Chasm Marketing: The Revised Technology Adoption Life Cycle

I recently read a book written by Geoffrey Moore entitled, Crossing The Chasm and had the opportunity to listen to Geoffrey's speech delivered at the Software Marketing Perspectives conference in August of 1994. He presented innovative concepts that are critical for anyone involved in high-tech marketing to understand and use.

Moore says that attitudes toward the adoption of new technology become significant, from a marketer's standpoint, any time users are introduced to products that require them to change behavior or modify other products and services they rely upon. Products causing this pattern are referred to as discontinuous innovations. A high definition television, whose format is incompatible with current equipment, is an example of a discontinuous innovation. Continuous innovations, on the other hand, refer to the normal upgrading of products (i.e., a regular TV with a sharper image) that do not require any changes.

A basic marketing model was created based on discontinuous innovations, relating to psychographic buying habits, forming a bell curve with divisions roughly equivalent to where standard deviations would fall. The divisions included:

Technology Enthusiasts: to these individuals, technology is their life. Any new high technology product is good, and they will do anything they can to help the vendor get the product into the marketplace. The technology enthusiasts play the important role of 'gatekeeper' with the introduction of a new product, providing access to the next segment of buyers.

Early Adopters: these non-technology individuals find it very easy to imagine, understand and appreciate the benefits of new technologies, relating these benefits to their own concerns. They want to embrace a new paradigm, be there first and ride it to the top of the industry. They rely on their own intuition and vision when making buying decisions, sometimes referring to the technology enthusiasts, and are key to opening up high-tech market segments.

Pragmatists: these are the individuals whose methodology of solving problems and affairs is via practical means. They like to wait until the market is shaken out, giving them the ability to transact business with the clear market leader. They like de-facto standards, right choices and safe purchases. Because there are so many people in this segment (roughly 1/3 of the adoption life cycle), securing their business is critical to substantial growth and profits.

Conservatives: these individuals do what the pragmatists do, but essentially they do it later. They want it faster, cheaper and better. They want products that 'just work.'

Skeptics: these are the individuals that simply don't want anything to do with technology and are therefore not a worthy audience to pursue.

The above model depicts marketing success by winning one segment after another, with each captured segment acting as a reference base for the segment following. The basis of Moore's writings is that this particular model, which was popular throughout the '80s, does not work. A revised model shows gaps between all of the segments, with the largest and most difficult gap to overcome being between the early adopters and the pragmatists.

The fundamental problem lies in the transition from the early adopters to the pragmatists. Careful analysis of the psychological profile of these two groups shows that they do not have much in common. The early adopters like making decisions by themselves that do not depict the norm. The pragmatists, on the other hand, want to communicate with others and put together a good decision. Moore defines this large split between segments in his revised Technology Adoption Life Cycle as the 'Chasm.'

The key to crossing the chasm was derived by studying the fundamental differences between the last early adopter and the first pragmatist. While the early adopter would purchase a product that could deliver an 80% solution (seeing it as only 20% more to go), the pragmatist takes the position of buying when it is 100% complete (a 'whole product' as Moore puts it) and can be referenced as working within their industry. There are many pragmatists out there--all in different industries.

Moore's solution for making the transition is to focus on a 'beachhead' and deliver a total solution to one of those niche markets as quickly as possible. Identification of target customers and their compelling reason to buy are keys to fulfilling the 'whole product' concept, which will allow you to win over the pragmatists in a particular market segment.

Moore's new book entitled, Inside the Tornado (due to be released in October), defines the three different phases in the life cycle after the chasm:

The Bowling Alley: this is a period where your product is in the main stream but it is not yet perceived as a general purpose solution. The beachhead that helped you cross the chasm can be viewed as the 'head pin,' which can be leveraged to penetrate other closely related niche markets. The overall strategy is to target other niches that can be offered a 100% solution with only minor product modifications. This allows the movement from niche to niche in a controlled and predictable way, building your installed customer base.

Understanding where your product is positioned in the revised Technology Adoption Life Cycle will influence refinements or possibly an overhaul in your own agenda of marketing activities.

Targeted direct mail and interactive marketing can lay the foundation for establishing your initial beachhead. The power of databases, which offer segmentation by SIC code, employee size, and consumer demographics, can be harnessed to execute carefully planned attacks into related niche markets, building your base of reference customers whose critical mass will start your tornado.

Once the tornado hits, the ones with the developed distribution channels that deliver the ability to ship products are king. Direct mail and interactive marketing can work in 'channel unity' with the retail channel, offering users every possible method of making product purchase decisions.

As you head for main street, controlled testing of modified offers will facilitate the 'whole product + 1' strategy, identifying profitable secondary niche markets and penetrating them with complete vertical depth.

Due to their targetable and measurable nature, direct mail and interactive marketing activities play an important role in implementing the overall 'chasm-crossing' strategy. However, your first step is to see where you are currently positioned in the curve--you might be surprised and find yourself preparing for a tornado.

Tornado: the tornado starts when the pragmatists in the mainstream, who have seen the collective base of won 'niches,' then decide that the product is ready for them to purchase. And, like a stampede, the pragmatists come all at once, with a vortex of product demand. Moore's strategy during the tornado phase is to 'just ship.' It is during the tornado stage that market share is set. Companies with similar products will also enjoy a piece of the market, because no pragmatists want a market without competition. The tornado phase will define a clear market leader. Securing as many distribution channels and hitting as many different price points as possible are key to obtaining new customers in this phase. The current campaign from Microsoft for Windows 95 is a classic tornado phase. Their aggressive beta-testing program, which signed up a critical-mass of users, was their beachhead within the bowling alley phase.

Main Street: this phase is reached when the backlog of orders that occurred during the tornado phase has been fulfilled, creating market equilibrium. Distribution channels have a 'mass-market' appeal, as opposed to the 'value-added' positioning during the bowling alley phase. Moore references a 'whole product + 1' strategy, taking the product institutionalized during the tornado and adding one minor change to it to yield one compelling reason to make a purchase.

The 'plus one' strategy allows deep penetration into new niche markets, some of which will bud into other niches. Sometimes the bud into another niche can start a new tornado, an example being the laptop market as it split off from the desktop PC market.