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					Crossing the Chasm
Abhishek Nag Applications Engineer Duration : 60 minutes

About the book


Geoffrey A Moore, Regis Mc Kenna Inc., The Chasm Group Written in 1990, published in 1991 Originally, total sales target – 5000 Volume till 1997 – 175,000 Re-written in 1998, re-published in 1999 Assertion – high-tech products need radically different marketing strategies

    

What is a market?
   

A set of actual or potential customers

for a given set of products/services
who have a common set of needs/wants who reference each other

The Technology Adoption Life Cycle (Pre Chasm)

Psychographic profile – „Innovators‟
   

The “techies”, “geeks”, “propeller heads”, “nerds”… Appreciate technology for its own sake Make great critics Will forgive some design shortcomings if they see promise

  

Expect low prices
References for the early adopters Dos
– Technology should capture their imagination – No lies

Psychographic profile – „Early Adopters‟
      

The visionaries

Driven by a “dream”
Match emerging technology to strategic opportunity Not looking for improvements but for breakthroughs Look for “order of magnitude” ROIs Can be used as vehicles for gaining visibility Dos
– To be managed by a small top-level sales force

Psychographic profile – „The Early Majority‟
      

Pragmatists

Represent the bulk of market volume
Look for incremental, measurable, predictable progress Averse to risk taking. Want turnkey solutions Would mostly buy from the market leader Tend to communicate with more like themselves Require proven solutions which fit seamlessly into their current operations Once won, loyal for a long time



Psychographic profile – „The Late Majority‟
  

The conservatives Like to stick to something that works for them Will not adopt a technology unless they are left with no option Dos
– Offer “preassembled package” solution to a problem
– Understand their values, and work to serve them



Psychographic profile – „The Laggards‟
  

Skeptics

Do not participate in the market
Dos
– Neutralize their influence – Learn what they have to teach

How the model fits together

A high-tech parable

So, what went wrong in the TALC model?

Cracks in the model

Cracks in the model

Cracks in the model

The Chasm

Why is there a chasm?
    

Visionaries want revolution

Pragmatists want evolution
Visionaries want to set the standards Pragmatists want to adopt only de facto standards Visionaries are not considered to be good references by pragmatists Pragmatists only reference from fellow pragmatists Dance Night Syndrome

 

The D Day Analogy

The solution – Normandy!

Fighting ones way into the mainstream


Long term – take control of the mainstream market (takeover Europe) Currently dominated by the entrenched competitor (the Axis) Required to assemble an invasion force of other services and companies (the Allies) Transition from an early market base (England)… …to a strategic target market segment in the mainstream (Normandy)





 

Niche market vs. sales – driven strategy


Ensure that first customers in the mainstream get “whole product” Foment word of mouth Market leadership in a segment There is life outside a niche

  

Applications vs. platform (the challenge for NI)


Applications have a huge advantage
– Disruptive innovations championed by the end user



Platforms are spread over the current infrastructure
– Often require a re-engineering – The pragmatists nightmare



NI (Virtual Instrumentation – not just a platform, a paradigm
– Required, a re-engineering of thought – Immense FUD

So, it begins!

Target the point of attack
  

High risk, low data decision

Use informed intuition
Once identified, commit to it

Assemble the invasion force


The „Whole Product‟ concept
Potential Product

Augmented Product

Generic Product

Expected Product

Assemble the invasion force


The „Whole Product‟ concept
Potential Product

Augmented Product

Generic Product (DAQ) Expected Product (Datalogging S/W)

Assemble the invasion force


The „Whole Product‟ concept
Potential Product

Augmented Product (LabVIEW)

Generic Product (DAQ) Expected Product (Datalogging S/W)

Assemble the invasion force


The „Whole Product‟ concept

Potential Product (Systems Solutions, Alliance Members etc.)

Augmented Product (LabVIEW)

Generic Product (DAQ) Expected Product (Datalogging S/W)

Define the battle

Interest

Attitude



Product Centric
– Fastest product – Easiest to use – Elegant Architecture



Market Centric
– Largest installed base – Most third party suppliers – De facto standard

– Price
– Unique Functionality

– Cost of ownership
– Quality of support

Launch the invasion – distribution and pricing


Secure a channel with which the pragmatist is comfortable Options
– Direct sales – Two tier retail



– VARs (two tier)
– OEMs (two tier)


Direct sales – optimal for high-tech

Direct Sales
 

Optimized for creating demand

Consultative salesperson at its center
– Needs analysis for the client – Develops and proposes solutions with the aid of application and technology specialists

– Turns solutions into purchase orders


Expensive way to sell
– Cost of selling built into price – NI, perceived as a “high-cost” company

Direct Sales (preconditions)


Broadly comprehensive and reasonably competitive solution for the customer Volume and predictability of revenue for the vendor (NI) There is a price point below which this method of distribution cannot work

 

Retails Sales
    

Optimal when demand is to be met, not created

Non consultative selling
Structurally unsuited for crossing the chasm Should be used after chasm has been crossed E.g. Trident Tech Labs

VARs and OEMs


VARs
– Limited marketing capabilities – Good for customized high-tech solutions based on product



OEMs
– Leverage the direct sales force of an established player

– Requires creative selling

Summary


Fundamental flaw in prevailing high-tech marketing model The chasm is perilous, but, crossable Strategy – D Day type invasion
– Target the point of attack

 

– Assemble the invasion force
– Define the battle – Launch the invasion

Companion books


The Innovators Dilemma and The Innovators Solution Clayton M. Christensen The Chasm Companion : A Fieldbook to Crossing the Chasm and Inside the Tornado – Paul Wiefels



Answers

Thank you!


				
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posted:5/18/2009
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Description: A book presentation I had done way back in 2005.