‘Crossing the chasm’
Markets in the IT industry can often usefully be segmented by the psycho- graphics associated with the diffusion of innovation. The diffusion of innovation curve has been known since the early 1920s via work on the adoption of technology amongst farmers throughout the world, both in America and also the under developed world.
FIGURE 3.6: TECHNOLOGY ADOPTION CURVE – AS A PSYCHOGRAPHIC SEGMENTATION BASE
The ‘curve’ is a ‘normal distribution’ and illustrates what appears to be essential human behaviour. The ‘mainstream’ of the market being the early and late majority, i.e. within one standard deviation each side of the mean (in other words they represent 68% of the market).
Rate of take-up
Innovators
‘Techies’
Early ad opters
Laggar ds
Market penetration perception of risk
2.5% 13.5% 34% 34% 16%
‘Visionaries’ ‘Pragmatics’ ‘Cons ervativ
es’
‘Skeptics’
Early – late majority
However, two standard deviations to the left of the mean will include the ‘early adopters’ (called ‘visionaries’ by Geoffrey A. Moore) and three standard deviations will include ‘innovators’. Two standard deviations to the right of the mean will encounter the ‘laggards’.
The main issue is that these are psychographic segments related to the buyer’s perception of, and behaviour towards, risk.
In short, innovators love to be ‘first on the block to amaze their friends’.
In terms of the technology industry, innovators (in the form of ‘techies’) take great delight in exploring new technologies merely to see how it works.
Early adopters are the visionaries. To convince early adopters you need to be able to show that the innovation has a practical application to their business from which they can benefit.
The ‘early majority’ (i.e. ‘pragmatics’ – 34% of the total market) want to climb on board the bandwagon only when the major product benefits (goods or services) can clearly be identified.
The ‘late majority’ (i.e. ‘sceptics’) are much more risk averse and they will only adopt the innovation when it is well proven and easy to use along such lines as the graphic user interface (G.U.I., i.e. Windows) for example.
Finally the laggards, who abhor any innovation and any change. They will only ‘adopt’ if the innovation is heavily disguised within the products that they are currently buying. For example, nowadays they can’t really avoid buying microprocessors when they buy cars or washing machines. However, if Laggards are a significant part of the market – it would be wrong to stress the presence of microprocessors.
Between each of these major groups there are psychological gaps (chasms) that need to be crossed. The gaps between innovators and early adopters, between the early majority and the late majority and between the late majority and the laggards, are only half (as big as) the distance
that has to be crossed between early adopters and the early majority (i.e. between the ‘visionaries’ and the ‘pragmatics’). This is the true chasm.
This model not only suggests a very powerful way of segmenting a market for services in any technology related business, but it also strongly recom- mends strategies for crossing these particular gaps and particularly the
‘chasm’ between the early adopters and the early majority. It is partic- ularly useful when considering market development for technological goods and services. The types of goods affected include new forms of processor or computer screen, or LCD projector etc. However, for the service aspect of marketing technology, the concept is absolutely critical because it not only indicates how the service marketer can get their technology related service adopted in the market place, but also where service can be used to add further value (to either goods or other services).
FIGURE 3.7A: STRATEGY FOR CROSSING THE CHASM Early
adopters
Niche of patroller companies
The ‘CHASM’
Intensive marketing led Compelling reason to buy Invasion to beach head
Early majority
First the beach head
FIGURE 3.7B: STRATEGY FOR CROSSING THE CHASM
When crossing the major ‘chasm’, the strategy of the cherry picker or the niche marketer is recommended. The innovating company needs to obtain strong references amongst the early majority or the company will have absolutely no chance of success in the future. This major part of the market (early majority) contains a subset which is referred to as
‘patrollers’. Their job is to patrol the chasm and ensure that no hare brain schemes make the crossing. ‘Patrollers’ tend to be large companies that are well respected amongst the rest of the early majority. They must be identified, targeted and converted in that initial invasion. Otherwise, without that beachhead, the innovating company has little, if any, chance of diffusing innovation throughout the mainstream of the market place.
Having once established the bridgehead with a significant niche of the early majority patrollers, these customers can then be used as a stepping stone to create the breakout in various directions as the opportunities arise.
Establishing the initial beachhead is very much a marketing led, highly intensive sales invasion of the patroller’s niche. Moving out from this beachhead reverts to a sales led marketing operation with the patrollers being used to establish leads and provide references to convert the remainder of this most important and very profitable mainstream segment (see ‘Crossing the Chasm’ and‘Inside the Tornado’by Geoffrey A. Moore).
Early adopters
Niche companies are now
’reference sites‘
The ‘CHASM’
Reinforcement and
resupply
Early majority
Then the expansion beyond