Migration from Early Market to Mainstream Market
Attached is a document which I intend to submit to my CEO regarding the mistakes I saw in our production development and marketing strategy, based on the teachings in Crossing the Chasm.
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Company X: Crossing the Chasm
Migration from Early Market to Mainstream Market
I have been reading this book about “Crossing the Chasm” by Geoffrey A. Moore, which discuss about the strategy of bringing your product from the early market (the visionary & technologist) to the mainstream market (the pragmatist & conservative). The gap between this two market is known as the chasm. The bell curve chart shown below is the Technology Adoption Life Cycle.
(Ref: Wikipedia)
I believe Product X had somehow managed to conquer the early market, where we have some strong sales in the early days. After which we fail to cross the chasm to the mainstream market, thus leading to lesser deals and ultimate product cold storage. If this were our problem, we would need to identify the right strategy to help us to cross the chasm.
According to Mr. Moore, this first thing we need to do is to secure a beachhead. Like the D-Day, in order to get to the rest of Europe (the mainstream market), we would need to conquer the beaches of Normandy (the beachhead). In order to secure a beachhead, we need to become the market leader.
Pragmatists are people who only listen and talk to their own kind, such as doctor talks to doctors and lawyer talks to lawyers. To win the heart of pragmatist, we need market leadership to establish strong word of mouth among their social and business groups. Now we are trapped in a Chicken and Egg scenario, where we need to become the market leader in order to enter the mainstream market. At the same time, we need to enter the mainstream market in order to become the market leader. The good news is every Chicken and Egg problem has a solution for it, else no new startup would have succeeded.
Since we have limited resources, we would need to be FOCUS. Choose a niche market and try to be the market leader. For Product X, we could not afford to be the market leader in DMS or Workflow. But, we could segment the market and concentrate on a specific market segment. For example, we could choose to become DMS leader in market segment such as Banking, Insurance, Factory, Law Firm, Pharmaceutical and etc. Market segment can be selected based on our existing customer base and evaluating competition. No matter how successful a competitor are, they could not possibly cover all the grounds. Our objective is to conquer more than 70% of our target segment where people would relate the specific segment with our product name. At this moment, we are targeting niche market segment with strong Product X footprint and weak competitor presence. We need to target a niche market, force our competitors out and use it as a base for broader expansion. The niche market will be our beachhead to enter the mainstream market. The niche market will be our strong reference to generate a strong word of mouth. The more tightly bound the market is, the faster messages travel by mouth.
The key to successful market leadership is FOCUS; thus we need to be market oriented rather than sales oriented. Most of the time we are tempted to become sales oriented, as this is where the immediate money is available to cover our bottom line. Being sales oriented would actually take our “Crossing the Chasm” effort a few steps back. Sales oriented would means diversification, where we would take any projects in disregard to its market segment or product segment. With our limited resources, we could not afford to cover all the grounds. Thus we would need to be market oriented, focusing our resources in strengthening our product and attack strongly on our target market segment. The time for diversification is after we have achieved market leadership in the mainstream market, when we have the proper resources to expand and conquers more market segments for more opportunities. It is mentioned being sales oriented when crossing the chasm period is fatal. If we were sales driven, we would not cover enough ground for the word of mouth effect. Pragmatist want to buy from market leader, make sure you are the leader in your niche market. Why do we want to be market driven? For product leverage, word of mouth effectiveness and perceived market leadership. The best example for this strategy is Apple Macintosh, where they build machine and application for graphic department (niche market). Once they secure their beachhead, they start to target the nearby market.
There are many strategy and elements from the book that I would not be covering, such as utilizing different strategy to attract different group of customers at different stages. I am not a businessperson nor knowledgeable in marketing and sales, but I found the strategy proposed by Mr. Moore rather interesting and could be beneficial to us.
---
Company X: Crossing the Chasm
Migration from Early Market to Mainstream Market
I have been reading this book about “Crossing the Chasm” by Geoffrey A. Moore, which discuss about the strategy of bringing your product from the early market (the visionary & technologist) to the mainstream market (the pragmatist & conservative). The gap between this two market is known as the chasm. The bell curve chart shown below is the Technology Adoption Life Cycle.
(Ref: Wikipedia)
I believe Product X had somehow managed to conquer the early market, where we have some strong sales in the early days. After which we fail to cross the chasm to the mainstream market, thus leading to lesser deals and ultimate product cold storage. If this were our problem, we would need to identify the right strategy to help us to cross the chasm.
According to Mr. Moore, this first thing we need to do is to secure a beachhead. Like the D-Day, in order to get to the rest of Europe (the mainstream market), we would need to conquer the beaches of Normandy (the beachhead). In order to secure a beachhead, we need to become the market leader.
Pragmatists are people who only listen and talk to their own kind, such as doctor talks to doctors and lawyer talks to lawyers. To win the heart of pragmatist, we need market leadership to establish strong word of mouth among their social and business groups. Now we are trapped in a Chicken and Egg scenario, where we need to become the market leader in order to enter the mainstream market. At the same time, we need to enter the mainstream market in order to become the market leader. The good news is every Chicken and Egg problem has a solution for it, else no new startup would have succeeded.
Since we have limited resources, we would need to be FOCUS. Choose a niche market and try to be the market leader. For Product X, we could not afford to be the market leader in DMS or Workflow. But, we could segment the market and concentrate on a specific market segment. For example, we could choose to become DMS leader in market segment such as Banking, Insurance, Factory, Law Firm, Pharmaceutical and etc. Market segment can be selected based on our existing customer base and evaluating competition. No matter how successful a competitor are, they could not possibly cover all the grounds. Our objective is to conquer more than 70% of our target segment where people would relate the specific segment with our product name. At this moment, we are targeting niche market segment with strong Product X footprint and weak competitor presence. We need to target a niche market, force our competitors out and use it as a base for broader expansion. The niche market will be our beachhead to enter the mainstream market. The niche market will be our strong reference to generate a strong word of mouth. The more tightly bound the market is, the faster messages travel by mouth.
The key to successful market leadership is FOCUS; thus we need to be market oriented rather than sales oriented. Most of the time we are tempted to become sales oriented, as this is where the immediate money is available to cover our bottom line. Being sales oriented would actually take our “Crossing the Chasm” effort a few steps back. Sales oriented would means diversification, where we would take any projects in disregard to its market segment or product segment. With our limited resources, we could not afford to cover all the grounds. Thus we would need to be market oriented, focusing our resources in strengthening our product and attack strongly on our target market segment. The time for diversification is after we have achieved market leadership in the mainstream market, when we have the proper resources to expand and conquers more market segments for more opportunities. It is mentioned being sales oriented when crossing the chasm period is fatal. If we were sales driven, we would not cover enough ground for the word of mouth effect. Pragmatist want to buy from market leader, make sure you are the leader in your niche market. Why do we want to be market driven? For product leverage, word of mouth effectiveness and perceived market leadership. The best example for this strategy is Apple Macintosh, where they build machine and application for graphic department (niche market). Once they secure their beachhead, they start to target the nearby market.
There are many strategy and elements from the book that I would not be covering, such as utilizing different strategy to attract different group of customers at different stages. I am not a businessperson nor knowledgeable in marketing and sales, but I found the strategy proposed by Mr. Moore rather interesting and could be beneficial to us.
posted by Unknown | 6:01 pm
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