The first step to implementing the chasm crossing is targeting the point of attack. The vital principle for crossing the chasm is to target a specific niche segment as your point of attack and focus your resources on achieving market leadership in that segment as quickly as possible. First, you need to divide the possible mass of customers into segments. Then you need to examine each segment based on its attractiveness. After the segments get narrowed down to a small number as the finalists, you need to develop estimates for such factors as the market niches’ size, their accessibility to distribution and the extent to which competitors will protect them. Then you need to pick a segment and fight to win it. Unfortunately, nobody seems to get this right. Most companies don’t come to the chasm with a market segmentation strategy; if they do have one, they are not usually confident about it. It’s not because of a lack of knowledge of market segmentation as most of these individuals have been to business school. Instead, they have a natural hesitancy and lack confidence in making a high-risk, low-data decision.
We already know that crossing the chasm is a hazardous attempt where you march right into the competitor’s kingdom. We will either win or lose a significant amount of equity value in our company. Since you’re trying to choose a segment you have not penetrated to a great extent, you also lack experience in that target market segment. Moreover, as you’re introducing a discontinuous innovative product to the market, no one has experience with what will happen. By definition, the market you’re entering has not experienced your product type before. The early adopters who have experienced your product before are so unique in their psychographic profile compared to your new target market customers, who happen to be pragmatists, that you should be careful about assuming your results until this date. This means you’re in a high-risk, low-data situation.
If you go through established case studies in market segmentation, you will see that they’re based on issues on market share in an existing market. There are few valuable models on how to proceed when you cannot evaluate market share data, and you cannot even conduct a detailed interview with an existing customer for the type you’re trying to succeed in. The biggest mistake anyone can make in this situation is relying on numeric information to save them. Numeric data are made up of millions of assumptions on the market for a promising future, but all hell breaks loose when something terrible happens. You need to accept the lack of data as a condition of this chasm process. To be sure, you can collect highly focused data on your own. However, you cannot expect to transform a low data situation into a high data situation just like that. Since you must act fast, you must decide on your viewpoint. For this purpose, informed intuition instead of analytical reasoning is the most reliable decision-making tool.
Unlike numerical analysis, informed intuition isn’t based on processing a statistically significant sample of data to achieve a particular confidence level. Instead, it includes conclusions based on separating a few high-quality images, and these images are unique from the mass of mental material that goes around our heads. Moreover, these images are memorable ones. Thus, the first rule of working with an image is that if you can’t remember an image, don’t try to, as it’s useless. Instead, work with memorable images.
In marketing, the target market segments can be imagined as Gen X, Gen Y, goths, geeks, Biebers and so on. Bieber’s can be seen shopping at a mall, wanting peer approval and not liking parental control, which means that specific marketing tactics can win their money. Early adopters, pragmatists and the late majority represent a set of images which are like goths or geeks. Each segment represents different marketing behaviours in adopting a discontinuous innovation from which you can predict the success or failure of marketing tactics. Target customer characterization thus makes these abstract segments more target market-specific.
Most chasm crossing market segmentation efforts get into trouble at the start, where they focus on a target market or segment instead of a target customer. You need to work with something that gives more signs on how to proceed when real people are present with complicated motives. However, as there are no real customers, you’ll have to create them. After you have their images in mind, you need to let them guide you to build a genuinely responsive approach to their needs.
Target customer characterization aims to create as many characterizations as possible, one for each type of customer and application for the product. Once you have built basic information on possible target customer profiles, you can apply a set of techniques to minimize the data into a ranked list of desirable target market opportunities.
Let’s consider how we would market a 3D printer to demonstrate an example of target customer characterization. 3D printers were getting a lot of attention from the press when Geoffrey A. Moore was working on his book, ‘Crossing the Chasm’. You input a 3D CAD file of the object you require, and the printer builds one up by manipulating a polymer stream or laying down layers of substrate. Let’s assume that 3D printers will continue winning an early market of techies and early adopters in the next few years. Invisalign, which happens to be the leader in the next generation of orthodontia, has normalized 3D printing to create its products and is revolutionizing the industry. Next, it is time to target the mainstream market, so where will you begin? This is a simple case of “so many segments, so little time” for which target customer situations are suitable for. Thus, let’s consider a sample situation below for our understanding.
Sample situation –
1. Header information – in the header, you need thumbnail information regarding the offer’s end-user, technical buyer, and economic buyer. For business markets, the primary information is industry, geography, department and job position. Regarding consumer markets, demographic information such as sex, economic status and social group are needed.
Assume, in this sample situation, a lighting designer is introducing new lighting fixtures for homes. She plans to sell these fixtures through wholesale distributors to interior decorators and designers acting as agents for their wealthy clients. In this situation, the critical header information is:
It’s important to note that in ready-made consumer situations, the three users merge as one or two. For example, if the end-user is a child, the economic buyer is a parent, and the technical buyer is the child. One issue is that it’s difficult to cross the chasm in a consumer market. Still, most successful chasm crossings occur in the business markets where the economic and technical resources can fight against the challenges of an immature product and service offering.
