Technology and products continue on the path described in Geoffrey Moore’s book Crossing the chasm, the unsuccessful ones disappearing forever. This article compiles key insights that can help conquer the market because Moore’s strategy continues to work even after 30 years.
Who needs to read this:
For startup owners who have yet to conquer the mass market.
A must for those with an innovative and complex product.
To choose the right strategy right away, not to make mistakes by targeting the wrong audience, and not to be left in the forgotten product dump.
You don’t want to be like Google+, Segway, and Facebook Phone (did you know about it?!).
- A mass-market strategy for high-tech products is different than one for products that don’t change user habits.
- There is a difference between the early market for startups, in which the product is bought by innovators looking for technical gizmos, and the big market of pragmatists, who buy only proven products.
- To earn the trust of pragmatists, make sure they learn about the product from proven channels. Give them a “holistic product,” not a minimally viable version (MVP).
- The only way to bridge the gap is to capture a narrow niche first and then expand.
- To gain a foothold in one segment, define your positioning and build a specific customer portrait. Don’t try to sell to everyone at once.
Theory and practice apply to any type of product, whether it is an invention (VR glasses), a technology (neural networks), a program (Figma), or a SaaS service (Slack).
There are two types of innovation:
- Interruptive innovations are those that require us to change habits.
- Continuous innovations are those that modernize products but do not change the usual way of doing things.
The chasm theory is suitable for discontinuous innovations. Such products struggle with the inertia of potential customers: you have to adjust your marketing strategy to convince the majority to change their way of life.
The chasm theory is suitable for discontinuous innovations. It’s hard for these products to fight the inertia of potential customers: you have to tweak your marketing strategy to convince the majority to change their lifestyles.
Product Life Cycle
It takes time for society to embrace technology.
People perceive technology differently: some begin to use it earlier, some later. Because of this, a new technology comes to the market gradually, moving from one type of consumer to another.
This process is described by the technology acceptance life-cycle diagram.
The diagram shows the transition from the earliest consumer groups to the latest. Notice how the graph looks like a bell: two-thirds of the market is made up of early- and late-majority consumers. This is where the most profits are concentrated.
Innovators: they’re geeks. The search for technological innovations is like a hobby for them. These are the people who stand in line for new iPhones. They buy cool stuff because it’s cool, even if it’s laggy.
Early adopters (visionaries): not as enthusiastic as innovators. They don’t know the ins and outs, but they can appreciate a new technology for its benefits. Rely on their vision and intuition.
Early majority: This is an important part of the market. They love new technology, too, but they’re much more pragmatic. Before they buy a new gadget or subscription, they’ll wait for someone else to test it, read reviews, and then decide it’s right for them. To gain their trust, make sure you have sources that are authoritative for them to talk about your technology. Note that they occupy about a third of the market. To penetrate this segment means to ensure a stable profit and growth.
Late Majority: If the early majority can handle a technological product on their own, the late majority wait for it to become the industry standard. They buy from large companies and only if they are sure. This group also makes up about a third of the market.
Laggards: They don’t want to know anything about new technologies. They learn with a crunch and only if there is no other way out. Make up a small part of the market, so just ignore it.
Summary: A new product or technology consistently captures a new audience. The mass market is an early and late majority.
But there are gaps between the categories. Each segment has different values, and the channels from which they learn about new products and technologies are not the same. So it’s not easy to move into a new market segment.
The gap between the early adopters and the early majority is so big that it’s a chasm. And in that chasm die those products that use the same strategy for everyone.
The differences in motivation between them are too great, and marketing strategies for them must be different.
Innovators and early adopters love technology for technology’s sake. They will buy a breakthrough product just because it’s cool and needs to be tested. It has to be a revolution.
For them, the opinion of others is not that important, and the product itself doesn’t have to be perfect. So it’s enough to give out a minimum viable version of the product for cheap, and word of mouth will spread the word. Put the information where they live, and then they’ll find you on their own.
