Modeling Emerging Technology Market Development
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In his book Crossing the Chasm, Geoffery A. Moore deftly renames these characteristic market adopter segments to better fit the psychographics of technology market end-users. In Moore’s model, the Innovators are called the Technology Enthusiasts (or Techies), the Early Adopters are Visionaries, the Early Majority are Pragmatists, the Late Majority are Conservatives and the Skeptics are the Laggards.
Moore takes the TAL model one step further by introducing the notion that market development phases must be identified according to overall environmental characteristics rather than solely by adopter psychographics. The market phases that correspond to the established adopter segments are Early Market, The Chasm, Bowling Alley, Tornado, Mainstreet and Total Assimilation. Moore’s model also introduces gaps between each subsequent phase. These gaps represent transitions where market momentum can be lost if organizations fail to adjust their strategy to accommodate the new adopter segment’s values, priorities, motivations and fears.
The most treacherous of these gaps is the Chasm. Emerging technology markets often stall when they reach this phase. It is too late to attract new Visionaries, who are not interested because they can’t be the first to adopt the technology, and too early to attract Pragmatists, who are too risk averse to invest in solutions from anyone but established market leaders that have been referred by a trusted source. (Pragmatists invest in solutions, not technology, and consider Visionaries to be risk takers. Therefore, they are not inclined to consider them trusted references.)
The Chasm often becomes a game-over graveyard for those technology hopefuls who appear to have a bright future in the early market but cannot bridge the divide separating the early market from the mainstream. The Chasm can be particularly deadly if it goes unrecognized. This happens because, while the size of the customer and the order may be the same on opposite sides of the Chasm, the customer’s motivation for buying and his perception of the problem that needs to be solved differ radically. In other words, technology vendors who attempt to use their successful early market sales techniques on Pragmatists will be sorely disappointed.
The good news is, the strategies necessary to cross the Chasm provide opportunities for healthy growth and market share acquisition. Furthermore, success in the Chasm positions vendors for market dominance during the chaotic, high-speed, high-volume, run for the money phase: the Tornado.
The Tornado phase occurs when market growth accelerates dramatically, demand far outstrips supply and vendors ship everything in sight as fast as they can to expand market share. Entrepreneurs and investors alike wait and pray for the Tornado. After all, this is the explosive phase during which the great high-tech fortunes are made.
But to get to the Tornado, one must survive the Chasm. While it is possible to cross in other ways, there is one proven method for charting a successful course across the Chasm. This involves a disciplined approach, one that is often somewhat counterintuitive for early market, sales-driven organizations, called niche marketing. niche marketing strategy
Niche marketing enables an organization to establish a leadership position by dominating small, narrowly defined market segments. The real discipline involved in successful niche marketing is in defining the niche.
The most significant characteristic of a niche market is that its members can and do easily reference one another in their buying decisions. They read the same publications, attend the same conferences and belong to the same professional associations. For niche marketing to work, markets must be defined vertically by industry, rather than horizontally by technology or application. If two customers purchase identical products or services for identical reasons but have no way to reference each other in that purchase decision, they are not considered part of the same niche market.
Contents based the work of Geoffrey A. Moore’s in his books “Crossing The Chasm”, 1995, and “Inside The Tornado”, 1999, Harper Collins Publishers, Inc.