Tag: Crossing the Chasm

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Positioning: Defining The Battle (Crossing the Chasm Strategy Part 6)

The following is sixth in a series of posts about high tech marketing strategy based on Geoffrey Moore’s Crossing the Chasm.

In order to win the battle for customers and revenue, you must define the battle.

One essential component to building a market is positioning.

Positioning is the image or identity in the minds of their target market for its product, brand, or organization.

Despite common misconception (and Wikipedia’s own entry), positioning is not a process but rather the market position itself.

To succeed “we need to understand who or what the competition is, what their current relationship to our target customer consists of, and how we can best position ourselves to force them out of our target market segment.”

Create the competition

Define the competition in such a way that you are the leader.

It must be a competition big enough that there’s a market, but also targeted enough to win.

Geoffrey Moore might be the greatest marketing consultant with a PhD in Renaissance English but so what? That’s a small, irrelevant niche.

He could claim he’s the greatest marketing consultant of all time but – as much as Crossing the Chasm is great – that’s simply false and even worse not credible.

Our positioning should change depending on the stage of the technology adoption life cycle that we are targeting, according to the Competitive Positioning Compass.

Chasm3 vrs2

The early market is dominated by specialists interested in technology and product, rather than company or market issues.

The mainstream market is “dominated by generalists who are more interested in market leadership and company stability than the bits and bytes or speeds and feeds of particular products.”

Markets begin in a state of skepticism and evolve to a state of support. In the early market, the technology enthusiasts are the skeptical gatekeepers. In the mainstream, it’s the pragmatists. However, once they give their blessings, they buy in. Hence, you need to create a value proposition for each group that’s compelling.

In order to win the pragmatist than we must focus on market-centered concerns. Shift our marketing focus from product-centric values to market-centric ones. See the chart below:

Product-Centric Market-Centric
Fastest product Largest installed base
Easiest to use Most third party supporters
Elegant architecture De facto standard
Product price Cost of ownership
Unique functionality Quality of support

 

According to Moore, “it is the market-centric value system – supplemented (but not superceded) by the product-centric one – that must be the basis for the value profile of the target customers when crossing the chasm.

Next comes positioning.

There are four important principles to remember about positioning:

  1. Positioning is a noun, not a verb – it’s attribute, not a marketing process.
  2. Positioning is the single largest influence on the buying decision – it serves as buyers’ shorthand
  3. Positioning exists in people’s heads, not in your words – You must frame a position that actually exists in other people’s heads “and not in words that come straight from hot advertising copy.” Forget creative or buzz or fluff. If it’s inauthentic, it’s not correctly positioned.
  4. People are highly conservative about entertaining changes in positioning – the most effective positioning strategies demand the least amount of change.

How do we come up with a position? There are four important steps:

  1. Name it and frame it – reference what they seek and under what category it resides. Jargon is gobbledygook and has no place. Listen to Strunk and White, be clear and concise.This is the minimum needed to get a technology enthusiast to buy.
  2. Who for and what for – Customers will not buy something until they know who is going to use it and the purpose it serves. This is the minimum needed to get a visionary to buy.
  3. Competition and differentiation – Customers can’t know what to expect or what to pay until they can place it in a comparative context. This is the minimum needed to get a pragmatist to buy.
  4. Financials and futures – Customers can’t be completely secure in buying unless they know it comes from a vendor with straying power. This is the minimum needed to get a conservative to buy.

So, now what? I still don’t have an elevator statement, or a positioning statement.

What is a positioning statement? What is it made up of?

  1. The claim
  2. The evidence
  3. Communications
  4. Feedback and adjustment

A good position must pass the elevator test. It must be credible. Can you explain your product in the amount of time it takes to ride up in an elevator. If not, you will fail. You won’t get funded. Here’s why:

  1. Your claim can’t be transmitted by word-of-mouth.
  2. Your marketing communications will be all over the map.
  3. Your R&D will be all over the map. You will have no winning proposition, but many losing ones.
  4. You won’t be able to recruit partners and allies.
  5. You won’t get financing from anybody with experience  — if you can’t pass the elevator test, investors know that you lack a clear and investable marketing strategy.

Define your position based on the target segment you intend to dominate and the value proposition that you intend to dominate it with.

Positioning is dynamic. It’s not a one time event, but something that – like agile – should have continuous iterations.

