How to Start and Grow your Startup 4. Growth -Diffusion of Innovations -Market Development Strategy

1. Growth
Diffusion of Innovations
Market Development Strategy

2. Growth
The Technology Adoption Life Cycle:
Adapt strategy according to the stage in the life cycle
Source: Geoffrey Moore

3. Diffusion of Innovations
• The Technology Adoption Lifecycle
• Selling to mainstream customers

4. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

5. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

6. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

7. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

8. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

9. Diffusion of Innovations
• The Technology Adoption Lifecycle
– Technology Adoption profiles
Technology Visionaries Pragmatists Conservatives Skeptics
Enthusiasts (Early (Early (Late majority) (Laggards)
(Innovators) Adopters) majority)
Source: Geoffrey Moore

10. Diffusion of Innovations
• The Technology Adoption Lifecycle
– Technology Adoption responses
Stick with the
Hold on!
herd!
Get ahead of
No way!
the herd!
Try it!
Technology Visionaries Pragmatists Conservatives Skeptics
Enthusiasts (Early (Early (Late majority) (Laggards)
(Innovators) Adopters) majority)
Source: Geoffrey Moore

11. Diffusion of Innovations
• Selling to mainstream customers
– The Chasm
Chasm
Source: Geoffrey Moore

12. Diffusion of Innovations
• Selling to mainstream customers
– Crossing the Chasm: Establish a beachhead segment
Source: Geoffrey Moore

13. Diffusion of Innovations
• Selling to mainstream customers
– How Markets Develop
Tornado Main Street
Chasm
Early Market Bowling Alley
Source: Geoffrey Moore

14. Diffusion of Innovations
• Selling to mainstream customers
– Implications for Sales & Marketing
Chasm
Customer goal: Competitive Advantage Solve problem Adopt the obvious Extend paradigm
Customer need: Potential of technology Complete solution Make safe choice Better value
Vendor goal: Validate technology Segment share Market share Profitability
Source:
Strategy: Demo the technology Show ROI Set standards Segment focus The
Chasm
Skills: Technology proficiency Customer Intimacy Closing deals Relationship mgmt. Institute

15. Diffusion of Innovations
• Learn more
– Everett Rogers, “Diffusion of Innovations”
– Geoffrey Moore, “Crossing the Chasm: Marketing and Selling High-
Tech Products to Mainstream Customers”
– Geoffrey Moore, “Dealing with Darwin: How Great Companies
Innovate at Every Phase of their Evolution”
– The Chasm Institute, “Chasm Methodology”

16. Market Development Strategy
• Market Development Strategy
• Market creation variables
• Market attractiveness variables
• Market penetration variables

17. Market Development Strategy
• Market Development Strategy
– The Market Development Strategy checklist & stage in the
TALC
Source of money 1. Target customer
2. Compelling Reason to Buy Source of demand
To fulfill the compelling 3. Whole Product
reason to buy
4. Partners & Allies Needed for whole product
Function of whole product 5. Distribution
integration complexity
6. Pricing Function of all other factors
For the customer’s money 7. Competition
8. Positioning Relative to competition
Next move 9. Next Target
Source: The Chasm Companion

18. Market Development Strategy
• Market creation variables
– Target customer
• Identified economic buyer, accessible to the sales channel, and
sufficiently well-funded to pay the price for the whole product
– Compelling reason to buy
• Economic consequences sufficient to mandate any reasonable
economic buyer to fix the problem
– Whole product
• Ability (with the help of partners and allies) to provide a complete
solution to the customer’s compelling reason to buy
Source: The Chasm Companion

19. Market Development Strategy
• Market attractiveness variables
– Partners & allies
• Relationships with the other companies needed to fulfill the whole
product
– Distribution
• Sales channel in place that can call on the target customer and
fulfill the whole product requirements put on distribution
– Pricing
• Price of the whole product consistent with the target customer’s
budget and with the value gained by fixing the broken process
Source: The Chasm Companion

20. Market Development Strategy
• Market penetration variables
– Competition
• Target a space that has not been occupied by another company
– Positioning
• Establish credibility as a provider of products and services to the
target niche
– Next target customer
• Potential to facilitate entry into adjacent niches
Source: The Chasm Companion

21. Market Development Strategy
• Market Development Strategy
Target Customer: Visionary functional Pragmatist dept. Pragmatist End-users
executive manager technical buyer
Compelling Dramatic competitive Fix a broken Adopt new Better value with no
Reason to Buy: advantage business process infrastructure risk
Whole Product: Differentiated Standardized Standardized Differentiated
application application product product
Partners & Allies: BPR/SI service Recruited for Rationalize to Minimum required,
providers specific product reduce friction ideally none
Distribution: Direct sales Direct sales/VARs Higher-volume, Low-cost, high-
lower-touch touch
Pricing: Value-based, gain Value-based, pain Competition-based, Competition-based,
motivated motivated pain motivated pain motivated
Competition: Category vs. category Application vs. Company vs. Product vs. product
application company
Positioning: Technology-based Niche market Market share- Better experience for
leadership leadership based leadership end users
Next Target: Another visionary in a Adjacent niche New platforms, Next micro-niche
different industry market channels, geographies
Source: The Chasm Companion

22. Market Development Strategy
• Learn more
– Geoffrey Moore, “Crossing the Chasm: Marketing and Selling High-
Tech Products to Mainstream Customers”
– Geoffrey Moore, “Inside the Tornado: Strategies for Developing,
Leveraging, and Surviving Hypergrowth Markets”
– Paul Wiefels, “The Chasm Companion: A Field Guide to Crossing the
Chasm and Inside the Tornado ”
– The Chasm Institute, “Chasm Methodology”