CROSSING THE CHASM About The Authors High Tech Marketing M

Geoffrey A.Moore is an author, speaker, and advisor who splits his consulting time between start-up
Marketing & selling disruptive products to
mainstream customers
- A Book by Geoffrey A.Moore
Graphic Summarization by Tu Bui - Conversion.vn
Learning from High-tech
Industry
Companies need to learn how to
handle disruptive change.
High-tech industries happen to
have substantial experience
managing disruptive change, and
companies from other industries
can benefit from this experience.
Because of its popularity, this inn
companies in the Mohr Davidow and Wildcat Venture Partners portfolios and established high-tech adoption lifecycle has been cited an
many marketers as a way to capture
enterprises, most recently including Salesforce, Microsoft, Autodesk, F5Networks, Gainsight, Google,
share for high-tech products. How
and Splunk.
author argued that reality is usually
Moore?s life?s work has focused on the market dynamics surrounding disruptive innovations. His first difficult and the transition betwee
book, Crossing the Chasm, focuses on the challenges start-up companies face transitioning from early customer segment is usually not a
adopting to mainstream customers. It has sold more than a million copies, and its third edition has process. The strategies apply for th
been revised such that the majority of its examples and case studies reference companies come to won't work on another. There are cra
the segments and if businesses
prominence from the past decade. Also known as well-maneuvered, they will be usually
biggest crack of all, which is referred
CHASM.
First, there is a mountain Innovation Adoption Lif
Then there is no mountain by Everett M. "Ev" Roger
2004) which is also rega
Then there is. High-tech Marketing M
~ Zen proverb

How to market a high tech product

Innovation
Within these broad categories, there is a spectrum
of innovation, some requiring significant adaptation
How to cope with on our part, some not requiring much of us and
some falling between the extremes
disruptive changes

Disruptive / Sustaining /
Discontinuous Continuous
Innovation entails
Innovation gets us to
steady improvements
change our behavior or
and but don?t make us
the way we use products
change our behavior

Normal to 3D TV HD to UHD TV
INNOVATORS
seek out novel technology;
it?s like a hobby for them.
There aren?t many
Innovators, and because
they?ll try new things, they
Gasoline to electric car Newer car model
are important. As other
people see them use new
things, they would feel
braver themselves about
trying them as well.
Feature phone to
VHS to DVD
smartphone
EARLY
ADOPTERS
are quick to understand
the benefits of new
technology. Unlike the
Innovators, they don?t love
technology for its own
sake. This group relies on
its own intuition and vision
to make buying decisions.
EARLY MAJORITY LATE MAJORITY LAGGA
are practical minded wait for something to are those cons
consumers. If a product become well established. for persona
seems useful, this group They don?t feel confident in economic reas
will try it. The Early their ability to deal with looking to b
Majority are cautious of technology and often buy techno
fads. from big companies

Early Market: 16% Mainstream Market: 68% Usually not wo

Successful Market Penetration (50%)

 Bodies in the Chasm Danger of the Chasm The Chasm's Many Names
keting Model Some famous example of well-known failures in the chasm: Segway & A company in the chasm is often endangered The chasm is actually a phenomenon
arity, this innovation Iridium satellite networks. by negative cash flow. At the same time, that usually associated with many
een cited and used by competitors have now had the time to other names such as the trough of
y to capture the market Segway hopes to become universal transportation devices for everyone observe the new product and respond with disillusionment (in Gartner Hype
oducts. However, the but then its encounter a deadly enemy: stairs. The segway even with its knockoffs. Venture funding may be drying up Cycle) or The Struggle (by Andreesen
y is usually much more amazing gyroscopic control cannot handle stairs very well. just about now. Some investors, known as Horowitz). Overall it is a struggling
sition between each vulture capitalists, prey on companies stuck period in which the business /
usually not a smooth Iridium was invested 6 billions by Motorola to change how in the chasm. They do their best to discredit company find itself in a situation where
apply for this segment communications work. Its showstopper was buildings. The phone do not the companies and drive their price down, things have stopped working for them
here are cracks between work well inside building plus its big size compare to traditional phones then swoop in and buy them for cheaper than and has to find a solution before the
businesses are not prevent it from going mainstream. the value of their assets. reaching the end of the line.
ll be usually stuck in the Segway Satellite Phone
h is referred to as THE
SM.
Classic examples What is inside the chasm Also known as...
ption Lifecycle - In reality
v" Rogers (1931 -
also regarded as
arketing Model
Disillusion: Cracks & The Chasm
1st crack (Innovators and Early Adopters):
arises when there?s new technology that
motivates the Innovators, but not the Early
Markets, because there aren?t any practical
applications for the technology. THE CHASM
is the huge gap that lies between the early
2nd crack (Early Majority and Late Majority): adopters and the early majority, when a
occurs because members of the former group product is very disruptive and requires
are willing to learn a little about their technology And most notably behavioral changes. The chasm is where
in order to use it, while the latter won?t put energy many disruptive products meet their ends
into learning. The technology has to be intuitive after a long and struggling period of
and easy to use for the latter group. development without able to tap into the
mainstream customers
3rd crack (Late Majority and Laggards):
occurs because the latter do not have any desire
to engage or purchase any new technology. That
is why this group often considered as not worth
pursuing.

A Look At The Markets

The book went into great length to explain the
characteristics of customers in each market and their
differences as well as how business can navigate and
LAGGARDS maneuver their strategies suitable for each market. I
e those consumers who, took the initatives of breaking these information into the
for personal and/or familiar 5W+1H model so that viewers can easier
onomic reasons, are not understand the author's points.
looking to buy new
technology

5W1H

y not worth pursuing

EARLY MARKETS MAINSTREAM MARKETS MATURITY
MARKET &
SEGMENTS INNOVATOR EARLY ADOPTERS EARLY MAJORITY LATE MAJORITY LAGGARDS
 A High-Tech Parable
A simple story of an imagining tech
company to illustrate what would happen
when it fail to overcome the chasm.

The Hopeful Good Start

In the first year of selling a product? most of it alpha and beta release? the emerging high-tech company expands its
customer list to include some technology enthusiast innovators and one or two visionary early adopters. Everyone is
pleased, and at the first annual Christmas party, held on the company premises, plastic glasses and potluck canapés are
held high.
Gartner Hype Cycle
In the second year? the first year of true product? the company wins over several more visionary early adopters, including
a handful of truly major deals. Revenue meets plan, and everyone is convinced it is time to ramp up? especially the venture
capitalists who note that next year?s plan calls for a 300 percent increase in revenue. (What could justify such a number?
The technology adoption profile, of course! For are we not just at that point in the profile where the slope is increasing at its
fastest point? We don?t want to lose market share at this critical juncture to some competitor. Strike while the iron is hot!)
This year the company Christmas party is held at a fine hotel, the glasses are crystal, the wine vintage, and the theme, a la
Dickens, is ?Great Expectations.?
Early Market The Chasm Mainstream Market

And Then The Struggle Begins

At the beginning of the third year, a major sales force expansion is undertaken, impressive sales collateral and advertising
are underwritten, district offices are opened, and customer support is strengthened. Halfway through the year, however,
sales revenues are disappointing. A few more companies have come on board, but only after a prolonged sales struggle
and significant compromise on price. The numbers of sales overall is far fewer than expected, and growth in expenses is
vastly outdistancing growth in income. In the meantime, R&D is badly bogged down with several special projects committed
to in the early contracts with the original customers. Meetings are held. The salespeople complain that there are great holes
in the product line and that what is available today is overpriced, full of bugs, and not what the customer wants. The
engineers claim they have met spec and schedule for every major release, at which point the customer support staff merely
groan. Executive managers lament that the sales force doesn?t call high enough in the prospect organization, lacks the
ability to communicate the vision, and simply isn?t aggressive enough. Nothing is resolved, and, off line, political enclaves
begin to form.

