All creative technological innovations require time for any group to absorb themselves. Because of variations in attitudes towards new technologies, this phase of adoption appears to take place in stages, one group of people at a time, according to the Technology Adoption Life Cycle. Author, Geoffrey A Moore describes this in greater detail in his book, Crossing the Chasm.
The first to adopt a new technology are the technology enthusiasts, for whom technology is a central interest in life. They simply want the hottest new technology before everyone else, even if it is still bug-ridden and faulty in places.
Next in line are the visionaries. Rather than the technology itself, they are interested in the strategic competitive advantage it could provide. They seek breakthroughs, not minor improvements to the status quo.
The two categories above represent the comparatively small early market followed by the vitally relevant and much larger mass market. When a technology has proved itself and a strong market leader has emerged, the pragmatists feel confident enough to hop on board, making up about one third of the entire market. Unlike the visionaries, they are not looking for major improvements, they are looking for gradual gains from standardized, well-supported goods instead. Pragmatists make extremely loyal customers and therefore, the path to long-term market domination is to gain their loyalty.
The fourth group, the conservatives, is as numerous as the pragmatists, but suspicious of high-tech. They want simple, high-quality, low-cost products with no hassle involved.
Finally, the skeptics are a small high-tech resistant group who are most often ignored as a customer segment, but who can provide valuable feedback on how your product is failing to meet their expectations.
Unlike early-market customers, mainstream customers abhor products that require them to hunt for additional products and services.
Therefore they want only what are known as whole goods, meaning items that fully fulfill their purchase goals. For example, Pragmatists love Microsoft products because they know there is a large infrastructure already available for them to support products and services.
In addition to the product that is shipped in a box (the generic product) they also demand things like installation, support and any additional soft- or hardware needed to fully meet their expectations.
Whole goods are the arena where they win or lose the battle for the consumer markets. To meet the pragmatist community and effectively cross the chasm, you need to supply your chosen target niche with a whole product. While a successful, generic product is a great advantage, being a market leader is neither necessary nor appropriate.
Some of the components needed for the whole product will inevitably fall outside the core competence of your company, so you may need to find partners to address those needs. Such alliances should have the sole aim of developing and marketing a whole product for a specific customer segment.
Take , for example, a company that sells aggregated pharmaceutical research data. Its consumers would require access to various data sources, and the company must collaborate with a range of data suppliers such as public health departments, managed care organizations and individual scientists to fully satisfy these demands.
Entering the mainstream market is an act of aggression: you are invading the existing players’ territory, hence you should plan your attack as you would a military invasion.
You start by getting a beachhead secured. This means targeting a particular business segment within the pragmatist party and becoming the undisputed leader in the industry. You will then expand from this base into other segments until finally you will conquer the entire market. The niche is the kindling you’ll ignite the fire with.
But it takes concentration to enter a niche: you must have the discipline not to sell beyond the niche. Many businesses in the chasm literally can not tolerate additional prospects for revenue elsewhere. They wind up selling around the market without ever developing a credible role, and waste their money on endless customizations to fit every segment of the market.
A small target niche helps you satisfy the pragmatists’ preferences for buying products which are well-supported, well-referenced and sold by market leaders:
First of all, the narrower the niche, the easier it would be to win most new orders within it and thereby become the de facto market leader. And a greater proportion of consumers in the niche will discuss your product, and positive word-of – mouth reviews will circulate more easily.
Lastly, operating within a niche allows you to develop a standard product specifically for that niche, including the additional components, services and support infrastructure that the pragmatists expect.
Choosing the right target niche to invade first usually means making a risky decision without having reliable information to base it on. Hence, it calls for informed intuition rather than analytical reasoning.
A method called target-customer characterisation is a tool to assist in this decision. This means designing a range of situations where different consumers might be using your product. You are considering the consumer, the end user and how the product will potentially change the present condition of the customer.
Thus one possible scenario for e-books would involve airline maintenance directors buying them for their repair crews. The crews could then access up-to-date repair manuals even on the tarmac, thus resulting in fewer costs from delays.
The purpose of this exercise is to arrive at a range of potential customers so that you can compare them and identify the consumer segment with the most compelling reason to purchase your product. If your product doesn’t solve a desperate problem in a given market, pragmatist consumers prefer to delay their purchase decision, making your entry considerably more complicated.
Time is your enemy in the chasm. Within your intended niche, you must be able to find necessary partners and field a whole product that fully addresses customer needs within three months.
Finally, consider the existing competition in that niche. If a competitor has crossed the chasm before you, they will have the exact same advantages you were hoping to gain.
Once you have picked your beachhead, there is no looking back. While it is possible to succeed by invading the wrong niche, hesitation almost always results in failure.
Check out my related post: Is this an innovation?