Friday, May 18, 2007

Marketing Disruptive Innovations to Consumers: Myths vs. Realities

[ ... a Chasm Institute perspective ]

The boundaries between high-tech and the consumer have shifted. The next 2 to 5 years will increasingly blur this boundary further, making it essential for today’s marketers to more deeply understand the rules of the game.

It is no longer “business to business = high-tech” and “business to consumer = low-tech.”

Competitive worldwide markets clearly require smarter approaches for savvy companies seeking to introduce a “consumer” high-tech product. And the good news is that key success patterns are emerging and becoming more predictable, based on our Chasm Institute client strategy sessions and workshops during the past 10+ years.

In this overview, we describe four myths and realities that must be considered, for the successful marketing of disruptive technology into consumer markets.

These are as follows:

(1) Consumers and Disruptive Innovations –
This Can Be Done

· Myth: Consumers will not buy disruptive innovations.
· Reality: Certain consumers will buy disruptive innovations, but the motivation and economic model must be right.
· Lesson: Target wealthy consumers, or less affluent but highly-motivated early adopters (think MP3 players). In either case, you need to win over Technology Enthusiasts who will give your product a strong early endorsement.

Examples: early stage PC’s, home theatres, digital cameras, wireless home networking.


(2) Cross the Chasm with Consumer Products – by Not Focusing on the Consumer

· Myth: There’s no such thing as Crossing the Chasm with consumer products.
· Reality: Best to first Cross the Chasm with a business use for your consumer product, then do the same with consumers.
· Lesson: Find a business application for your consumer product first, if at all possible.

Examples: the true commercialization of mobile phones started with sales professionals; the true commercialization of HDTV’s started with sports bars, trade show booths, corporate lobbies.


(3) Completing the Whole Product is a Big Deal

· Myth: First one to market always wins.
· Reality: First one to market with the whole product wins.
· Lesson: Just because you have a cool technology, is no guarantee of market success – until you’ve nailed the entire “minimum viable” whole solution. And yes, this includes that pesky ecosystem.

Example: iPods (whole product included hardware, “look & feel”, industrial design, packaging, channel strategy, “out-of-box-experience”, pricing, iTunes music downloading system, branding, messaging – yes, even the billboards!)


(4) Market Leadership can be Fleeting: ... don’t think you ever “own” the market – you’re only renting !

· Myth: I can always leverage leadership from a previous paradigm to win in the future.
· Reality: Few companies can break the stronghold of their past, without a clear + disciplined “renewal strategy”.
· Lesson: Just because you’re a leader in one paradigm, is no guarantee for success in the next paradigm. You have to fight just as hard, if not harder, to win the next wave of adoption.

Examples: Sony Walkman losing to Apple’s iPOD (2000’s), Motorola losing to Nokia in mobile phones (1990’s), Kodak losing to Canon/Sony in digital cameras (2000’s), Nokia at risk of losing to Samsung / LG / Motorola (2000’s).


About the Authors:

Mark Cavender
and Michael Eckhardt
Managing Directors at Chasm Institute LLC

Mark Cavender is Founder and Managing Director of Chasm Institute. An accomplished teacher and workshop leader, he also serves as a senior instructor. With over 15 years of experience in enterprise software, Mark has a unique blend of strategic and tactical marketing skills coupled with a strong background in software sales.

Mark has worked with numerous leading enterprise software and telecommunications companies such as Acterna, Business Objects, Hyperion, Lawson Software, Microsoft, Nextel, Nokia and SunGard as well as growing firms such as Docent, iManage, and Logility. He has also done joint strategy work with IBM and their key enterprise software business partners.

Prior to founding Chasm Institute, Mark spent 9 years as a Managing Director with The Chasm Group and four years with Oracle Corporation, most recently as Director of Marketing, Financial Applications. Before joining Oracle, he was Marketing Manager with J.D. Edwards & Co. He has also held various sales and marketing management positions with GEAC (formerly Dun & Bradstreet Software / McCormack & Dodge), and Ceridian (formerly The Service Bureau Company).

Mark holds an MBA in marketing from the University of North Texas and a BS in general business from John Brown University.



Michael T. Eckhardt, Managing Director of Chasm Institute LLC, is a veteran of Hewlett-Packard, PepsiCo Inc., and Price Waterhouse. A graduate of Harvard Business School and Wall Street Journal Award Winner, Michael is a recognized expert in delivering market strategy workshops for high-tech executives and product teams.

Michael has 20 years of deep expertise in strategic marketing and high-tech market development. He provides clients in the U.S., Europe, and Pacific Rim with strategy workshops & tools for gaining and sustaining market leadership positions in highly-competitive marketplaces. He was first named a Senior Affiliate of the Chasm Group in 1994.

Michael's client base includes Cisco Systems, Hewlett-Packard’s printer business, Intel Corporation, AT&T Wireless, Agilent Technologies, Philips Medical Systems, Autodesk, LMC Data Systems, and Mentor Graphics.
Prior to Chasm Group, Michael directed Hewlett-Packard's market-focus consulting group. His work with HP frequently contributed to its business units generating profitable growth from key product lines, and increasing the market acceptance of new products. He provided HP product divisions, including the market-leading LaserJet® and DeskJet® printer businesses, with 3 priorities: market strategy workshops, customer needs analysis, and competitive intelligence training.



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