Comes The Final Fate

Third quarter revenues results are in? and they are absolutely dismal. It is time to whip the slaves. The board and the
venture capitalist start in on the founders and the president, who in turn put the screws to the vice president of sales, who
passes it on to the troops in the trenches. Turnover follows. The vice-president of marketing is fired. It?s time to bring in ?real
management.? More financing is required, with horrendous dilution for the initial cadre of investors? especially the founders
and the key technical staff. One or more founders object but are shunted aside. Six months pass. Real management
doesn?t do any better. Key defections occur. Time to bring in consultants. More turnover. What we really need now,
investors decide, is a turnaround artist. Layoffs followed by more turnover. And so it goes. When the screen fades to the
credits, yet another venture rides off to join the twilight companies of Silicon Valley? enterprises on life support, not truly
alive and yet, due in part to the vagaries of venture capital accounting, unable to choose death with dignity.

What Happened?
What the company staff interpreted as a ramp in sales leading smoothly ?up the curve? was in fact an initial blip? what we
Mapping it out will be calling early market? and not the first indications of an emerging mainstream market. The company failed because
its managers were unable to recognize that there is something fundamentally different between a sale to an early adopter
and a sale to the early majority, even when the company name on the check reads the same.

Why The Chasm Exist?

The chasm was formed mainly because of the fundamental differences
between the visionaries and the pragmatists. Four fundamental
characteristics of visionaries that alienate pragmatists:
1. Lack of respect for colleagues' experiences
2. Taking greater interest in technology than in their industry

First Principles
Before starting, the author want to establish
some ground rules. In this case, an actionable
working definition of the word marketing.
Actionable means a reasonable basis for taking
actions that will predictably and positively affect
company revenue.
Therefore, marketing definition in this book
means taking actions to create, grow, maintain or
defend market. Marketing's purpose is to
develope and shape something that is real, and
not as some people want to believe, to create
illusions.
Market definition
High Tech Market
It is also very important to define clearly what is
"market" in high tech:
- A set of actual or potential customers
- For a given set of products or services
- Who have a common set of needs or wants
- Who can reference each other when making
a purchase or buying decision
The last part is something that many people do
not understand clearly. Example: if I sell an
oscilloscope to a doctor in Boston and another
same products with the same purpose to a
doctor in Zaire and they have no reasonable
basis for contacting each other then it is 2
different markets. Similarly, if I sell an
oscilloscope to a doctor in Boston and go next
door and sell the same thing to an engineer for
sonar device then it is also 2 different markets.
So in this case, there is no oscilloscope market
but it would be better classified as category. An
approach for this would be to break down
category into different market segments (doctors
& engineers).
Why segmentation?
Market Segmentation
Segmentation is insisted by many marketing
professionals because they know that no
meaningful marketing program can be carried out
on a set of customers who do not reference each
other. There is simply not enough ad dollars for
the companies to pay for every marketing contact
made. Marketing usually have to rely on some
on-going chain reaction effects which is usually
known as word of mouth. The more
self-referencing the market and the more tightly
bound its communication channels, the greater
opportunities for such effects.
Is being sales-driven bad?
Economic buyer: the client who
ultimately pays for the product
End user: the one who will use the
product
Technical buyer: the party who will
integrate / install the product
Depends on the products, these
roles can merge into one or two. For
example, if end user is children then
the economic buyer would be the
parent. If end user is married adult
then the economic buyer maybe their
other spouse and technical buyer is
also the user.
Informed Intuition
Analytical and rational means are usually used
extensively for both preparation and in review of central
moment but when the moment is here, the actual
decisions are made intuitively. Unlike numberical
analysis which relies on processing a statistically
significant sample of data in order to gain a certain
level of confidence, Informed intuition involves
conclusions based on isolating a few high quality
images - archetypes of a broader and more complex
reality. These can also be called characterization -
represents characteristic market behaviors.
What you should do
Mistake
Biggest mistake one can make during this
situation is turn to numberic information as
source of refuge or reassurance. Statistics,
even when published by prestigious firms, are
like sausages, the more you know how it is
made, the less apetite you have for it. All of
these included many assumption from different
market analysts, even though experienced, still
biased. Each assumption can massively affect
your projection.
And Yes, Size Matters
The opportunity should be big enough to
matter to you, but small enough that they?re
being ignored by larger competitors.
If you find the target segment too big,
sub-segment it. The best is based special
interest groups within the general community. If
not, geography can be a safe sub-segment as
well.
If the target segment is too small to generate
half of next year's sales for the new product,
Successful Market Penetration (50%)
Target Customer Characterization Scence or situation: focus on the m
situation. What is the user about to att
Many people often focus on target market or target
Desire outcome: what is the user try
segment instead on a target customer. Market as
accomplish? Why is it important?
categories are impersonal and abstract, we need
something with more clues about how to proceed in
presence of real people with complex motives. Target generate archetypes
customer characterization is the process for making up
archetypes. The idea is to create as many archetypes
as possible, one for each type of customers and
application for the product. As these start to
accumulate, they begin to start to resemble each other
and you have the same formulas with minor tweaks, Old way
and in fact, you have outlined 8 to 10 alternatives. Innov
Once we have a list of possible target customer profiles
we can then, apply a set of techniques to reduce these
"data" into a prioritized list of desirable target market Attempted approach: without New approac
segment opportunities. the new product, how does the product, how d
user go about the task? about t
Enabling fac
Interfering factors: what goes
about the new
wrong? How and why does it go
allows the use
wrong?
and be p
Based on
Economic consequences:
Economic re
what is the impact of the user
the costs avo
failing to accomplish the task
gai
productively.
TARGET THE POINT OF ATTACK
Trying to cross the chasm
High Risk, Low Data Decision
Crossing the chasm is high risk and because our
without taking a niche market
product is disruptive with a niche market so there is
almost always a low data situation.
approach is like trying to light
a fire without kindling
MARKET DEVELOPMENT CHECKLIST
Factor Importance Factor Description Showstopper / Challenge
Is there a single, identifiable economic If not, sale forces waste valuable time
buyer for this offer, readily accessible to the evangelizing groups of people trying to
Target Customer sales channel we intend to use and generate a sponsor. Sales cycle drag on
sufficiently well-funded to pay the price for forever and project can be shut down at
Primary - all the whole product? any moment.
scenarios are to
be rated against Are the economic consequences sufficient If pragmatists can live with the problem for
these 4 factors. to make any reasonable economic buyer another year, they will. But they will want to
Compelling Reason to Buy Low score in any anxious to fix the problem? Are the pains learn more. Your salespeople will be invited
of these factors big enough for the pragmatists to make the back and again but without any purchase
eliminate the decision? order.
scenario from Can our company with the help of partners
future & allies field a complete solution to the The time is limited and we need to cross
consideration as
target customer's compelling reason to buy now, we need a problem we can solve, any
Whole Product beachhead
within the next 3 months so that we can be thread left hanging could be the one that
segment. Nice in the market in the next 6 months and trips us up.
market maybe nice capture the market in 12 months?
to purchase after
chasm crossing. If some other company already got there
Has this problem already been addressed
before you, all the market dynamics that
by another company such that they have
Competition you are seeking to make work in your favor
crossed the chasm ahead of us and
are already working in its favor. Don't go
occupied the space we would be targeting?
there.
Do we have a sales funnel in place that
If not, usually the company hire a
can call on the target customer and fulfill
Distribution well-connected individual in the target

