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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.
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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.
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