Here’s a proven formula to win. Try it out:

  • For (target customers – beachhead segment only)
  • Who are dissatisfied with (the current market alternative)
  • Our product is a (new product category)
  • That provides (key problem solving capability)
  • Unlike (the product alternative – competitors and substitute goods)
  • We have assembled (key whole product features)
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Developing The Whole Product: Crossing the Chasm Strategy Part 5

The following is the fifth in a series of posts about high tech marketing strategy based on Crossing the Chasm.

 

One of the most important functions of marketing isn’t viral and it isn’t advertising and no, it’s not creative slogals. Rather it’s in the fundamental 4Ps taught in every Marketing 101 class: Product.

In order to win the marketplace, you must wire the marketplace. According to Moore, “For a given target customer and a given application, create a marketplace in which your product is the only reasonable buying proposition. That starts… with targeting markets that have a compelling reason to buy your product. The next step is ensuring that you have a monopoly over fulfilling the reason to buy.”

Moore brings Theodore Levitt’s model of product defined in The Marketing Imagination. 

  1. Generic Product – what’s shipped in the box
  2. Expected Product – what the consumer expects – the minimum configuration of products and services necessary to have any chance of achieving the buying objective
  3. Augmented Product – The fleshed out product achieving maximum chance of achieving the buying objectives – all the products and services that are related
  4. Potential product – The product’s room for growth

 

Pragmatists buy the whole product.

According to Moore, “Whole product planning is the centerpiece for developing a market domination strategy.” He continues, “Winning the whole product battle means winning the war.”

In the following model, there are only two categories: (1) what’s shipped (the generic product) and (2) what else the customers need in order to achieve their compelling reason to buy. Moore calls this the “marketing promise” made to win the sale. Failure to meet this promise in a B2B marketplace has serious consequence, this isn’t fluff or mumbo jumbo but a promise that must be delivered on.

This can, of course, be delivered with partners and additional vendors over a period of time. You don’t need to provide everything yourself but you do need to create the whole package.

 

 

whole product model

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Chasm Strategy: Point of Attack – Determing Your Target Customer (Part 4: Chasm Strategy)

The following is the forth part of a series of posts about high tech marketing strategy based on Crossing the Chasm by Geoffrey Moore.

Moore opens with a quote from Yogi Berra: “If you don’t know where you’re going, you probably aren’t going to get there.”

The fundamental principle to cross the chasm is to pick a specific niche market and focus all your resources on achieving the dominant position in that segment.

It sounds simple but most organizations fail.

Why?

According to Moore, it’s a high risk, low data decision.

Businesses love data. MBA-types love data. Engineers and computer programmers, left-brain thinkers, love data even more.

But we don’t have the data to make the right decision (an aside: this is why I think social scientists make great marketers: we are used to taking scientific approaches to imperfect data sets and make decisions based on imperfect data, but still more data driven than journalists or English majors).

According to Moore, you’re about to make “what may be the most important marketing decision with little or no useful hard information.” Since your target is discontinuous, past experience doesn’t provide us accurate positions as we’re changing the data points.

What now?

According to Moore, use “informed intuition rather than analytical reason.”

Informed intuition involves making conclusions based on data fragments, a few high-quality images, taken to be archetypes of a more complex reality. In other words, take memorable images and make conclusions.

Moore calls this “data characterizations” but many of us know this today as “personas.”  Personas, first developed in the early 1990s, provide:

  • a better understanding of customers
  • shorter design cycles
  • improved product qualityAccording to Wikipedia, “personas are fictional characters created to represent the different user types within a targeted demographic, attitude and/or behavior set that might use a site, brand or product in a similar way.”

    According to Moore, characterizations “represent characteristic market behaviors.”

    We’re not talking about target markets, but rather target customers. How do we develop this? With the Market Development Strategy Checklist.

    According to Moore, capture scenarios. This is not a formal survey – that takes too long. They’re imperfect and they incorporate our prejudices (one reason why a diverse team is important and there’s significant value in having people from different background on your team. When you’re doing global marketing, if you have people from your target country on your team, all the better).

    The checklist “consists of a set of issues around which go-to-market plans are built,” namely:

    • Target customer
    • Compelling reason to buy
    • Whole product
    • Partners and allies
    • Distribution
    • Pricing
    • Competition
    • Positioning
    • Next target customer
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Invasion – Choosing Your Target Market (Crossing the Chasm, Part 3)

The following is the third in a series about high tech market strategy based on Geofrey Moore’s Crossing the Chasm.