us on the moment
about to attempt?
the user trying to
it important?
Innovation
ew approach: with the new
duct, how does the user go
about the task?
nabling factors: what is it
bout the new approach that
ows the user to get unstuck
and be productive.
conomic reward: what are
e costs avoided or benefits
gained.
MARKET &
SEGMENTS INNOVATOR
"TECHIES"
They are nerds who like technology for
its own sake. They often overlook
WHO ARE THEY technical issues, bugs of the new
technology in order to be on the cutting
edge.
They demand honesty because you
cannot fool them in term of technical
technology?? ?game changers?? ?and
knowledge. They want highly competent
they are willing to pay for that technology.
WHAT THEY WANT tech support so that they can feedback
and ask meaningful questions. They
They have high expectations and they
want to be the first to get the new
product and they want it cheap.
Innovators are a useful market group,
WHY ARE THEY because they?ll give you early feedbacks
and can ignite enthusiasm and attention
IMPORTANT for your product.
WHERE TO FIND They are enthusiasts and influencers in
their own circle. Publishers, bloggers,
THEM social KOLs or critics.
Your product should have clear business
application if you want to approach the
You can and should approach them even
when your product is in beta or testing.
customer group that you must secure by
WHEN TO They can provide you feedbacks to
improve it better. Because visionaries
reputation and quality of service that you
APPROACH THEM look up to techies so this group is your
ticket to cross into the next customer
provide in this market would be the keys
group.
Because they are taking risk buying /
please. You need a direct sales force that
using a new products with potentially
understands the visionaries. You need to
HOW TO many issues so free / giveaway products
or discount work well. Direct marketing is
be flexible and accommodate their goals.
APPROACH particularly effective with this group as
well. It is good to receive feedbacks and
(show them that you) make changes.
How to Start a Fire
Starting a fire requires some bunched-up paper, some
kindling and some logs. Crossing the chasm is just like
starting a fire. The bunched-up paper is your marketing
budget and the log is your major market opportunities.
No matter how much paper you put under that log, if
you do not have any target market segment to act as
kindling, sooner or later the paper will all be used up, Similar to
and the log still won't be burning.
Starting a fire is not rocket science but rather a matter
of discipline. And this is where high tech management
falls short. Most high tech leaders when come down to
making marketing choices, will continue to shy away
from making niche market commitments. it is failure of
will rather than a lack of understanding.
EARLY ADOPTERS
"VISIONARIES"
Early Adopters are visionaries. They are
highly motivated and have the insight to
match an emerging technology to a
strategic opportunity. They are dreamers
and the dream is usually a business
goal, not a technology one.
They are looking for breakthrough
get disappointed easily.
These customers tend to be the ones
who see the possibilities in new
products, and so marketing should start
with them.
Visionaries are attracted by technology
and its application, so they usually turn to
the techies for guidance and inquiries. If
you are engaged with techies, they will
find you.
visionaries. This is an important
delivering on your promises. The
to launch you across the chasm and
penetrate the first mainstream market
group, the pragmatists.
They are easy to sell to but hard to
Understand what their dreams are to
market to them. And you must keep the
enthusiasm going without making
promises you can?t keep.
- Have partnerships / alliances with other
- Earn a reputation for quality and service
Crossing The Chasm
To cross the chasm, Moore advocates that a company
focus on a single market, a beachhead, win domination
over a small specific market and use it as a
springboard to adjacent extended markets to win.
Successful chasm crossing
EARLY MAJORITY
"PRAGMATISTS"
The Early Majority folks are pragmatists.
They?re risk averse; they don?t want beta
anything. They prefer products have
been proven in their market.
They care about the company they are
buying from, the quality of the product
they are buying, the infrastructure of
supporting products and system
interfaces, and the reliability of the
service they are going to get. Their goal
is usually incremental gains for their
business, not to disrupt.
The real money is to be made, naturally
enough, by selling to the Majority.
Pragmatists are hard to win over, but
once you?ve done so, they?re loyal.
Pragamatists tend to be 'vertically'
oriented, meaning that they
communicate more with others like
themselves within their own industry than
do technology enthusiasts and early
adopters.
They are the group that you should
attempt to approach when you have a
good portfolio and reputation in their
industry. The product that you bring to
them should be a whole product that can
solve all or majority of the customer pain
points.
To market to pragmatists you must be
patient. Usually, you have to:
- Be conversant with the issues that
dominate their particular business
- Show up at the industry-specific
conferences and trade shows
- Be mentioned in industry specific
magazines or news sources
- Have industry related portfolios
- Develop industry specific applications
vendors who serve their industry
LATE MAJORITY LAGGARDS
"CONSERVATIVES" "SKEPTICS"
They could be classified as conservative
when it comes to change.
Skeptics have been burned by past
promises of what new technology can do
This group doesn?t like disruptive
innovation. They are believers in
(but failed). They feel disappointed and
they hold onto these failed promises like
tradition, not progress. If their technology
old grudges.
works for them they see no reason to
change it.
Although they resist new technology, the
Late Majority will adapt eventually, in
order to keep in step with the rest of the
world. What they want is usually how The Laggards are skeptical about new
new technology can add value to their technology and go so far as to block it.
current infrastructure without changing
it.
Late Majority consist of about one-third
There is a tendency to try to neutralize
of potential customers for technology.
their pull, but we actually could benefit
Tech companies aren?t generally
sympathetic to these consumers, and
from paying attention to them. By
listening to them, however, we gain some
consequently, their market potential is
often neglected. But there is a great deal
credibility with everyone. We should
always be careful about what we
of benefit to be gained by understanding
promise.
the Late Majority.
They are similar to pragmatists, just that
they are much more conservative about
They actively block new technology thus
no way to effectively reach them
changes and technology overall.
They are usually at the end of the
purchase cycle and not profitable unless
you have a thoroughly whole product to a
target end user market's needs and
developed a low overhead distribution
They are the lost market share that haunt
tech companies for their previous failures
channel to get this package to them
effectively. In this context, "as-a-service"
on delivering the promises
over the web creates a magnificent
opportunity to make progress with
conservatives.
They buy at the end of a cycle, and they
like to buy cheap. Unfortunately, because
they do buy cheap, they sometimes buy
junk, and this reinforces their negative They are usually deem by tech
opinion of technology. companies as not worth pursuing. What
most tech companies would do is try to
Since they want proven technology, neutralize their negative influence.
there?s opportunity to be had in bundling
existing components together and selling
them at discount.
Dyn
The early market requi
and compelling applic
and appreciate the su
and a visionary who c
imp
 between the visionaries and the pragmatists. Four fundamental
characteristics of visionaries that alienate pragmatists:
1. Lack of respect for colleagues' experiences
2. Taking greater interest in technology than in their industry
3. Failing to recognize the importance of existing product infrastructure
4. Overall disruptiveness

e Visionaries Pragmatists
Elaborate
Back into the Chasm
Visionaries often see themselves as
smarter than their peers in competive
Pragmatists greatly value the experience
companies. They want to leverage the
of their colleagues in other companies.
latest technology to gain competitive
When they buy they expect extensive
Respect advantage and thus do not expect
references, and they want good number
industry reference. It would actually turn
to come from companies in their own
In-market Affinities them off if such reference base exist
industry segment.
In some cases the basic affinities of the market keep groups relatively because that indicates that they are too
closer to each other. For example, visionaries keep in touch and respect late for this technology already.
the view of techies because they need the latter to serve as a reality Visionaries take a greater interest in They tend to invest convention in industry
check on technical feasibility of their vision and to help evaluate specific technology than in their industry. They specific forum, discussing
products. As a result, techies can speak to at least some of the Interest understand and appreciate what high tech industry-specific issues. Sweeping
visionaries' concern. companies and high tech products are changes and global advantages may take
trying to do. for fine speeches, but not much else.
e Similarly, conservatives look to pragmatists to help lead them in
technology purchases. Both groups see themselves as members of a Visionaries fail to acknowledge the
Pragmatists expect all these things.
specific industry first, business people second and purchaser of importance of existing product
When they see visionaries forging their
technology third. Pragmatists have more confidence in technology as a infrastructure. They are building system
Infrastructure from the ground up, set new standards.
own path with little or no thought of
potential benefit and in their bility to make sound technology purchases. connecting with the mainstream practices
Conservatives are more nervous about both. They are willing to go They expect no support groups, no third
in their industry, they shudder.
along, up to a point, with pragmatists they respect but still unnerved by party, no procedures available.
pragmatists overall self-confidence. So the reference has partial value in
s Visionaries have little self-awareness Pragmatists see visionaries as people
transitioning between adoption segments.
about the impact of their disruptiveness. who come in and soak up all the budget
Successful or not visionaries do not plan with their pet projects. Pragmatists are
Disruptiveness to stay long, they are fastrack in the very cautionous about grandiose
corporate ladders and crossing schemes because they know they will
corporations. have to live with the results.

