Download Crossing the Chasm: Understanding Technology Adoption and Market Development - Prof. Rajag and more Study notes Introduction to Business Management in PDF only on Docsity! Slide 1 Workshop on Crossing the Chasm Raj Echambadi Slide 2 Product Life Cycles from Marketing Time D o ll a rs Introduction Growth Maturity Decline Industry Sales Industry Profits 0 Slide 3 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Nationwide 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 T o ta l S u b s c ri b e rs i n ' 0 0 0 s Year Source: Cellular Business, November 1993 1995 RCR Publications Inc U.S.Cellular Phones http://en.wikipedia.org/wiki/Bass_diffusion_model Slide 4 CROSSING THE CHASM Slide 5 Adopter Categories Traditional Adoption Model Slide 6 The Early Market The Mainstream Market The Chasm The Chasm Slide 13 Seed enthusiasts with new products Help them educate visionaries Capture interest of visionaries Make them satisfied customers Serve as good references for pragmatists Find a niche. Serve this market well! Gain bulk of revenue by serving pragmatists ideally by becoming market leader and setting de facto standards Generate volumes and experience so products become reliable and cheap to meet demands of conservatives Leave skeptics to their own devices The Adoption “Stairway” Slide 14 Conventional wisdom Most companies focus on matching and beating their rivals along the same dimensions. They think like their competition does. Competitive convergence. RED OCEAN strategy. Where is the element of surprise????? You need to create new spaces. BLUE OCEAN strategy. Slide 15 Prospect Theory What drives behaviors are psychological reactions to gains and losses ….not objective gains or losses Slide 16 Rules from Prospect Theory Individuals are sensitive to gains and losses…relative to a reference point not absolute. Losses loom larger than gains. Slide 17 Endowment Effect People value items in their possession more than they value items not in their possession. Duh! Most innovations demand change. Giving up things we have and receiving things we don’t have. Benefits being given up loom larger than benefits being received. Slide 18 Scenario 1 Net benefits for both the incumbent and the innovation are the same. The innovation is far cheaper than the incumbent. What happens? Slide 19 Scenario 2 The innovation offers all of the benefits of the innovation and much more (say, Google) with no additional costs. What happens? Slide 20 Scenario 3 Simultaneous consideration of both gains and losses. – Electric car – Online groceries More than the overweighting of losses, the nature of the innovation exacerbates the tradeoffs. – Timing (immediate loss vs. delayed gratification) – Certainty of the losses – Ability to quantify losses Slide 21 Psychology of the Innovator – The developer’s curse! Who innovates? The believers. So the developer’s evaluations of the features may not match the mainstream consumers’ evaluations. Curse of knowledge. What is the status quo for the developer? V( New / Old) < V (new) < V (New / New) Customer Firm Andy Grove of Intel says that an innovation has to be 10 times better than the incumbent product….