A big strategist failure that many organizations get into is picking the wrong market. Either, they don’t pick one at all and just see what sticks or else picks a market that is so wide (“everybody with a cell phone,” “mothers over 30,” “all people of a specific religious or ethnic group of a certain age,” “all Java programmers”) that it’s impossible to develop a market penetration strategy.

If your market is everybody, than your market is nobody.

This is particularly true when trying to cross the chasm from early adopters to majority. As we might remember from the Technology Adoption Life Cycle, the majority (even the early majority) need to see that your solution is suitable for their industry and is respected.

But, you’ve just started, and now you already have to win a market? That’s impossible, right? Wrong!

According to Crossing the Chasm, launch a targeted invasion – like the Allies did at Normandy – pick a specific niche that is small enough that you can win but large enough that it can show that you can handle the unique requirements of industry.

According to Moore take a D-Day approach, “Cross the chasm by targeting a very specific niche market where you can dominate from the outset, force your competitors out of that market niche, and than use it as a base for broader operations. Concentrate an overwhelming superior force on a highly focused target.”

This is what Apple did when starting out, winning the graphic design industry.

Moore continues:

Companies just starting out, as well as any marketing program operating with scare resources must operate in a tightly bound market to be competitive. Otherwise their “hot” marketing messages get diffused too early, the chain reaction of word-of-mouth communication dies out, and the sales force is back to selling “cold.” This is a classic chasm symptom, as the enterprise leaves behind the niche represented by the early market. It is usually interpreted as a letdown in the sales force or a cooling off in demand when, in fact, it is simply the consequence of trying to expand into too loosely bounded a market.

Yet many companies don’t follow this strategy because it’s not logical to them … to their peril. According to Moore, “Unfortunately, sound as this practice is, it is counterintuitive to the management of start-up enterprises, and thus, although widely acknowledged in theory, it is rarely put into practice.”

According to Moore, companies are failing because they are going after the short-term sale – and thus causing a long term crash. He writes that companies refuse to adopt a market-driven approach at the expense of a sales-driven approach. But “the consequences of being sales-driven during the chasm period are, to put it simply, fatal.” This is, unfortunately, especially common in bootstrapped startups and startups in Israel, lacking significant initial capitalization.

According to Moore this sales-oriented strategy fails because during the chasm period the goal must be to create a pragmatic customer base that’s reference able and can access other prospects and begin to build a word-of-mouth community. To capture this initial group, our initial group must achieve all of their objectives, including the whole product, to be discussed later. In order to completely satisfy this initial group, all emphasis must be made on providing the complete satisfaction of the initial group – which will then lead to more sales later.

Also, pragmatist companies want to buy from market leaders. By creating market leadership in a niche, you open the door for other companies in other markets and industries to recognize your leadership and give you a chance as well.

According to Moore, “If you do not commit fully to this goal, the odds are overwhelmingly against your ever arriving in the mainstream market.”

 

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Crossing the Chasm–The First Step–The New Strategic Principles (Chasm Strategy: Part 2)

The following is the second in a series of posts about high tech marketing strategy based on Crossing the Chasm.

It’s Strategy Stupid.

CB-Celebration-Still

This should be obvious, but it’s not.

We’re enamored with the next shiny thing to realize that the basic fundamentals are even more important than ever.

Marketing is about markets. Strategy.

Do you remember the four Ps? The core principals of marketing:

  • Product
  • Price
  • Promotion
  • Place

These principles guide all marketing activities, including crossing the chasm from early adopter to mainstream.

In particular, Geoffrey Moore lays out the following path (or, as he might prefer, warplan) to cross the chasm:

Niche: Defining your target market – it’s not everyone. In order to cross the chasm, Moore advocates a “D-Day strategy,” choosing a very specific niche market that can be won. Says Moore:

Companies just starting out, as well as any marketing program operating with scare resources must operate in a tightly bound market to be competitive. Otherwise their “hot” marketing messages get diffused too early, the chain reaction of word-of-mouth communication dies out, and the sales force is back to selling “cold.” This is a classic chasm symptom ….

Identify the market that has a compelling reason to buy your product.

Product – Product has always been a core marketing role, but it’s not as simple as one may think. When one is buying a car, he or she needs a wide range of services: tires, gas stations, accessories like car covers and floor mats, insurance, etc. Not just the car. This is what Moore calls the whole product concept. But, what do you do with a new product that’s discontinuous innovation? According to Moore, “For a given target customer and a given application, create a marketplace in which your product is the only reasonable buying proposition.”