Sales Pitch & Positioning

t The situation in the chasm can be further complicated if the high tech companies
s after the initial marketing success with the visionaries, neglects to change its sales
Ch asm cr ossi n g is not t h e en d, pitch. Thus, the company might trumpeting about recent early test site successes
when the pragmatist wants to hear about up-and-running product installations. The
but rat her t he beginning, of company maybe saying "state-of-the-art" when the pragmatist wants to hear
"industry standard".
m ai n st r eam m ar k et
dev el opm en t The problem goes beyond pitches and & positioning, it is fundamentally a problem
of time. The high tech companies want the pragmatists to buy now and the
pragmatists want to wait. Somewhere a clock has started, thing is, who will blink
first. And for everyone's sake, it had better the pragmatist.

Segment market transition

Dynamics of Early Market
market requires a breakthrough technology product with a new
elling application, a technology enthusiast who can evaluate
eciate the superiority of the product over current alternatives
onary who can see the order-of-magnitude improvement by
implementing the new application.
Oracle
This is the game Oracle has played masterfully
Dynamics of Mainstream Market in the first decade of 21st century. After several
The pragmatists drive the development of the mainstream market. Winning their support is not decades of relying on organic R&D to build out it
only the point of entry but also the key to long-term dominance. But even so, you cannot take Example of market leader portfolio of enterprise IT software. Oracle
the market for granted. At this point, it is no longer necessary to be the technology leader, nor it changed their game by acquiring PeopleSoft,
is necessary to have the best product. But the product has to be good enough and should a Seibel, BEA, Agile and Sun Microsystems for a
competitor make a major breakthrough, you have to at least make a catch-up response. complete enterprise software and hardware
solution. These acquisitions are desgined to
conserve rather than innovate.

Transition
To build loyalty The key to making a smooth transition from
pragmatists to the conservative market segments is
 well. there.

If the target segment is too small to generate Do we have a sales funnel in place that
If not, usually the company hire a
half of next year's sales for the new product, can call on the target customer and fulfill
Distribution well-connected individual in the target
then you have to augment it. If there is no the whole product requirements put on
Sales-driven vs Market-driven market and lead the sales team.
appropriate super-segment, then go back and distribution?
The consequences of being sales-driven during pick up another target.
the chasm period are fatal. The main focus for Do we already have relationships begun
Without this it is usually a major challenge
any company in the chasm should be to secure a Secondary - the with other companies needed to fulfill the
Partners & Allies for the whole product manager to pull
beachhead in mainstream market - that is a set remaining factors whole product? If you do, it is typically from
together a working partnership.
of pragmatist customers who are referenceable. are "nice to have", a single early-market project.
In order to do this we need to ensure our first set low score can
Is the price of the whole product consistent
of customers completely satisfy their buying usually be
with the target customer's budget and with
objectives. compensated or
the value gained by fixing the problem? Do If pricing strategy is not right, it will weaken
Pricing overcome with
all the partners and distribution channel get the compelling reason to buy.
time and
compensated sufficiently to keep their
investment.
attention and loyalty?
However, these 2
are usually what At first, the typical answer is not very. But
you do not have. Is the company credible as a provider of the resistance can be quickly overcome if
Positioning
products and services to the target niche? only one truly commits to the whole product
that can fix the target customer problem.

If we dominating this niche, will these

Otherwise, the economics of niche
Next Target Customer customers and partners facilitate our entry
marketing simply do not hold up.
into the adjacent market?

ASSEMBLE AN INVASION FORCE

The Whole Product Concept

Generic product: what shipped in the box and covered by

the purchasing contract.

Expected product: what customers thought they was

buying when they bought the generic product. It is the
minimum configuration of products and services necessary
to have any chance of achieving the buying objective. For
example, when you buy a tablet, you need to have wifi or
cellular connection at home for it to work and you usually do
not have to purchase it separately.

Augmented product: this is the product fleshed out to

provide the maximum chance of achieving the buying Excellent example of a whole pro
objective. In case of tablet, this would be email, browser,
calendar, search engine, appstore, etc.

Potential product: this represents the product's room for

growth as more and more ancillary products come on the
market and as customer-specific enhancements to the
system are made. For example with iPad, there are
hundreds of thousands of apps which users can access on
appstore to extend its reach and value is one of its key
selling points. Source: drawback.com

The Whole Product & The Whole Product Planning

Technology Life Cycle
The model includes 2 categories:
Outer circles of the whole product increase in 1) What we ship
Steve Jobs - iPod Presentatio
importance as one moves from left to right. 2) Whatever else the customers need to achieving their compelling reason
That is, the customers least in need of the to buy
whole product are tech enthusiasts. They like
to cobbling together bits and pieces of the The latter is the marketing promise made to win the sale. The contract Surround your di sr upt i v
technology and figure out the whole product does not require the company to deliver on this promise but the customer
that pleases them.This is the pleasure they
take from technology. Visionaries, however,
relationship does. Failure to deliver on this promise in a highly reference
B2B market can have serious consequence as negative WOM can cause
pr oduct , t he t hing t hat go
 making marketing choices, will continue to shy away
from making niche market commitments. it is failure of
will rather than a lack of understanding.
Documentum: Document Management
Application
Documentum had been seeing flat revenue for 3 years, a
typical performance of a company in the chasm. To get
out of the chasm, they surveyed their client experience
and targeted a very thin market niche: the regulatory
affairs departments in Fortune 500 pharma companies.
There are only around 40s of these companies and with
around 1,000 people in total. A big step down from their
previous "all personnel who touch complex documents in
all large enterprises" segment. The answer is that it is not
about the number of people involve but the amount of
pain they are causing. In case of pharma industry's
regulatory affiars function, the pain was excuciating. The
application process was so complicated it took months to
submit and it was costing these pharma companies big
bucks - one million dollars per day. By tackling this
problem, Documentum ensured itself a strongly commited
customer. The commitment was not from the IT
department who was content to work with its established
vendors instead in came from the top brass who saw in
Documentum a chance to reengineer the entire process
to a new end.
In a year, Documentum had demonstrated that it could
solve this problem and 30s out of top 40s pharma
companies had commited to its solution. Then inside
these companies, Documentum became the standard for
all document management tasks and spread to the
researchers, to the manufacturing floors. When it got to
the floor, the contractors realize that factories in related
process industries had the same needs and they bought
the process into chemicals, oil refineries. When it got to
the oil industry, the IT people saw the product can help
them solve their upstream issues, then it spread to Wall
Street who saw its potential to solve their business
issues. Turn out financial services was the biggest
customer segment for the company. However, it was not
the right target segment to cross the chasm because
while its needs was more pervasive, is not as urgent as
those in pharma industry.
hole product
More information:
esentation
upt i v e cor e
hat got you t o What is Enterprise Content Management (ECM)
Successful chasm crossing
SalesForce: A SaaS Company
Packaged enterprise applications usually involve lots of
investment in term of equipment / hardware, operating
budget for expert staffs and also significant integration
efforts. The efforts of integration is so great that customers
usually skipped the updates, denying themselves of latest
innovation. Then came, Salesforce, with its SaaS model
where these is only 1 version of the software, keep
updated by the vendors and multiple customers would
access it over the internet. Their data and information
would be kept isolated from each other and entire
operation was secured by latest technology. That means
no data center, no equipment / hardware, no expensive IT
staffs, no integration efforts. In away it was disruptive, not
to the customers but to the entire application ecosystem
that made its living off the old model.
Their disruptiveness threaten many and generated
backlash from the ecosystem. It was exclaimed that such
system was inherently insecure, only fool would put
enterprise data "on the cloud", inherently dependent on the
network with unreliable response time. Skeptics think that
the idea was ahead of its time and Salesforce is just
another dot-com notion waithing to flame out. Instead it
became one of the fastest growing software company in
history. How did they do it?
They did not go after a vertical market. Instead they focus
their segmentation along the following lines: They target
sales people & their managers. They target mid-market
companies, big enough to need a system to compete with
market leaders and small enough to be unable to affort the
IT investment. Focus on US only because US has always
been the early-adopting country in enterprise software.
They focus on technology-savvy industries with high-tech
then telco, pharma, and financial services. Salesforce was
designed first and foremost for sales people and their
managers, give direct visibility into the pipeline and the
salespeople loved it. Because they love it, they share it
with other people in the sales field. The sales people can
subscribe and start using Salesforce without CIO
permission or approval. Because Salesforce owns the
software so they know who was and who wasn't using it
and allocate the support accordingly while it is not the
same for traditional enterprise package.
What is Salesforce
The Good Cases
The entrepreneurial company seeds the technology
enthusiasts with its early version of product while
connect with visionary executives. The visonaries then
check with the tech enthusiasts of their choice about
the feasibility of the technology. Out of these
conversations comes a series of negotiations with what
VMware: Disruptive Infrastructure seems like a lot of money but later will recognized as
just the tip of the iceberg. The technology enthusiasts
VMWare makes software that can take over a computer and
get to buy a lot of new toys to play with, the visionaries
let two different programs run at the same time in it own
have on paper what looks like an achievable project but
controlled environment or taking over more than one
in fact a highly improbable one and the entrepreneurial
computer and make it appear as one. So, it creates "virtual"
company commits itself to product modification and
computers. Their first users were techies who want to both
system integration services it never intended to.
Windows and Linux on the same machine. This is
unrelevant for majority of people but if you do write code
Even though grim but this in fact is the good case
and you work for a corporation, the ability to do all your
scenario because it can get fixed one way or another
work in one machine is a boon. So VMware captured a
and some levels of value will be achieved all around.
strong position among techies when it launched to target
the PC aftermarket.
Then its next two applications were still primarily appeal to
technologists. The first was run 2 Windows applications on
the same PC server. While Windows did support the
capacity, it was troublesome enough people chose not to do Lac
that and instead just use a different PC server for another The company
application which can be expensive. So VMware scored product to the
another small victory for this. The next variation was effort, hire ine
running 1 application on 2 servers. Previously, when people, sell p
application was getting so much use it ran out of room on 1 channels, prom
server and the solution was to upgrade to a bigger server.
VMware allows using the spare capacity of another server -
effectively free. This score another small victory for
VMware. These successes were all pre-chasm.
VMware chasm crossing use case showed up in the testing
phase of software development life cycle. Previously, in
order to test a software in production, developers usually
have to need a test bench which basically many computers
which can be expensive and the testing period is not usually
long. VMware allows developers to create multiple test
environments with their own hardware and further more, all Scale back expe
the configuration can be "saved" and quickly load up later marketing more
whenever you want to do testing! Once across the chasm fish in the pond
additional use cases such as virtualize the PC to utilize with the right fit
unused capacity of PC (as much as 90%) allows VMWare must be self-re
grew quickly. Then later use cases got into reliability and the leadership p
agility. Virtualization had become a pervasive computing will help get the
strategy for providing servers across all application. Of one market, we
course, it was after the chasm has been crossed but
understand this was the dream from the start and it was the
system administrator who needs the simulating production
environments for software testing was the one allows
VMware to cross the chasm successfully.
What is virtualization?
 Transition
To build loyalty The key to making a smooth transition from
pragmatists to the conservative market segments is
to maintain a strong relationship with the former,
always giving them an open door to go to the new
paradigm, while still keeping the latter happy by
The Bad Cases adding value to the old infrastructure. It is a
chnology balancing act to say the least, but properly
ct while There are several cases where the early market does
managed, the earnings potential in loyal mature
aries then not even get a proper start:
market segment is very high indeed.
ice about
hese
s with what
gnized as
nthusiasts Where things go wrong Service is important
visionaries
project but
Functionality-oriented vs
preneurial Service-oriented
ation and We can see that the first group - techies are extreme
ded to. functionality-oriented while conservatives are
extreme service-oriented. One's level of involvement
od case and competence with a high tech product is a prime
or another indicator of when one will enter the Technology
ll around. Case 1 Case 2 Case 3 Adoption Life Cycle. The longer your product is on
the market, the more mature it becomes, and the
more important the service element is to the
customer.

