Crossing the Chasm is a marketing book for high tech companies selling disruptive technology to mainstream users. It assumes the company has traction with early adopters and outlines a plan for companies to “Cross the Chasm”, which is the gap in time between early adopters and the first mainstream users (early majority) in the technology adoption life cycle. (illustrated below).
Early adopters are visionary and driven by a dream. The early majority are pragmatists, and don’t want disruptive change. They want references from other pragmatists, not from early adopters. They are risk averse, loyal and like to buy from the market leader.
How To Cross the Chasm
The plan to cross the chasm is to target and dominate a niche market and use it as a base for further expansion. It’s a key point that a market in this context consists of customers that reference each other. The tighter bound a market is the more word of mouth and opportunity for sales referrals. Those sales references and referrals are what make the strategy viable versus just going after the entire mainstream market at once.
Which niche market to target first?
The decision for the niche market to target can be a difficult one because there is limited information about new markets and you need to move quickly. The conclusion is you should gather as much information, but the decisions should be driven by informed intuition.
Whole Product
Whereas early adopters may accept a minimal viable product, mainstream users want a whole product. A whole product is the ancillary products and services to make the product compelling to buy. Examples might be training, support, or after market parts. Often mainstream customers choose inferior products that are superior from a whole product perspective.
Competition
If there is no competition, it may be too early to cross the chasm. You need competition to validate the market. Mainstream users want to buy from the market leader. Although you want general competition, you also want to position your product as the best solution for your niche. Having a name (like “middleware” or “cloud computing”) for the market also helps validate it.
Distribution and Pricing
Direct Sales is the recommended distribution method for crossing the chasm. It allows you the best opportunity to control your destiny. After the market is dominated, the most efficient long term distribution channel should be considered. Premium pricing is recommended to reinforce your position as the market leader in your niche and the price has to be enough money to get the sales guys excited about selling it.
One example of this niche strategy that stands out to me is Blackberry. They so dominated the corporate business market that a myth persists that it’s still their primary market although it long ago crossed into the mainstream consumer market. Do you know any more examples of a company that got it’s foothold in the mainstream market through a niche?
Early adopters are visionary and driven by a dream. The early majority are pragmatists, and don’t want disruptive change. They want references from other pragmatists, not from early adopters. They are risk averse, loyal and like to buy from the market leader.
How To Cross the Chasm
The plan to cross the chasm is to target and dominate a niche market and use it as a base for further expansion. It’s a key point that a market in this context consists of customers that reference each other. The tighter bound a market is the more word of mouth and opportunity for sales referrals. Those sales references and referrals are what make the strategy viable versus just going after the entire mainstream market at once.
Which niche market to target first?
The decision for the niche market to target can be a difficult one because there is limited information about new markets and you need to move quickly. The conclusion is you should gather as much information, but the decisions should be driven by informed intuition.
Whole Product
Whereas early adopters may accept a minimal viable product, mainstream users want a whole product. A whole product is the ancillary products and services to make the product compelling to buy. Examples might be training, support, or after market parts. Often mainstream customers choose inferior products that are superior from a whole product perspective.
Competition
If there is no competition, it may be too early to cross the chasm. You need competition to validate the market. Mainstream users want to buy from the market leader. Although you want general competition, you also want to position your product as the best solution for your niche. Having a name (like “middleware” or “cloud computing”) for the market also helps validate it.
Distribution and Pricing
Direct Sales is the recommended distribution method for crossing the chasm. It allows you the best opportunity to control your destiny. After the market is dominated, the most efficient long term distribution channel should be considered. Premium pricing is recommended to reinforce your position as the market leader in your niche and the price has to be enough money to get the sales guys excited about selling it.
One example of this niche strategy that stands out to me is Blackberry. They so dominated the corporate business market that a myth persists that it’s still their primary market although it long ago crossed into the mainstream consumer market. Do you know any more examples of a company that got it’s foothold in the mainstream market through a niche?
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