Messaging and Positioning – Define the battle. Define what you are doing and what benefit it provides. Locate the product within a buying category that has some established credibility and position your product as the correct buying choice for this audience. These claims must be credible (no hype – egoism and false claims are not good marketing) and represent a large enough audience in order to be relevant.

Address the values and concerns of the pragmatists (not the visionaries). This is about creating a compelling value-proposition that answers the WHY (BUY) to the WHO (that we’ve already defined). If you’re everything to everybody than you’re really nobody.

It’s not about the features (big processor, nice architecture, cheap price, or supported technologies) but rather about the benefits — what these features provide.

According to Moore, “positioning is the single largest influence in the buying decision.”

Pricing and Place (Channel) – Launch the invasion. According to Moore, “the number-one corporate objective, when crossing the chasm, is to secure a channel into the mainstream market which the pragmatist customer will be comfortable.” Motivate the channel.

Moore than explores several channels, such as retail, direct-sale, OEMs, Internet retail (in this analysis, the book, revised in 2002, is quite outdated), integrators, and more. Analyzing whether the goal is fulfilling existing demand or creating new demand, choosing the appropriate channel depends on your goal.

Cheaper isn’t always better. Pricing strategy is also essential. Are you basing your pricing based on customer needs or your fixed costs? Moore provides guidelines for how to pick a price to fit your positioning. Hint: Cheaper isn’t always better but being priced significantly above your competitors can also be a failure. Price carries a message. You need a price that presents market leadership.

Making the right choices for these issues will get you past the chasm. But how do we do this?

The next several posts will explore the specific strategies and tactics that need to be put in place in order to successfully cross the chasm and delve further into the above strategies and tactics for startup and high-tech business success.

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Hi Tech Business Strategy: The Technology Adoption Life Cycle (Crossing the Chasm Part 1)

The following is the first of several posts about high tech business and marketing strategy, based on the bible of high tech marketing, Crossing the Chasm.

As my colleague Josh Cline likes to say, we frequently put the cart before the horse, developing a plan before engaging in a strategy.

We can’t implement a promotional plan before we understand the decision making cycle and just how technology is adopted. Selling to the uber-geek early adopter requires a different strategy than selling to your mother and selling to a small, disruptive startup is also going to require a different strategy than selling to a global behemoth.

We know that, right? But do we know how to map a promotional and strategic plan throughout the entire technology adoption lifecycle. In order to develop a plan, first we should understand how technology is adopted.

The technology adoption lifecycle is a model from the 1950s and 1960s (first used to understand how farmers purchased corn!) that intended to describe how new ideas and new technologies spread in different cultures. According to Wikipedia:

The technology adoption lifecycle model describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups. The process of adoption over time is typically illustrated as a classical normal distribution or “bell curve.” The model indicates that the first group of people to use a new product is called “innovators,” followed by “early adopters.” Next come the early and late majority, and the last group to eventually adopt a product are called “laggards.”

Technology Adoption Life Cycle

According to this model, the process  of technology adoption takes place at a steady pace, with the first group (making up about 2.5% of the population) being the innnovators, the next group (another 13.5%) are the early adoptors, and than a larger growth happens next – the 34% that are the early majority, immediately followed by another equal group, the late majority, followed by the laggards, the remaining 16%. While each group is not equal in size, according to this model, progression naturally flows from one group to the next. Thus, when developing business strategy, one simply pinpoints their location on the map and develops and adapts naturally as your company develops along the cycle.

So – why do so many startups fail and don’t gain majority support?

According to Geoffrey Moore, it’s because this model – first developed for agriculture – is flawed. According to Moore, companies get stuck in the chasm – the gap between innovators and early adoptors and the rest of us.

The model is wrong and so the strategy based on winning is also flawed.

Technology adoption doesn’t take place at a continuous place.

Rather, it gets stuck in the chasm before experiencing tornado-like rapid growth.

This is Moore’s revised model:

tech

According to Moore, there is a gap – a chasm – between the Early Market and the Mainstream Adoption. It’s not continuous and it’s possible to get stuck in this chasm.

In order to avoid getting stuck, Moore outlines a series of prescriptions and strategic requirements, including positioning, price, product, and place, in order to cross the chasm between the early market and market to the main street.

Yup, you must start with business strategy.

The next several posts will outline strategies that high tech companies, especially startups, can put in place in order to win their market and sell disruptive products to the mainstream.