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January 18 - December 11, 2019
the tendency of its members to reference each other when making buying decisions—is absolutely key to successful high-tech marketing.
When marketing consultants sell market segmentation studies, all they are actually doing is breaking out the natural market boundaries within an aggregate of current and potential sales.
No company can afford to pay for every marketing contact made. Every program must rely on some ongoing chain-reaction effects—what is usually called word of mouth.
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.
In sum, 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. For any innovation, there will always be a small class of these enthusiasts who will want to try it out just to see if it works.
Nor can managers find safety through continuing to service just the early market. To be sure, there are still sales opportunities here—other visionaries who can be sold to. But each one is going to have a unique dream, leading to unique demands for customization, which in turn will overtax an already burdened product development group.
Indeed, a truly predatory type of investor—sometimes referred to as a vulture capitalist—looks to use the chasm period of struggle and failure as a means to discredit the current management, thereby driving down the equity value in the company, so that in the next round of funding, he or she has an opportunity to secure dominant control of the company, install a new management team, and, worst case, become the owner of a major technology asset, dirt cheap.
The companies who have already established relationships with your target customer will resent your intrusion and do everything they can to shut you out.
The customers themselves will be suspicious of you as a new and untried player in their marketplace.
The efficiency of the marketing process, at this point, is a function of the “boundedness” of the market segment being addressed. The more tightly bound it is, the easier it is to create and introduce messages into it, and the faster these messages travel by word of mouth.
It has the ability to galvanize an entire enterprise by focusing it on a highly specific goal that is 1) readily achievable and 2) capable of being directly leveraged into long-term success.
Most companies fail to cross the chasm because, confronted with the immensity of opportunity represented by a mainstream market, they lose their focus, chasing every opportunity that presents itself, but finding themselves unable to deliver a salable proposition to any true pragmatist buyer.
Trying to cross the chasm without taking a niche market approach is like trying to light a fire without kindling.
Numerous studies have shown that in the high-tech buying process, word of mouth is the number-one source of information that buyers reference, both at the beginning of the sales cycle, to establish their “long lists,” and at the end, when they are paring down their short ones.
Winning over one or two customers in each of five or ten different segments—the consequence of taking a sales-driven approach—will create no word-of-mouth effect.
By contrast, winning four or five customers in one segment will create the desired effect.
This lack of word of mouth, in turn, makes selling the product that much harder, thereby adding to the cost and the unpredictability of sales.
Pragmatist customers want to buy from market leaders. Their motive is simple: Whole products grow up around the market-leading products and not around the others.
To be the leader in any given market, you need the largest market share—typically over 50 percent of the new sales at the beginning of a market, although it may end up to be as little as 30–35 percent later on.
So, take the sales you expect to generate over any given time period—say the next two years—double that number, and that’s the size of market you can expect to dominate. Actually, to be precise, that is the maximum size of market,
our number-one marketing goal is to achieve a pragmatist installed base that can be referenced—the only right strategy is to take a “big fish, small pond” approach.
number-one marketing goal is to achieve a pragmatist installed base that can be referenced—the only right strategy is to take a “big fish, small pond” approach.
our marketing strategy we want to establish a longer-term vision to guide our immediate tactical choices.
For example, when the Macintosh first crossed the chasm back in the 1980s, the target niche was the graphics arts departments in Fortune 500 companies. This was not a particularly large target market, but it was one that was responsible for a broken, mission-critical process—providing presentations for executives and marketing professionals.
software programs at the application layer are “naturally vertical” because they directly interface with end users, and end users organize themselves by geography, industry, and profession. This makes them readily adaptable to the beachhead focus needed to cross the chasm.
The niche wins—presuming the beachhead strategy is conducted correctly—by getting a state-of-the-art fix for its heretofore unsolvable problem. And the vendor wins because it gets certified by at least one segment of pragmatists that its offering is legitimately mainstream.
Big enough to matter • Small enough to win, and a • Good fit with your crown jewels.
