Invasion – Choosing Your Target Market (Crossing the Chasm, Part 3)

October 31st, 2011 No Comments

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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