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

October 26th, 2011 No Comments

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

It’s Strategy Stupid.

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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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