Project Description

Book_Crossing_Chasm_LargeBefore you proceed in a big new venture / startup / idea, make sure you figure out which niche to pursue and defend.


  • Only reasons not to be profitable right away:
    • Because barriers to entry are so high
    • Mistake
  • Direct sales is the optimal channel for hi-tech.
  • Always start with a direct sales model.
    • You can’t afford to lose one day of market opportunity
  • Set the price of a product at a high point to set the market leading price and positioning
    • Give ample rewards to the sales channel to get everyone on board
  • Discontinuous innovation: Innovations that require many new changes in behavior.
  • Try to cater to each segment of the market: early majority, later majority, early adoptors, etc.
    • Each will want different features.
  • The chasm is the gap between fade and trend that creates a market.
  • Every true high tech market starts out as a fade and turns into a trend.
  • Often the superior product is the one that fails vs the inferior product.
  • I’m part of the early majority segment of the market.
  • Sales to early adoptions are fundamentally different from sales to other customer groups.
  • Marketing is the ability to create something real, as opposed to being an illusion.

How to define a market: If you sell the same product to two different people, but those people can’t or don’t communicate, then you have two different markets.

  • Those who define the market will always win.

Early markets: They will ignore many issues with a product if it means moving a technology forward. (e.g. they bought HD TV before their were any channels to show it).

  • Technology enthusiast:
    • They want the truth and not any tricks.
    • They want access to the most technology relevant person to fix their person.
    • They don’t care for added value. They want it for cheap.
  • Visionary:
    • Early adopters of high technology products. (e.g. JFK was a visionary leader for launching the Moon program).
    • Highly motivated and driven by a business dream.
    • They are driven my the potential of a big ROI.
    • Less price sensitive of any segment of the market and they have big budgets.
    • Need to be a VP in order to have the clout to fulfill their vision.
    • They typically find you after communicating with technology enthusiast.
  • The dynamics of early markets:
    • Need a truly superior product.
    • Make sure to focus on one platform and valuable service and remove all barriers to your target group using the product.
  • Mainstream Markets:
    • Accepted as leaders by the late majority.
    • They don’t like to take risks.
    • These buyers like to see competition, so they
      • Can buy from a proven market leader
      • Can have a good fallback if things go wrong.
      • They need an after market.
  • Conservatives:
    • Represent 1/3rd of the market, believe in tradition vs. progress, they prefer low prices.
    • Prefer single function systems for basic business needs.
    • You can keep this group by playing fast follow-up.
    • You can lose this market if you stop investing in it.
  • The initial value from the start of a system does not end up being the main value of the product.
    • Therefore, initial learning curves are important.
  • Steamrolling sceptics is good for sales, but bad for marketing.

Strategy Notes:

  • Trying to start a market without going after a specific niche will burn up your efforts and show very little.
    • A niche strategy is generally best. An industry develops around you to reinforce your dominance.
    • Make a total commitment to the niche and use whatever is left over to work on other markets.
    • Segmentation is the best strategy.
    • Take a big fish in a small pond outlook.
    • A wide open strategy is doomed to fail.
    • Need a beach head to grow.
    • Need a whole product idea.
    • Sales efforts need to work on one or two niche products.
    • Sales driven strategy should be avoided.
    • Niche focused achieves market leadership.
  • Next, line up other market segments that can come from subsequent niches:
    • Market the same services to them as well.
    • In the act of trying to reduce market risk by increasing the features, a company can increase market risk, because it doesn’t focus on a particular niche.
  • Application fit a need whereas platforms are the infrastructure for those systems
    • When markets go mass, platforms have the advantage.
    • Platforms are the hardest types of ideas to get across the chasm.
  • Target the point of attack (market entry)
    • If you don’t know where you are going, then you wouldn’t get there.
    • Focus on a specific niche market and attack
  • Difficult products create a barrier to entry against other customers

Strategy Steps:

  1. Divide up the universe of possible customers into market segments
  2. Find the ones that are most attractive
    • Size, characteristics, competition
  • Develop a whole product strategy that starts with the minimally viable product and ends with what the visionary and market wanted.
    • Don’t get caught out when developing to the final market.
    • Produce all the different aspects of the strategy that can fulfill a target segment’s needs.
  • Research value chains to see how to create a market.
    • MBA term

Target customer characterization:

  • Create as many characterization so as possible to figure out customer profiles.
  • Then make sure features carter to them.
  • Make sure marketing efforts target them.

Four important checklist

  • Target customer
  • Compelling reason to buy
    • Check that the customer can afford the “whole” product price, not just the initial costs.
  • Competition

Niche market strategy

  • Focus on getting half of the orders in the segment in order to get the market segment leadership position.
  • If a target segment is too big, then sh segment it, but watch for word of mouth. Geography could also work.

Target market selection process:

  • Develop target customer library
  • Figure out target market
  • Create scenarios. Show stoppers and nice to haves.
  • Rate each scenario
  • Rank order results and pursue best
  • Move forward on best segments. Attack the main scenario.
  • Assemble the invasion force. It’s war fair, not word fair.
  • Any time you need to cater to a new target, you have to change up the product to meet that goal, which adds to product cost and marketing demands.
    • After a while, we see that you just can’t do all activities.

Positioning (Single largest influence on the buyer’s choices, steps to correctly position)

  1. Goal is to occupy a segment of the market inside their head.
    1. Customers need to use a short hand reference to explain the product.
    2. Use a competitor or competitive product to help triangulate the product in customer’s minds
  2. Undisputable market segment dominance in a two sentence format
    1. Elevator test? Can you explain it in two sentences?
      1. Importance? Ppl only remember two sentences at a time, etc.
      2. Only hit target customers who are dissatisfied with the current market
      3. Don’t overload the positioning effort
      4. Elevator Test Formula:
        1. Mention name
        2. Target market (For the …. Member of ….)
        3. Explain problem (
        4. Explain solution (Unlike…. We…)
        5. Mention competitors
  3. Need the evidence
  4. Communications: address right audience in right sequence
  5. Feedback and adjustment