Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers

by Geoffrey A. Moore

First there is a market . . . Made up of innovators and early adopters, it is an early market, flush with enthusiasm and vision and, often as not, funded by a potful of customer dollars earmarked for accomplishing some grand strategic goal. Then there is no market . . . This is the chasm period, during which the early market is still trying to digest its ambitious projects, and the mainstream market waits to see if anything good will come of them. Then there is. If all goes well, and the product and your company pass through the chasm period intact, then a mainstream market does emerge, made up of the early and the late majority. With them comes the real opportunity for wealth and growth. To reap the rewards of the mainstream market, your marketing strategy must successfully respond to all three of these stages. In each case, the key to success is to focus in on the dominant “adoption type” in the current phase of the market, learn to appreciate that segment’s psychographics, and then adjust your marketing strategy and tactics accordingly. Illustrating how to do that is the goal of this chapter.

defining marketing is not particularly difficult: It simply means taking actions to create, grow, maintain, or defend markets.

Marketing’s purpose, therefore, is to develop and shape something that is real, and not, as people sometimes want to believe, to create illusions. In other words, we are dealing with a discipline more akin to gardening or sculpting than, say, to spray painting or hypnotism.

Of course, talking this way about marketing merely throws the burden of definition onto market, which we will define, for the purposes of high tech, as: • a set of actual or potential customers • for a given set of products or services • who have a common set of needs or wants, and • who reference each other when making a buying decision.

market, which we will define, for the purposes of high tech, as: • a set of actual or potential customers • for a given set of products or services • who have a common set of needs or wants, and • ...

If two people buy the same product for the same reason but have no way they could reference each other, they are not part of the same market. That is, if I sell an oscilloscope for monitoring heartbeats to a doctor in Boston and the identical product for the same purpose to a doctor in Zaire, and these two doctors have no reasonable basis for communicating with each other, then I am dealing in two different markets. Similarly, if I sell an oscilloscope to a doctor in Boston and then go next door and sell the same product to an engineer working on a sonar device, I am also dealing in two different markets. In both cases, the reason we have separate markets is that the customers could not have referenced each other.

Marketing professionals insist on market segmentation because they know that no meaningful marketing program can be implemented across a set of customers who do not reference each other.

the innovators are better known as technology enthusiasts or just techies, whereas the early adopters are the visionaries. It is the latter group, the visionaries, who dominate the buying decisions in this market, but it is the technology enthusiasts who are first to realize the potential in the new product. High-tech marketing, therefore, begins with the techies.

Daedalus, inventing a labyrinth and then the wings whereby one could fly out of it (if one did not fly too close to the sun).

As a buying population, or as key influencers in corporate buying decisions, technology enthusiasts pose fewer requirements than any other group in the adoption profile—but you must not ignore the issues that are important to them.

they think all technology should be free or available at cost, and they have no use for “added-value” arguments.

Technology Enthusiasts

The key consequence here is, if it is their money, you have to make it available cheap, and if it is not, you have to make sure price is not their concern.

There they are empowered to buy one of almost anything, simply to explore its properties and examine its usefulness to the corporation. In smaller companies, which do not have such budgetary luxuries, the technology enthusiast may well be the “designated techie” in the IT (information technology) group or a member of a product design team who either will specify your product for inclusion into the overall system or supply it to the rest of the team as a technology aid or tool.

technology enthusiasts are easy to do business with, provided you 1) have the latest and greatest technology, and 2) don’t need to make much money.

That said, for the most part, these people are not powerful enough to dictate the buying decisions of others, nor do they represent a significant market in themselves. What they represent instead is a sounding board for initial product or service features and a test bed for introducing modifications to the product or service until it is thoroughly “debugged.”

Enthusiasts are like kindling: They help start the fire. They need to be cherished for that. The way to cherish them is to let them in on the secret, to let them play with the product and give you their feedback, and wherever appropriate, to implement the improvements they suggest and to let them know that you implemented them.

let us now turn to the next group in the Technology Adoption Life Cycle, the early adopters, or as they are often called in the high-tech industry, the visionaries.

Visionaries are that rare breed of people who have the insight to match up an emerging technology to a strategic opportunity, the temperament to translate that insight into a high-visibility, high-risk project, and the charisma to get the rest of their organization to buy into that project.

When John F. Kennedy launched the U.S. space program, he showed himself to be something we in America had not known for some time—a visionary president.

When Steve Jobs took the Xerox PARC user interface out of the laboratory and put it into a Macintosh personal computer “for the rest of us,” then drove the rest of the industry to accept this new approach in spite of itself, he showed himself to be a visionary to be reckoned with.

visionaries tend to be recent entrants to the executive ranks, highly motivated, and driven by a “dream.” The core of the dream is a business goal, not a technology goal, and it involves taking a quantum leap forward in how business is conducted in their industry or by their customers.