Lacking Expertise Non-compelling Application Vaporware as a service

he company has no expertise in bringing a
oduct to the market. Insufficient capital for
ort, hire inexperience sales and marketing
people, sell product through inappropriate
annels, promotes in wrong place and wrong
ways, etc.
Solution
Marketing falls prey to the crack between the
technology enthusiast and the visionary by failing
to discover, or at least failing to articulate the
compelling application that provides the
order-of-magnitude leap in benefits.
Solution
The entrepreneurial company sells to the
visionary before it has the product or the product
still has significant development hurdles to
overcome. As schedules continue to slip, the
visionary's position in the organization weakens,
support for the project is withdrawn, a lot of
customized work with no usable customer
reference gained.
Design out as much as possible
the service demands that derive Making a service yield an
from installing and integrating improved user experience. The
their product successfully. The more of this, the better.
Solution less of this, the better.

e back expectation several times. Winning at
keting more than not by being in the biggest
h in the pond. Find a suitable pond (market)
the right fit for our current size. The market
st be self-referencing so that when we take
leadership position with some of them, they
help get the word out, fast. When we capture
market, we move to the next adjacent one.
have to make sure that the product is compelling
Reevaluating what we have. If it is not a
breakthrough then it never going to create an
early market but maybe it would serve as an
supplementary product on an existing
mainstream market. If that is the case then we
should surbodinate ourselves to another
mainstream market company so that they can
put our product in play through it existing
channels.
But if it is a breakthrough product but we are
stalled in getting the early market moving, we
at least to one of the visionary who already
known us and commiting to that visionary in
exchange for his or her support to remove
obstacles in getting the product adopted.
Shut down marketing efforts, admit its mistakes
to its investors, focus all energies into turning
pilot projects into something useful, first as a
deliverable to customer and ultimately in terms of
a marketable product.
Example
Example: Brickstream
Brickstream was founded with vision to use AI
technology to extract information from video,
promised to gave brick-and-mortar retailers
same kind of visibility that e-retailers were
getting from their website tracking. Their first
systems were successful but implementation
proved to be costly and performance fell short.
Under new management, the team turn around
drastically. It first act was focus on something
much simpler problem, counting the people that
coming to store everyday and do it better, faster
and cheaper than current technology. This was
nothing like what they promised before but it was
real and was profitable. From there, they
eventually developed camera technology that
would support their original vision. They expand
into queue managment, personnel time tracking,
inventory protection, security. They lost their
original window but with the new trends in Brickstream high volume counting
ecommerce and retail, a 2nd window is coming
for them.
 whole product are tech enthusiasts. They like
to cobbling together bits and pieces of the
technology and figure out the whole product
that pleases them.This is the pleasure they
take from technology. Visionaries, however,
take no pleasure in pulling together the
whole product by their own. But they accept
that, if they want the advantage from the new
technology, they are going to take
responsibility for creating the whole product
under their own steam. That is it for the early
market. Into the the mainstream market,
pragmatists prefer the whole product from
the outset.
Creating Competition
If there is no competition, there is no market. In the
pragmatist's domain, competition is defined by comparative
evaluations of products and vendors within a common
category. Pragmatists loath to buy until they can compare.
Competition, therefore, becomes a fundamental condition for
purchase.
It begins with positioning your product within a buying category
that has already has some established credibility with the
pragmatist buyers. That category should be populated with
other reasonable buying choices, ideally ones with which the
pragmatists are already familiar. And within this universe, your
goal is to position your product as the indisputably correct
buying choice.
However, avoid rigging the competition and create a
self-serving universe as this is not credible or attractive to the
pragmatists.
Example: Box
Dropbox as product-alternative and
Sharepoint as market-alternative.
Box combines Dropbox easy of use
and Sharepoint enterprise
standards.
The fundamental rule of
engagement is that any force
its technology and through it, appreciate your product. The
can defeat any other force - if it
can define the battle.
Similarly, skeptical generalists might not take an interest in
new market development. If you can show the generalists
The latter is the marketing promise made to win the sale. The contract Surround your di sr upt i v
does not require the company to deliver on this promise but the customer
relationship does. Failure to deliver on this promise in a highly reference
B2B market can have serious consequence as negative WOM can cause
pr oduct , t he t hing t hat go
sales productivity to drop dramatically. t he dance, w it h a w h ol e p
Winning the whole product battle means winning the word but prentending
you are winning the whole product battle is a losing tactics as people check
t hat solves for t he t arg
up on each other too much in high tech marketplace.
cust om er?s problem en d t
Real life example page 142 - 160.
Vertical (Skeptics - Supporters) shows the buyer's attitude
toward the proposed value proposition. The market begins
1. P
in the state of skepticism and involve to a state of support.
Market-alternative 2.
In early market, technology enthusiasts are skeptical
The vendor who our customers have been in
gatekeepers while in mainstream are the pragmatists.
buying from for years whom we can preempt the 3. Po
When the product has gained these gatekeepers'
budget by providing disruptive innovation to
blessings, then their companions - visionaries and
address a stubbornly problematic limitation in 4. Peo
conservatives, feel free to buy in.
the traditional offer. ent
The
Horizontal (Specialist - Generalist) shows buyer interest in produ
and understanding of high-technology issues. Specialists T
Product-alternative in early market are more interest in technology and the custom
This is a company that harness the same product while the generalists in mainstream market are ty
disruptive technology or at least close to it - and more interested with the market leadership and company occ
is positioning itself like us as a technology stability. there
leader. Their very existence gives credibility to
the notion that now is the time to embrace this
new discontinuity.
These are the 2 "natural" marketing rhythms in high tech: 3
Early market: demonstrating a strong technology
advantage and converting it to product credibility.
Mainstream market: demonstrating a market leadership
advantage and converting it to company credibility.
When
a
The Chasm transition represents an unnatural rhythm.
DEFINE THE BATTLE Moving from environment of support of the visionaries
People who are supportive of your value proposition take
back into one of skepticism among the pragmatists.
an interest in your products and in your company. People Moving from familiar ground of product-oriented to the
who are skeptical do not. This means, at the beginning of unfamiliar ground of market-oriented ones. From the
the market when skepticism is the common state, basing familiar audience of like-minded specialists to the
communications on product or company strenth is a unfamiliar audience of wary generalists.
mistake.
There are ways to win over skeptics. Skeptical specialists
MARKET-CENTRIC
are always look out for new technology breakthroughs.
Thus although you cannot initially get them to sponsor
PRODUCT-CENTRIC
Cool product:
Most compete whole product:
- Solid user experience
your product, you can get them involved in understanding
- Easy to use
- Elegant architecture
- Compatibility with standards
- Whole product price
more they appreciate, the more easier for them to support
your products.
- Product price
- Unique functionality
- Situational value
- Fit for purpose
an unproven company but they are always interested in
that there is a emerging unmet market requirement, one
that you have specifically positioned your products and
your marketing efforts to meet, then out of their
appreciation for the market opportunity, they can learn to
appreciate your company.
 upt i v e cor e
hat got you t o What is Enterprise Content Management (ECM)
What is Salesforce What is virtualization?
System
ol e pr oduct
he t arget
en d t o en d

