Sneak preview: beyond the chasm.Four years ago, marketing guru Geoff Moore Geoff Moore (born February 21, 1961 in Flint Michigan) is a Contemporary Christian music artist and songwriter. Biography
Moore was born in Michigan in 1961. added a powerful new concept to the classical technology life cycle model--the notion that a "chasm" exists between early adopter and mature markets. Moore pointed out that the most perilous moment for a technology product is usually the transition from early-stage enthusiasts (who buy because a product is new) to mainstream pragmatists (who buy because a product works).
"These two groups," he says, "although adjacent on the adoption life cycle, are so different in terms of underlying values as to make communication between them almost impossible." Moore's message, in its simplest form, is that life-cycle transitions demand a complete overhaul of marketing tactics--regardless of how successful those early tactics may have been.
This concept quickly caught on among technology marketers, who turned Moore's Crossing Moore's Crossing is a historic community nine miles southeast of Austin, Texas, near Austin-Bergstrom International Airport. The area was settled in the 1840s as a low-water crossing for Onion Creek. It was named after John B. the Chasm into an instant classic and made Moore a hot property on the consulting and lecture circuit. But Moore himself admits that his original model was a bit sketchy about how to cross the chasm, in large part because most successful companies seemed to make the crossing "more or less inadvertently." So Moore began looking more closely at the tactics used by successful chasm-crossers. The result is a fascinating and persuasive new book called Inside the Tornado tornado, dark, funnel-shaped cloud containing violently rotating air that develops below a heavy cumulonimbus cloud mass and extends toward the earth. The funnel twists about, rises and falls, and where it reaches the earth causes great destruction. (due to be released in October).
Moore recently gave us a sneak preview sneak preview
A single public showing of a movie before its general release.
Noun 1. sneak preview - a preview to test audience reactions of Inside the Tornado, which is clearly destined des·tine
tr.v. des·tined, des·tin·ing, des·tines
1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic.
2. to be one of the technology world's most influential strategy guides. This time, Moore offers an in-depth look at the behavior of the so-called "early majority" buyers, the mass-market pragmatists whose "tornado" of demand typically produces the largest share of a product's lifetime revenue. Early majority buyers, says Moore, dislike risk, tend to favor established market leaders, and expect to buy "whole" products (with no unfinished features or customization). That's clearly a tough challenge for emerging companies with rough-edged products, but Moore's new model offers a three-stage blueprint for capturing a mainstream market:
* The Bowling Alley: Rather than jump straight into a mass market, Moore argues, it's usually better to establish a beachhead beach·head
1. A position on an enemy shoreline captured by troops in advance of an invading force.
2. A first achievement that opens the way for further developments; a foothold: presence in a single vertical market segment. The key to this strategy, he adds, is to become almost obsessively focused on well-defined applications and small groups of customers. By scoring big wins in these segments, a new technology builds momentum and reputation: "Each niche is like a bowling pin, something that can be knocked over in itself but can also help knock over one or more additional pins."
However, bowling alley strategies can be tough to execute, Moore admits. The company has to become deeply committed to niche customers, who insist on control over features and product development. And a half-hearted effort to control the segment is likely to backfire, Moore says, because the real goal of a bowling alley strategy is to emerge as a well-established market leader. "To dominate a segment typically means winning 40% or more of its new business over a year to 18 months," he says. "If the segment is already well served by another vendor, already has an established market leader, you have no chance of displacing that vendor in this time period."
* The Tornado: Once a product has established itself in niche markets A niche market also known as a target market is a focused, targetable portion (subset) of a market sector.
By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. , it's well positioned for what Moore calls the "tornado .... the frenzy of buying that occurs when an entire market stampedes to adopt a new technology standard. "Virtually overnight, demand outstrips supply, and a whole world full of backlogged customers appears, just waiting to be served." At this stage, says Moore, there is tremendous value in being' perceived as a leader--but customer-centric marketing suddenly becomes a liability. Says Moore: "To put it as succinctly suc·cinct
adj. suc·cinct·er, suc·cinct·est
1. Characterized by clear, precise expression in few words; concise and terse: a succinct reply; a succinct style.
2. as possible--just ship. Don't segment. Don't customize. Don't commit to any special projects. Just ship."
Moore also points out that the tornado phase is the one time when big market share gains are essential. "The tornado market is a zero-sum game Zero-Sum Game
A situation in which one participant's gains result only from another participant's equivalent losses. The net change in total wealth among participants is zero the wealth is just shifted from one to another. ," he says. "Every new customer I win is one you lose--for life. Going forward, they will be part of my installed base, not yours, so you lose access not just to their current revenue but all future revenue as well." (Moore says one of the shrewdest tornado marketers of all is Oracle's Larry Ellison Lawrence Joseph Ellison (born August 17, 1944) is the co-founder and CEO of Oracle Corporation, a major database software company. Early life
Ellison was born in New York City to Florence Spellman, a 19-year-old unwed Jewish mother. , who once quoted Genghis Khan Genghis Khan: see Jenghiz Khan.
or Chinggis Khan orig. Temüjin
(born 1162, near Lake Baikal, Mongolia—died Aug. : "It is not enough that we win--all others must lose.")
* Main Street: Inevitably, hypergrowth comes to an end. What's left are "Main Street" buyers that are increasingly commodity-oriented and price-sensitive. These customers are especially frustrating frus·trate
tr.v. frus·trat·ed, frus·trat·ing, frus·trates
a. To prevent from accomplishing a purpose or fulfilling a desire; thwart: to the marketers who prospered during the slash-and-burn tornado phase, Moore points out. "The market share boundaries have been set, and all that's left to fight over are the late-comers and a handful of switchable customers who, if they were once disloyal, cannot be counted on as customers-for-life anyway."
But in fact Main Street markets can be the "best source of funding for recycling back into the next tornado," says Moore. The trick, says Moore, is once again to switch tactics--to become highly customer-centric, to look for line extensions, and to create enhancements that add perceived value to the core product. "The goal on Main Street is to maximize the financial yield from your installed base," he says. "You have captured your territory, now it is time to till it, and the company with the highest yield per acre is the victor."
Geoffrey Moore Geoffrey Moore is a Silicon Valley based high technology consultant and author.
His books are derived from his Silicon Valley consulting work at The McKenna Group and The Chasm Group (which he founded), and earlier work by Everett Rogers on adopter categories and diffusion , president, The Chasm Group, 550 California Ave., Palo Alto Palo Alto, city, California
Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif. 94306; 415/424-9411.