The early majority are pragmatists. They do not care about technological breakthroughs, the main thing – is how the product solves their problem and increases productivity. Pragmatists can’t be bought with freebies, the product must be perfectly fine-tuned. Product information must come from trusted sources.
Companies that don’t recognize these differences and sell equally to both risk dropping the product into an abyss from which it will never climb again, and share the fate of Amazon’s Fire Phone.
Sure, you can stay in the early markets, but there’s a lot less profit-focused there. Everyone wants to get into the bell-shaped part of the chart. That’s where almost all the money is.
How to cross the chasm?
Invading a major market is an act of aggression. Other companies are already entrenched there, and you are trying to force them out and take their bread. Potential customers know nothing about you and do not welcome you. If you mindlessly chase all the profits and go there as it is, you run the risk of failing.
There is a great temptation for salespeople to try to sell to everyone at once. But that’s a path to not selling to anyone.
- To bridge the chasm, follow one simple strategy. Fight not the crowd, but a small part of it.
- Pick a narrow niche for yourself. The segment whose problems your product best solves. Focus on that niche, win it over, and then you can spread throughout the market through word of mouth.
- Sell a “whole product.” That is a product that fully satisfies the purchase goal: not a beta version, but the final one with all possible infrastructure. In this case, the idea of capturing a narrow niche plays into your hands, because it’s easy to create a product tailored to this segment, and at the same time work out the infrastructure and additional components, rather than customize it for everyone.
- Become the market leader in your chosen niche. Pragmatists buy only the best and proven products that they have learned about from reputable sources.
- Prioritize marketing over sales. Selling, by all means, is a fatal strategy. You’ll ruin everything that way.
How to choose the right niche?
Divide the market into several segments, analyze each segment (in terms of size, distribution channels, etc.), and choose one.
For innovative products, it is difficult to predict how the market will accept them. Statistics are not helpful in this case: it is reassuring to look at percentages, but usually, the situation is unfamiliar, and numbers won’t help you.
Here’s a more effective approach: form a verbal portrait of your potential customer. If you don’t know exactly who your target audience is, come up with as many of these patterns as you can – you’ll soon see patterns.
Think through several scenarios of product use that describe the user’s experience before and after working with the product.
- Then evaluate the market development strategy plan. Key parameters:
- The target consumer (this should be real people);
- the deciding factor of purchase (will your solution benefit enough to overcome consumer inertia?). This is the most important parameter.
- Finished solution (can you provide your target customer with a finished solution?);
- competition (is someone doing the same thing as you?)
You have about three months to go to market with a complete product – this is the optimal time frame to dominate the market in a year. Any delay plays against you. You have to cross the chasm quickly, or you will be lost.
Positioning and fighting your competitors
Once you’ve decided on a strategy, find out who your competitors are. If the technology is new and unknown, you don’t have any.
Paradoxically, competitors need to be found.
Pragmatists are afraid of change. They focus on rankings and checklists when choosing, so you must fit in between familiar brands.
A competitor may not even be a product, but another way of doing things. For example, Evernote is a way to take notes online rather than on paper post-its.
Positioning yourself about your competitors gives you context. It’s just a matter of being the best.
How do you identify your competitors?
For positioning, you only need two:
- A market alternative is a company that your customers have been buying from for years. It solves the same problem as you, but your breakthrough technology does it better.
- The product alternative is a company that offers a similar innovation and positions itself as a technology leader. You need it to show that the market is already doing something similar to yours and it’s time to embrace the innovation. Appreciate their technology, but emphasize that your product is for a different segment.
Now you can prescribe positioning. Here is the optimal formula. Just fill in the blanks:
For ______ (our segment)
Who aren’t happy with______ (market alternative)
Our product is______ (new product category)
It provides______ (the key quality that solves the problem)
Unlike______ (product alternative)
We’ve put together______ (key qualities of a holistic product designed for your specific application)
And the final step.
Decide on distribution channels and pricing policy.
A few tips:
- Determine who your potential customers work for, who they listen to, who they trust, and where they buy from. Try to get there.
- Set the price that a market leader would set for their product. Pragmatists buy from leaders.
Now you are fully equipped.