e The shifting burden of proof:

s
Positioning
in sum, to pragmatist buyers,
.
1. Positioning is a noun, not a vert
the most powerful evidence of LAUNCH THE INVASION
2. Positioning is the single largest
influence on the buying decision leadership and likelihood of
3. Positioning exist in people head, not competitive victory is market
your words share. Without the number,
4. People are highly conservative about pragmatists will look up the
entertaining changes in positioning number of partners and allies
that you have assembled in
The company should try to make its your camp, and their degree of The num ber-one corporat e object ive,
demonstrable commitment to E
n product easier to buy, not easy to sell.
The goal is to create a space in your cause. w hen cr ossi n g t h e ch asm , is t o secur e Mak
foc
customer's head called "best buy for this
type of situation" and attain sole
a di st r i but i on ch an n el int o t he adopt
occupancy of that space. To do that
there are 4 fundamental stages in this
m ai n st r eam m ar k et
process:
1. Name it and frame it
2. Who for and what for
: 3. Competition & differentiation
4. Financials & future
Customer-Oriented Distribution Mak
Sales, marketing and distribution has been changing dramatically d
over the past decades. What has not been changing, are the work
The Positioning Process customers these channels are targeting. These group into 5
classes, each of which is associated with an optimal approach:
When positioning is thought of primarily as a verb, it refers to
a communications process with 4 key components:

Proven formula for positioning:

The claim: reduce the
fundamental position statement
- a claim of undisputable
market leadership within a
given target market segment -
to a two-sentence format.
- For (beachhead customer)
The elevator test: can you
- Who are dissatisfied with (the current M
explain your product in the time
market alternative) decis
it takes to ride up in an
- Our product is a (product category) tha
elevator? If you fail that mean
- That provides (compelling reason to buy)
your product does not have a
- Unlike (product alternative)
clear enough positioning.
- We have assembled (key whole product
features for your specific application)

The evidence: sufficient

evidence to make the claim to
RIC
leadership indisputable.
product:
ence
andards
rice Communications: identify and
ue address the right audience in
e the right sequence with the
right versions of the message.
Feedback & adjustment:
once the positioning has been
exposed to competition,
competititors can be expected
to poke holes in the initial effort
and these need to be patched
up or responsed to.
Whole product launches: the story should focus on an
emerging new market, anchored by a new approach to a
problem stubbornly resistant to conventional solutions, fed
by an emerging set of partners and allies, each supplying
a part of the whole product puzzle, to the satisfaction of an
increasing visibile and growing set of customers.
Business press: building
relationships with business
press editors, initially around a
whole product story, is a key
tactics in crossing the chasm.
coming from success in the early market with visionary customers,
Vertical media: those that
specifically dedicated to a
particular industry or a
particular profession. Industry
Mak
a
Distribution-Oriented Pricing
Pricing decisions are among the hardest for management groups
to reach consensus on. The problem is that there are so many
perspective competing for the controlling influence. From a
distibution perspective, there are two pricing issues that have
significant impact on channel motivation:
Is it priced to sell?
Is it worthwhile to sell?
Being priced to sell means that price does not become a major
issue during the sales cycle. Companies crossing the chasm,
Maki
are n
typically have their products priced too high. Product can also be
and
priced too low to cross the chasm. The problem is the price does
not incorporate sufficient margin to reward the channel for the
extra effort required to introduce a disruptive innovation into their
already established relationship with a maintream customer.

