Wednesday, May 06, 2009

Crossing the Chasm

The book 'Crossing the Chasm' was written by Geoffrey A. Moore in 1991. It explains market behaviour for high tech product. How are innovations diffused over the time. Moore explains that you can normally observe 5 phases:
- firstly, people who always buy and use the new stuff (called 'Innovators', although they are not really innovating themselves but rather using innovative products) will start to try out the product;
- the message about the innovation spreads out and a larger group of 'Early Adaptors' will jump on the moving wave.

So far this is the more or less easy part of the marketing game, once you really have made an innovation. It's not yet the place where you make substantial money, but an innovator can take pride in having been able to convince 'Innovators' and 'Early Adaptors' to buy in. Yet, the innovator must be aware that these two groups of users are pretty illoyal as the 'Innovators' will very soon hop off to follow the next new gadget. Here is the point where a chasm has to be crossed in order to reach a larger group of customers. Only when the innovation can be placed in broader markets really substantial money can be earned. The 'Early Adaptors' must be and sometimes are motivated to bring the message across to a mass audinece of potential clients. They are the multipliers who must be persuaded to 'fight for the good cause'.

In the next phases, after crossing the chasm, the following groups will have to be targeted:
- the 'Early Majority' is really most important to be found and convinced. They will buy in masses and this will bring the innovative product to it's peak performance in the marketplace. The curve will go up from a tipping point to a peak as members of this group of customers are convinced by the functionality and price / performance arguments of the product. After reaching a top performance the curve will go down again as
- the 'Late Majority' will join in, customers who will only buy once the product has become almost a commodity and a 'must'. Still a very interesting segment of customers and obviously meanwhile the product has paid off it's R&D cost.
- finally the 'Skeptics' will also buy as very late followers.

For all of these phases different marketing and sales approaches have to be applied. Most importantly the innovators (the real developers or producers of the product) have to make sure that the chasm is quickly crossed using momentum and word of mouth recommendations by the 'Early Adaptors'. Many innovations fail as they get stuck in the chasm.

The cycles in which innovative products must be placed in the markets and can be harvested have decerased considerably in time for new products. Therefore mastering the strategies and tactics of a diffusion model become ever more important. The iPod , launched before Christmas 2001 was sold 20 million times by mid 2005. After crossing the chasm it took just two years to sell it 100 million times by mid 2007. And a year later sales figures where up in the 150 million range.

The book 'Crossing the Chasm' explains the mechanism and marketing instruments to be used with innovative tech products. It still is and will be one of the most important text books for entrepreneurial marketing.

Monday, May 04, 2009

Be on top of things

Have you heard of PopURLs? If not, I think you're missing some very interesting information, fabulous pictures, videos and more. On PopURLs you will find aggregated information on many topics, searched through permanently digging through the Web. It's a great source for finding some extraordinary nuggets of articles, photos and videos on the Web. I post some of the information I read there to Twitter or will use it as a reference for future blogs. Enjoy.