market. The technology adoption life cycle is a model for understanding the acceptance of new products. The technology adoption life cycle is a bell curve that has become central to the entire sector’s approach to marketing. “Technology is absorbed into any given community in stages corresponding to the psychological and social profiles of various segments within the community” (Page 13). The life cycle is made up of different groups that represent a unique psychographic profile. From left to right on the bell curve the groups are innovators, early adaptors, early majority, late majority, and laggards.

The innovators pursue the new technology products and there are a very few in the market. Technology is a central part of their life and they even pursue the innovations before a formal marketing program has been launched. They often purchase technology to explore its components and features. It is key to win them over in the initial campaign, because their endorsement will help to expand the market to the other groups.

Early adaptors buy into new product concepts very early in the life cycle, but they are not technologists. They are not innovators but they still find it easy to imagine, understand, and appreciate the potential benefits of a new high-tech product. They rely on their own intuition and vision rather than others well-established references.

The early majority shares some of the early adopter’s ability to relate to technology but they are driven by a strong sense of practicality. They understand that technology is a fad but they are willing to adopt that technology after a strong reference. There are so many in this segment (1/3 of the whole adoption life cycle) and they invest in the technology after they wait to see how the technology fairs for other adopters.

The late majority, also about 1/3 of the whole adoption life cycle, shares the same concern for technology as the early majority, but they wait till the technology becomes a standard and then they tend to buy after they see much support for it.

Finally, there are the laggards. These people simply don’t want anything to do with new technology, for either personal or economic reason. They only pursue a technology when they ultimately have to. They absorb it when the technology is buried so deep inside another product.

There are two different breaks in the life cycle. The first is the between the innovators and the early adaptors and the next is between the early majority and the late majority. The break in the life cycle is between the innovators and the early adopters. The new hot technology product can not be readily translated into a benefit for the majority of the market. They don’t know what it is used for. This can be seen in the neural networking software and video conferencing. It seems like a good idea and the technology seems to be there but it becomes a business process problem.

The other crack in the life cycle is between the early majority and the late majority. At this stage the product is well developed and has been adapted by the mainstream but the key issue is to get it to the late majority. The early majority is willing to accept and invest in the technology but majority is not. They can not adopt and learn the new technology. This is the case with programmable VCRs, high-end officer copy systems, and telephones with three-way conferencing, call forwarding, or even call transferring.

These two cracks are not the most important and crucial transition is between the early adaptors and the early majority. Getting it from the technology experts or niche market to the mainstream is vital for the success of the product. This is most dangerous because is often goes unrecognized. The early adopters want a product that drastically changes from the old to the new ways and want to be the first to implement the change. The early majority want to buy a productivity improvement for existing operations. They don’t want a technology to overthrow the way they do business but only improve it.

Chapter 2

High-Tech Marketing Enlightenment

Moore gives precise definitions of the different technology markets, including technology enthusiasts, early adopters/visionaries, early majority, late majority, and laggards. Moore defines technology enthusiasts as individuals who enjoy using and playing with new technology for its intrinsic value. They are, for the most part, not looking to make a profit. Visionaries are risk takers that believe in technology and maintain ties with enthusiasts to keep abreast of the technological landscape. They are vigilant for any opportunities that technology may provide to give competitive advantage, and they are highly tolerant of the problems that tend to dog new technologies. The Early Majority or, The Pragmatists represent the most lucrative part of the life cycle. They are not afraid to use new technologies, but they don’t have high risk tolerance and they want proven solutions. Pragmatists are far less tolerant of unsupported standards, bugs, incompatibilities and migration issues than visionaries. The Late Majority represents an extended market for technology when it is no longer cutting edge. The late majority only adopts technology to avoid falling too far behind other firms in the industry, and they want packaged, bug free solutions. The late majority always chooses industry standard solutions. The Laggards avoid technology whenever they can, and they will dissuade others from new technologies whenever they can. Laggards only use technology when it is forced on them.

Moore then explains why a chasm exists between the visionaries and the early majority, specifically that visionaries are seen as mavericks, more interested in technology that their industry and that alienates the pragmatists. Thus Moore sets the table for the fourth chapter in which he presents his method for crossing the chasm.

Chapter 3

The D-Day Analogy

To cross the chasm, Moore advocates using a “beachhead” strategy. The company should target the industry they want to sell their technology to, then define a small, self-referencing segment that can be dominated, and focus all sales and marketing efforts on entrenching in that single niche single market. Moore is adamant that the segment must be self-referencing, and must be small enough that the seller can dominate it.

As an aside, Moore himself points out that Microsoft has never followed the chasm strategy, but he argues that since Microsoft was given a de-facto standard in DOS, they have had the early majority at their mercy. While Microsoft is a technology company, it is not really an innovator anyway.

Moore devotes the rest of the chapter to 4 successful chasm crossings Clarify, Documentum, PalmPilot, and NEON. Clarify produced the Clear Support application which aided the collection of information during technical support calls. They selected large network hardware vendors who were experiencing serious problems dealing with the high volume of technical support that their products required. Clear support solved the problem and used the success to move into new markets. Similar examples for the other three companies follow. It’s interesting to not that none of the 4 companies Moore used as examples are still in business, but that does not rebut his method, as all the vendors’ products he used as examples were highly successful in the mainstream market.

Chapter 4

Target the Point of Attack

In such a new market, it is very hard to perform traditional marketing strategies. You must remember that you will be the first one with a new technology or a new product. Nobody has ever done research, thus you have nothing to base your findings on. It is truly impossible to predict how your research will turn out. Sure you can take your guesses and hope they come out that way. However, you must anticipate that your results might lean you in a different direction. Such new markets can lead to many unrealistic estimates, even from the top firms. All it takes is one firm to start the trend. Such numbers are useless for “crossing the chasm”. One of the keys to getting into a new market is to have informed intuition. Yes you can take some chances, but you must be able to back up your guesses with at least some examples and estimations.

Chapter 5

Assemble the Invasion Force

Most of the major problems with businesses trying to find a market for their new product or service happen in the beginning. Most fail because of impatience. You see, it becomes a struggle to find out how to promote a new product. There is nothing to look at so you can copy as a blueprint. No insurance. This is high risk, low data. Value triads are important because they give you something to shoot for. The three components of the value triad are the product, the target customer, and the target application. You must market to a market segment around a must have value proposition. Make it important for people to have it. Don’t forget the end users. They are the most important. But don’t forget to make every vender successful. Look at the product from their point of view.

Chapter 6

Define the Battle

This chapter starts off with the author saying that we are on the eve of the invasion. We are at the day before launching the product. As of right now he has covered issues such as point of attack, target market, and reasons for buying the product. In addition, we have now recruited the necessary partners and allies to make this work. However, the pieces of the puzzle haven’t fully come together just yet. There are more factors to consider. The factor that is covered in this chapter deals with competition. Moore believes that in order to be successful, there has to be competition.

The reasoning behind Moore’s idea of having competition is based on the mindset of the customers. It is well known that customers like to have competition. They like to compare products to get the best deal for their money. The trick here is to make your products stand out over the rest