CUSTOMER GROUP
Direct Sales: the enterprise buyers making major
, system purchases expect to pay hundreds of
thousands or millions of dollars. In that context,
Enterprise Executives
re Making big ticket purchasing decisions
focused on complex systems to be
adopted broadly across their companies. The direct sales approach match this expectation
via a top-down approach to marketing, sales and
End Users
Making relatively low-cost purchasing
decisions focus on personal or
workgroup technologies to be ad-opted
locally and individually.
Department Heads
Making medium-cost purchasing
decisions for use-case-specific solutions context. Internet and the web have created a new
that will be adopted within their own
organization.
Engineers
Making design decisions for products
and services to be sold to their
company's customers.
Small Business
Owner-Operators
Making modest purchase decisions that
are nonetheless highly material to them
and a strong need to get value back.
APPROACH
they are looking for a consultative sales
experience that identify their key needs and
custom fits the vendor's offering to meet them.
delivery.
Web-based Self-Service: the end users usually
looking for transactional sales experience that is
primary self-service. The WWW is terrific at
providing just that.
Sales 2.0: the departmental buyers making IT
purchases are part of a larger enterprise, they
need systems that can pass muster in that
powerful sales channel alternative which some
called sales 2.0.
Traditional Two-Tier Distribution: design
engineers make for very demanding prospects
and customers. They also do not have any
authority to make any purchase however they are
a critical early decision maker as to whether the
vendor gets invited to the purchasing table at all.
Value-added Resellers: small business owner
are just consumers wearing a different hat
because their needs do not fit into a consumer
buckets. They know they need help, but they
don't have deep pockets, so they are always
looking for a way to get things done on the
cheap. Their natural allies on this quest are local
value-added resellers (VARs) who run low
overhead businesses always hungry for new
customers. VARs are typically not good at
marketing and sales so the vendors must do all
the marketing and most of the sales.
ecommerce and retail, a 2nd window is coming
for them.
MARKETING
Relationship marketing plays key role
with thought leadership events, forums
where senior executives can learn from
experts, exchange ideas with each other
and connect with vendor's senior staff.
This is followed with personal contacts,
often leads to referral down into the
organization to explore a possibility
raised in an earlier conversation.
Marketing on the web is primarily
promotional marketing, often driven by
free offer or trial period which is typically
driven by click-through advertisements
which is becoming increasingly effective
as marketers leverage behavioral
targeting, machine learning and other
algorithmic technologies to improve
conversion rate.
Direct-touch marketing which is very
similar to the method applied for end
users.
The web is a terrific medium to
communicating with these people, they
can engage or disengage as they like
and can get a factual perspective on
almost any issue they care to research.
But sooner or later they will need to see
samples, and more often than not this is
sufficiently complex to require a human
sales presence on-site.
Marketing consist mostly of web
programs, leads might be shared directly
with VARs if they have the capacity to go
to market.
SALES DELIVERY / SUPPORT EXAMPLE
Once sales motion is under way, the normal approach is
called solution selling, in essence a whole product tailoring job The delivery phase of this go-to-market approach, all
to meet the specific needs of a particular prospec. In early the tailoring that was promised in the proposal has to
market, the prospects might not even be aware they have a
need to address. This can call for something we call
be delivered in fact. This typically requires the vendor
to field its own professional services team, focus
Salesforce, VMware,
Workday, etc.
provocation-based selling in which the vendor makes the primarily on installing the vendor's products, often
provocative claim that the customer should direct existing supplement by a third party system integrator.
budget to meet an unnotice opportunity or impending crisis.
Once a user clicks on a link, the state of the relationship
changes to a direct response sales activity. If the offer is a
Support in this world of transactional selling is
digital service, freemium model works best which allows the
designed around avoiding personal contact which
customers to accustom to the core product before upsell them
saves vendor money and please customers as well. Prezi, Skype, Yammer,
with advanced features and functions. If the offer consists of
FAQs, emails for support queries and chat service etc.
physical goods then the sale is typically an e-commerce
and community-based support where knowledgeable
transaction as modeled by Amazon including shopping cart,
customers lend a helping hand to new arrivals.
checkout process, shipping and handling option, email
confirmation & tracking notices.
The difference arises after users click on the link, they will be
directed to a human salesperson where they will approach Once the prospect becomes a customer,
users via email, chat or a voice call. Based on the prospect's responsibility shifts from sales to the delivery team. In
level of interest, this leads to a webinar, web live demo, the world of SAAS, vendors are much more incented Rackspace, Box,
download of relevant documents, etc. As the prospect to follow through on their promises because their IntApp, etc.
demonstrate increasing levels of engagement, the system customers are a click away from discontinuing their
track their status and alerts salespeople to the next step in the subscriptions.
sales cycle. The entire process is conducted over the web.
That is what bring the customer-touching "second" tier of a
two-tier distribution channel into play, typically independent
manufacturers's representatives. This channel does not have
the capital to hold inventory, so it is supported by a first-tier,
Support during this phase of relationship transfer
vendor-facing organization, typicaly call a distributor. Once the
designer has selected a given component, that triggers what
directly to the component vendor who often field Intel, Broadcom,
sophisticated engineers to collaborate in debugging NVIDIA, AMD, etc.
the component vendors call a design win. This is an invitation
the customer's next generation designs.
to negotiate with the company's purchasing department to set
price, terms and condition for a set of future purchases which
volume will depends on the success or failure of the new
product on the market.
Small business owner cannot realize leverage a sales 2.0
experience because they lack the expertise. Instead they look Infusionsoft, Bill.com,
All of post-sales supports are done by VARs.
for an agent to mediate between them and the world of Intuit, etc.
technology, and that is the role of VARs.
 Changing the purpose of the enterprise

Organizational Decision: From Pioneers to

Financial Decisions: Breaking the
All organizations are market-driven whether they acknowledge
Hockey Sticks
The purpose of the post-chasm enterprise is to make
high-tech companies to a point of crisis where they must leave
money. The most common graph of revenue attainment
is "hockey stick". It usually a business with no revenue
development for some time after which there is a sharp
inflection in the curve and rapid, continuous, and what
any sane person would call miraculous revenue growth
from there on. But actually the revenue development
that actually would look more like a staircase than a
hockey stick. There is an initial period of rapid revenue
growth represents the early market development then
there is period where revenue is flat, indicates the
chasm period then a second phase of rapid growth
represents the successful initial mainstream market
development. This staircase can continue indefinely
with flat periods represent the slower growth when
transition into adjencent mainstream market segments
Example of hockey stick and and rapid growth represents the ability to capitalize
staircase forecast model these efforts.
Leaving the Chasm Behind
it or not. The chasm phenomenon drives all emerging
the safety of their established early market to seek a new
home in the mainstream market.
insitutionalize, infrastructure or even document. When crossing
The post-chasm enterprise is bound by the commitments
made by the pre-chasm enterprose. So the best course of
action is to avoid making the wrong kind of commitments
during the pre-chasm period.
technologists can be transfered to futuristic projects within the
The post-chasm period requires the company to change itself,
redirecting the energy of innovation and creativity toward a
goal that suits the pragmatists' value system. There is a call to
review and re-evaluate the skills and instincts and talents that
help build a winning position in the early market in light of the
impending challenge of building one in the mainstream. Not
everyone is adaptable or amendable to the new changes
required to operate in the new order.
Settlers
To cross the chasm involes a transformation in the enterprise
that few individuals can span. It is the move from being
pioneers to becoming settlers. In the development
organization, pioneers are the ones who push the edge of
technology application envelope. They do not like to
the chasm, the enterprise transform from product-centric to
market-centric and these innovative people become liability.
They do not cooperate and may be even disruptive to the
2n
groups that are seeking to carry out standardization. As
enterprise enters the mainstream market, these pioneer
same company or to other companies where their talents can
be better ultilized. The same process happen to the sales
force. The initial sales pioneers who have the ability to sell to
the visionaries, think big and can get big ticket deals. Without
them, the market leadership in the early market would not be
possible. However, once enter the mainstream market, these
same people become the liability because they cannot stop
making visionary sale which delivering custom
implementations of the whole product.