Understand their dream, and you will understand how t...

when Harry McMahon at Merrill Lynch committed to put ten thousand people on Salesforce.com’s cloud-based sales force automation system at a time when that vendor had no other large enterprise customer, he was acting as a visionary.

When Linda Dillman at Wal-Mart committed to install Symbol RFID systems to create real-time visibility into all the inventory in every Wal-Mart store, she was acting as a visionary.

When Reed Hastings, CEO of Netflix, committed to outsource the computing for his entire business to Amazon.com’s Elastic Compute ...

And when Ted McConnell at Procter & Gamble committed to direct all digital advertising worldwide via AudienceScience’s ad spend managemen...

Visionaries are not looking for an improvement; they are looking for a fundamental breakthrough.

The key point is that, in contrast with the technology enthusiast, a visionary focuses on value not from a system’s technology per se but rather from the strategic leap forward such technology can enable.

visionary focuses on value not from a system’s technology per se but rather from the strategic leap forward such technology can enable.

Visionaries drive the high-tech industry because they see the potential for an “order-of-magnitude” return on investment and willingl...

They know they are going outside the mainstream, and they accept that as part of the price you pay

Because they see such vast potential for the technology they have in mind, they are the least price-sensitive of any segment of the technology adoption profile.

As a buying group, visionaries are easy to sell but very hard to please. This is because they are buying a dream that, to some degree, will always be a dream. The “incarnation” of this dream will require the melding of numerous technologies, many of which will be immature or even nonexistent at the beginning of the project.

First, visionaries like a project orientation. They want to start out with a pilot project, which makes sense because they are “going where no man has gone before,” and you are going there with them.

The visionaries’ idea is to be able to stay very close to the development train to make sure it is going in the right direction and to be able to get off if they discover it is not going where they thought.

The winning strategy is built around the entrepreneur being able to “productize” the deliverables from each phase of the visionary project.

For example, a company might be developing a comprehensive object-oriented software toolkit, capable of building systems that could model the entire workings of a manufacturing plant, thereby creating an order-of-magnitude improvement in scheduling and processing efficiency.

The first deliverable of the toolkit might be a model of just one milling machine’s operations and its environment.

The visionary looks at that model as a milestone. But the vendor of that milling machine might look at the same model as a very desirable product extension and wan...

They see the future in terms of windows of opportunity, and they see those windows closing.

This plays into the classic weaknesses of entrepreneurs—lust after the big score and overconfidence in their ability to execute within any given time frame.

visionaries represent an opportunity early in a product’s life cycle to generate a burst of revenue and gain exceptional visibility.

The opportunity comes with a price tag—a highly demanding customer who will seek to influence your company’s priorities directly and a high-risk project that could end in disappointment for all.

Visionaries are the ones who give high-tech companies their first big break. It is hard to plan for them in marketing programs, but it is even harder to plan without them.

To get an early market started requires an entrepreneurial company with a breakthrough technology product that enables a new and compelling application, a technology enthusiast who can evaluate and appreciate the superiority of the product over current alternatives, and a well-heeled visionary who can foresee an order-of-magnitude improvement from implementing the new application.

winning at marketing more often than not means being the biggest fish in the pond. If we are very small, then we must search out a very small pond, a target market segment that fits our size. To qualify as a “real pond,” as we also noted before, its members must be aware of themselves as a group, that is, it must constitute a self-referencing market segment, so that when we establish a leadership position with some of its members, they will get the word out—quickly and economically—to the rest.

CA Technologies and one of the largest software companies in the world, was built up almost entirely on this principle of remarketing other companies’ often cast-off products.

You can succeed with the visionaries, and you can thereby get a reputation for being a high flyer with a hot product, but that is not ultimately where the dollars are. Instead, those funds are in the hands of more prudent souls, who do not want to be pioneers (“Pioneers are people with arrows in their backs”), who never volunteer to be an early test site (“Let somebody else debug your product”), and who have learned the hard way that the “leading edge” of technology is all too often the “bleeding edge.”

to market successfully to pragmatists, one does not have to be one—just understand their values and work to serve them. To look more closely into these values, if the goal of visionaries is to take a quantum leap forward, the goal of pragmatists is to make a percentage improvement—incremental, measurable, predictable progress.

The Fortune 2000 IT community, as a group, is led by people who are largely pragmatist in orientation. Business demands for increased productivity push them toward the front of the adoption life cycle, but natural prudence and budget restrictions keep them cautious. As individuals, pragmatists held back from using software-as-a-service applications until Salesforce.com made it safe to enter the water, held back from supporting bring-your-own-device policies until companies like MobileIron and Airwatch offered mobile device management solutions, and held back from investing in video until Cisco made telepresence a household word.