Startup University
Hi-Tech Marketing
How Markets Develop
Market Development Strategy
Hi-Tech Marketing
Diffusion of Innovations
Market Development Strategy
Hi-Tech Marketing
The Technology Adoption Life Cycle:
Adapt strategy according to the stage in the life cycle
Source: Geoffrey Moore
Diffusion of Innovations
• The Technology Adoption Lifecycle
• Selling to mainstream customers
Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University
Diffusion of Innovations
• The Technology Adoption Lifecycle
– Technology Adoption profiles
Technology
Enthusiasts
(Innovators)
Visionaries
(Early
Adopters)
Pragmatists
(Early
majority)
Conservatives
(Late majority)
Skeptics
(Laggards)
Source: Geoffrey Moore
Diffusion of Innovations
• The Technology Adoption Lifecycle
– Technology Adoption responses
Stick with the
herd!
Hold on!
Get ahead of
the herd!
No way!
Try it!
Technology
Enthusiasts
(Innovators)
Visionaries
(Early
Adopters)
Pragmatists
(Early
majority)
Conservatives
(Late majority)
Skeptics
(Laggards)
Source: Geoffrey Moore
Diffusion of Innovations
Chasm
• Selling to mainstream customers
– The Chasm
Source: Geoffrey Moore
Diffusion of Innovations
• Selling to mainstream customers
– Crossing the Chasm: Establish a beachhead segment
Source: Geoffrey Moore
Diffusion of Innovations
• Selling to mainstream customers
– How Markets Develop
Main Street
Chasm
Tornado
Early Market
Bowling Alley
Source: Geoffrey Moore
Diffusion of Innovations
Chasm
• Selling to mainstream customers
– Implications for Sales & Marketing
Customer goal:
Competitive Advantage
Solve problem
Adopt the obvious
Extend paradigm
Customer need:
Potential of technology
Complete solution
Make safe choice
Better value
Vendor goal:
Validate technology
Segment share
Market share
Profitability
Strategy:
Demo the technology
Show ROI
Set standards
Segment focus
Skills:
Technology proficiency
Customer Intimacy Closing deals
Source:
The
Chasm
Relationship mgmt. Institute
Diffusion of Innovations
• Learn more
– Everett Rogers, “Diffusion of Innovations”
– Geoffrey Moore, “Crossing the Chasm: Marketing and Selling HighTech Products to Mainstream Customers”
– Geoffrey Moore, “Dealing with Darwin: How Great Companies
Innovate at Every Phase of their Evolution”
– The Chasm Institute, “Chasm Methodology”
Market Development Strategy
• Market Development Strategy
• Market creation variables
• Market attractiveness variables
• Market penetration variables
Market Development Strategy
• Market Development Strategy
– The Market Development Strategy checklist & stage in the
TALC
Source of money
1. Target customer
2. Compelling Reason to Buy
To fulfill the compelling
reason to buy
3. Whole Product
4. Partners & Allies
Function of whole product
integration complexity
Function of all other factors
7. Competition
8. Positioning
Next move
Needed for whole product
5. Distribution
6. Pricing
For the customer’s money
Source of demand
Relative to competition
9. Next Target
Source: The Chasm Companion
Market Development Strategy
• Market creation variables
– Target customer
• Identified economic buyer, accessible to the sales channel, and
sufficiently well-funded to pay the price for the whole product
– Compelling reason to buy
• Economic consequences sufficient to mandate any reasonable
economic buyer to fix the problem
– Whole product
• Ability (with the help of partners and allies) to provide a complete
solution to the customer’s compelling reason to buy
Source: The Chasm Companion
Market Development Strategy
• Market attractiveness variables
– Partners & allies
• Relationships with the other companies needed to fulfill the whole
product
– Distribution
• Sales channel in place that can call on the target customer and
fulfill the whole product requirements put on distribution
– Pricing
• Price of the whole product consistent with the target customer’s
budget and with the value gained by fixing the broken process
Source: The Chasm Companion
Market Development Strategy
• Market penetration variables
– Competition
• Target a space that has not been occupied by another company
– Positioning
• Establish credibility as a provider of products and services to the
target niche
– Next target customer
• Potential to facilitate entry into adjacent niches
Source: The Chasm Companion
Market Development Strategy
• Market Development Strategy
Target Customer:
Visionary functional
executive
Pragmatist dept.
manager
Pragmatist
technical buyer
End-users
Compelling
Reason to Buy:
Dramatic competitive
advantage
Fix a broken
business process
Adopt new
infrastructure
Better value with no
risk
Whole Product:
Differentiated
application
Standardized
application
Standardized
product
Differentiated
product
Partners & Allies:
BPR/SI service
providers
Recruited for
specific product
Rationalize to
reduce friction
Minimum required,
ideally none
Distribution:
Direct sales
Direct sales/VARs
Higher-volume,
lower-touch
Low-cost, hightouch
Pricing:
Value-based, gain
motivated
Value-based, pain
motivated
Competition-based,
pain motivated
Competition-based,
pain motivated
Competition:
Category vs. category
Application vs.
application
Company vs.
company
Product vs. product
Positioning:
Technology-based
leadership
Niche market
leadership
Market sharebased leadership
Better experience for
end users
Next Target:
Another visionary in a
different industry
Adjacent niche
market
New platforms,
channels, geographies
Next micro-niche
Source: The Chasm Companion
Market Development Strategy
• Learn more
– Geoffrey Moore, “Crossing the Chasm: Marketing and Selling HighTech Products to Mainstream Customers”
– Geoffrey Moore, “Inside the Tornado: Strategies for Developing,
Leveraging, and Surviving Hypergrowth Markets”
– Paul Wiefels, “The Chasm Companion: A Field Guide to Crossing the
Chasm and Inside the Tornado ”
– The Chasm Institute, “Chasm Methodology”