Understand that this is not the purpose of
the pre-chasm organization as they are
driving forward by rewards of freedom in
careers, chance to experience in leading
edge technology, far more responsibility
than any established organization.
The Role of the Venture-Financing
Community
Estimate the market size, rate of penetration, cost to
achieve market leadership and anticipated market
share can all be made in the light of day without
smoke and mirrors. The call to action to the
investment community is to make your client
companies incorporate crossing the chasm into their
business plans. Demand to see not only broad, long
term market characterizations but also specific
target customers for D-day attack. Drive them to
refine their value propositions until they are truly
compelling and then use these to test how many
target customers there truly are. Force the
companies to define the whole product and then
help them to build relationship with the right partners
and allies. Again, use the results to test hypotheses
about market size. As for competitive set and
positioning, beware of pushing your small fishes too
soon into big ponds. For distribution and pricing, do
not look for standard margin until the chasm has
been crossed.
The Role of the Venture-Managing
Community R&D Decision: From Products to Whole
Until the break-even cashflow is achieved, nothing is R&D is high-tech. Everything else is secondary. As in an industrial sect
secure and your destiny is not under your control. we are technology-driven. We learn to create products, and then marke
This argues for early adoption of the profitability. In dominate those markets. But it starts with technology - "built a product
fact, in slow-development market with low is our fundamental dream, the dynamic that drives all else. Problem is,
capitalization requirements, there is a strong case The products and the markets and the company that we created all gr
for adopting profitability from day one. Early and legitimate demand on us, and we have no choice but to serve th
visionaries will pay consulting fees and prepay
How it impacts R&D doesn't get to focus on the generic product anymore. It must becom
royalties to help fund low-capitalization start-ups. Whole product R&D is not driven by the laboratory but by the marketpla
These fee is not revenue but it can help you cash creative technology but with creative market segmentation. It penetrate
flow positive right from day one, thus keep 100 process but rather habits and behaviours.
percent of the equity reserve later date. It is better to
adopt the discipline of profitability at the outset so Whole product R&D is an emerging discipline. It represents a converg
that you do not have to learn it later on. This teach tech marketing and consumer marketing where we see the tools of the
you to say "no" early and often because there isn't use in solving the problems of the former.
any money to fund them. The enterprise is forced to
focus drastically just because of resource
constrains. This radically reduces time to market
because people are not distracted and they
understand that the market is paying their
paychecks. In some cases, the profitability can be
forgo such as in manufacturing-intensive operation
or when the category is expected to develop so
rapidly that you cannot afford to grow organically as
a bit player.
 Vertical media: those that not incorporate sufficient margin to reward the channel for the
specifically dedicated to a extra effort required to introduce a disruptive innovation into their
particular industry or a already established relationship with a maintream customer.
particular profession. Industry
trade shows, conferences,
meetings, publications,
professional associations, etc.
dedicated to a specific market
segment all tend to attract Customer-O
pragmatists and conservatives.
Value-based pricing: high
product price has a high u
Cost-based pricing: even
market when all the other m
ex
Target market segment manager: this position only goal is to transform a visionary customer Competition-based pricing:
relationship into a potential beachhead for entry into the mainstream vertical market that particular but their allowed price is still
customer participate in. His or her works include: players
- Understand the visionary customer business by attending the tradeshows, read books, study the From customer perspective
systems, meet people - first, just within the one account, and subsequently, in related companies. above a norm set by produc
- At the same time, take over the supervision of the visionary's project, make sure it gets broken up This is justifiable because yo
into achievable phases, supervise the introduction and roll out of the early phases, get feedback and over the market alternative a
buy-in from the end users of the system and work with the in-house staff to spin off the kind of over the p
to localized implementations that give these initial deliverables immediate value and impact.
- At the same time he will work with the whole product manager to identify which parts of the
visionary project are suitable for an on-going role in the whole product and which are not. The goal Vendor-O
se is to isolate the idiosyncratic elements and account-specific modifcations and making sure the Vendor-oriented pricing is a f
ongoing product development team is not burden with maintaining them. with cost of goods, and ex
This position is expected to do the following: capital, promised rate of risk
of - Expedite the implementation of the first installation of the system. This is to ensure the reference oth
base in the target market segment. The biggest impact of vendor
sing - During the implementation of the first installation, introduce into the account his own replacement, transactions required to creat
to a true account manager, a "settler" who will serve this client, hopefully, for many years. For example: $10 millions is
ty. - Leverage the on-going project to create one of more whole product extensions that solve some segment then with OEM
e industry-wide problem in an elegant way. distribution, that could be the
2 new temporary positions
sales model, it is properly mo
of it coming from top five.
the probably need 200 - 400 tr
an model, 20,000
s Each of these price points w
to perspective on the sales fun
out prospect to qualified lead all
be Whole product manager: this position is the transition of the role product manager to the role of
product marketing manager. volume means the process
se depend more on filling top of
op We need to understand first, a product manager is normally a member of product team responsible
for the product get created, tested and shipped on budget, on schedule and according to more relationship-oriented the
specification. It is a highly internally focused job, bridging the marketing and development bottom of the funnel. With s
organization, and requiring a high degree of technical competence and project management the funnel where process eff
experience. bigg
While a product marketing manager is always a member of marketing, is responsible for bringing
the product to the marketplace and making it accessible to the distribution channel. This includes all
the elements on crossing the chasm agenda. It is a highly externally focused job. Not all
organization separate the 2 jobs, but they should.
Now whole product manager is product-marketing-manager-to-be. The reason is because the job
itself is premature as the crossing of the chasm has not yet happened so there is no meaningful
o Whole Products
market relationshio or understanding to drive the future of product development. What we have is a
dustrial section, before anything else,
list of bug reports and product-enhancement requests that is growing with disconerting speed. If this
then markets, and then enterprise to
list is not managed properly then it will bring the development team to their knees.
lt a product and they will come" - that
Problem is, we grow past the dream.
eated all grow up to make persistent how to compensate
t to serve them. And then, the R&D
must become whole product R&D.
he marketplace. It begins not with the
Coping with Compensation
It penetrates not into the protons and For pioneer sales force, it is necessary to discriminate account penetration and account
ehaviours. management. Account management is predictable, less remarkable and long-binding achievement.
Compensation for this type should be spread out over the time. While account penetration should be
ts a convergence between the high opposite, the reward should be in bulk and immediate. It is to recognize the single key achievement
tools of the latter can be of significant - winning the account. This is an extraodinary event, one that few can accomplish and is critical to
he former. the firm's long term future. However, if this was achieved by promising more than anyone can
deliver or more than anyone really knew then it is not what we want to reward. There should be a
reality check process built-in.
For the pioneer technologists, because they created the large part of the core product and when the
product become a mainstream hit, they feel like they entitle to the major share of the gains. The fact
is, they don't and they don't deserve it, either. Because the mainstream success is a function of the
whole product, not the core product and is a very large team effort. What they entitle to is a larger
share of the early market returns because here is truly the core product that drives success.
However, as money is tight during this period, it is usually difficult to reward these people and
usually equity is the fallback but that is a compromise.
 customers. VARs are typically not good at
marketing and sales so the vendors must do all
the marketing and most of the sales.

stomer-Oriented Pricing The D-Day Analogy

icing: high value placed on the end result, the The perils of the chasm make this a life-or-death situation for you. You must win entry to the
has a high umbrella under which it can unfold. mainstream, despite whatever resistance is posed. So, if we are going to be warlike, we might as
ricing: eventually emerge in any mainstream well be so explicitly. For guidance... [we look at] the Allied invasion of Normandy on D Day, June
the other margin-justifying elements has been 6, 1944...
exhausted.
ed pricing: market leaders usually get premium Our long-term goal is to enter and take control of a mainstream market (Eisenhower?s Europe)
price is still a function of comparison with other that is currently dominated by an entrenched competitor (the Axis). For our product to wrest the
players in the market. mainstream market from this competitor, we must assemble an invasion force comprising other
perspective, the key pricing is premium margin products and companies (the Allies). By way of entry into this market, our immediate goal is to
et by product alternative and market alternative. transition from an early market base (England) to a strategic target market segment in the
because you have next-generation technology mainstream (the beaches of Normandy). Separating us from our goal is the chasm (the English
alternative and segment-specific whole product Channel). We are going to cross that chasm as fast as we can with an invasion force focused
over the product alternative. directly and exclusively on the point of attack (D Day). Once we force the competitor out of our
targeted niche markets (secure the beachhead), then we will move out to take over additional
market segments (districts of France) on the way toward overall market domination (liberation of
endor-Oriented Pricing Europe)...
pricing is a function of internal issues, beginning
ods, and extending to cost of sales, overhead, The key to the Normandy advantage, what allows the fledgling enterprise to win over pragmatist
d rate of risk-adjusted return, and any number of customers in advance of broader market acceptance, is focusing an overabundance of support
other factors. into a confined market niche. By simplifying the initial challenge, the enterprise can effectively
ct of vendor-oriented pricing is on the number of develop a solid base of references, collateral, and internal procedures and documentation by
red to create a given amount of annual revenue. virtue of a restricted set of market variables. The efficiency of the marketing process, at this point,
0 millions is the target revenue of the beachhead is a function of the ?boundedness?of the market segment being addressed. The more tightly
en with OEM model fulfilled through two-tier bound it is, the easier it is to create and introduce messages into it, and the faster these
ould be the result of 1 or 2 design wins. In direct messages travel by word of mouth.
properly more like 20 to 40 transactions with half
om top five. In a sales 2.0 model, you would
200 - 400 transactions. And in a VAR-enabled
del, 20,000 - 40,000 transactions.
rice points will require a different management
he sales funnel, top to bottom, from suspect to
fied lead all the way to closed customer. Higher
the process should be more transactional and
filling top of the funnel. The higher the price, the
-oriented the process, the more you focus on the
nnel. With sales 2.0, you focus on the middle of
process effectiveness and efficiency have their
biggest impacts.

Reference:
https://medium.com/west-stringfellow/crossing-the-chasm-summary-and-review-9cfafdac9180
https://ewthoff.home.xs4all.nl/Weppage%20documents/Summary%20Crossing%20the%20Chasm.pdf
https://themarketingstudent.com/crossing-the-chasm-summary/
https://fourminutebooks.com/crossing-the-chasm-summary/
https://bizthoughts.mikelee.org/book-summary-crossing-the-chasm.html