On the other hand, consumer markets can operate with no chasms if the technology is already adopted, and the obstruction is coming from the new business model. Turning back to our example, the idea behind the header information is to make the marketing and R&D teams focus on a specific situation on how the product will be bought and used. This is known as the use case. You don’t have to worry about being overly focused on the three roles of the users at this point because the more specific you are, the better!
2. Life before 3D printing
The aim here is to describe a situation where a user is stuck with significant consequences for the economic buyer. There are five elements you should capture:
Let’s use the lighting fixtures example and implement it into the elements:
3. Life after 3D printing
Three elements need to be captured here:
Let’s assume you have spent a day with a group of ten members from a 3D printing company collecting 20-40 scenes. You have collected actual use cases from customers and interesting prospects regardless of whether they won, lost, or are waiting. This isn’t a survey based on formal segmentation as it takes too long, and their output isn’t valuable. Instead, we are exploring these stories of different customers, which will incorporate stories, prejudices and lies. However, they are the most valuable and correct data to gather at this point in the segmentation process.
The market development strategy checklist consists of a few issues around which go-to-market plans are made where each contains a chasm crossing factor:
Processing the scenarios includes rating each scenario against each of the factors of the market development strategy. The process happens in two stages, where in stage 1, all the scenarios are rated against 4 “showstopper” problems. Low scores in any of the scenarios eliminate them from being considered in the future as the beachhead segment. This means that the niche might be a good one to go after the chasm crossing but isn’t a good target for the crossing.
Scenarios that pass the first four issues will be rated against the last five factors (stage 2). In both stages, scores are given for each factor, ranking the scenarios. At the end of the process, the top-ranked scenarios are the top chasm crossing targets. Therefore, they will be discussed further until the team decides which ONE beachhead target to pursue. Remember, you cannot pursue more than one target as you cannot cross the chasm by pursuing two target markets simultaneously, where you cannot brush your teeth and fix your hair simultaneously.
Now let’s explore the four factors that raise the showstopper problems:
When scenarios are rated against these four factors, out of 1-5, the worst aggregate score they can achieve is 4, and the best is 20 with preferable high-rated scenarios. If you’re unsure, favour scenarios with a highly rated strong reason to buy. If a competitor has already been attracted, check whether you can outsmart them.
The remaining five factors fall into the “nice to have” category. This means that low scores can be resolved considering time and investment. However, as time and investment are scarce, cheaper and sooner are desirable features in a target market scenario.
Chasm crossing is, therefore, not the end but the start of mainstream market development. Consequently, it’s essential to have more follow-on niches that can be fruitfully addressed. If not, you’re going to fail.
After gaining the data from this process, it’s time to take the high-risk, low-data decision.
When crossing the chasm, you don’t have to pick the most desirable beachhead to succeed, as you must win the beachhead you have chosen. The target customer will desire you if there’s a problem in the segment. If it’s a complicated problem and the segment is small, you won’t have a competition to distract your focus. You can thus focus on the whole product, which is where it needs to be.
What makes you change plans? Mostly, it’s the scenario driving the effort based on wrong assumptions. To protect you from this, you need to have conducted market research early in the process, especially to validate the winning scenario. However, you shouldn’t expect this research to be complete before moving forward, as the enemy in the chasm is always time.
Finally, when you’re almost committing to the target customer, the point of how much revenue the segment might generate comes up.
As stated by Geoffrey A. Moore, to become profitable and a continuous entity in the market, you need a market segment that will commit to you as its current standard for enabling a critical business process. To become the current standard, you need to secure at least or a lot more of the new orders from the segment over the following year. This is what makes pragmatists notice you a lot. Simultaneously, you will be taking orders from other segments.
Assume that you can get half of the following year’s orders from the target segment. Suppose the total revenue target is 10 million USD. This means 5 million USD from the target segment, and this same 5 million USD implies that it must represent at least half of the total orders from the target segment if you are to have the impact of a market leader. I.e., if you’re going to be a 10-million-dollar company the following year, you shouldn’t target a segment more than 10 million USD. Meanwhile, the segment should be sufficiently large to generate 5 million USD.
Suppose you discover that the target segment is too large, sub-segment it. But be mindful of the word-of-mouth limits here. The best sub-segment is special interest groups in the community. Special interest groups are tightly networked and are usually formed due to having special problems. If there is no special interest group segment, consider geography as a sub-segmentation variable if it impacts how communities gather.
If the target segment is too small to generate the following year’s expected revenue, you need to augment it. Once again, it would help if you were mindful of genuine segmentation boundaries. If there is no suitable super segment to target, you’ll have to pick another target segment.
We have finally come to an end to this article. Always remember that the first step to implementing the chasm crossing is to target your point of attack. You need to make a high-risk, low-data decision, have an informed intuition, target customer characterization and a market development strategy checklist to rate target customer scenarios against the nine factors. After successfully rating these scenarios, you must select the target market by appointing a sub-committee.
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