TEI 079: Cross the chasm using the target market model – with Chasm Institute’s Michael Eckhardt
Summary: I read Crossing the Chasm when it was published in 1991. The third edition was released last year, with updated examples of how companies successfully increased the market for their new products. The book introduced me to the “target market model,” which had a significant impact on how I thought about the relationship between product growth and market segments.<br> To explore this model, I asked Michael Eckhardt to tell us about it and what it means to cross the chasm. He is a Managing Director & Senior Workshop Leader at Chasm Institute, a consultancy to tech companies. He joined Chasm after careers at Price Waterhouse, Harbridge Consulting, HP and PepsiCo, and has since worked with over 90 tech-based businesses, spanning 500+ client engagements, over the past 15 years.<br> In this interview you will learn:<br> <br> * the Chasm Institute market development model,<br> * how to determine the specific stage of the product category your new product is competing in, and<br> * what is required to successfully move from one stage to the next in the target market model.<br> <br> <br> Practices and Ideas for Product Managers and Innovators<br> Summary of questions discussed:<br> <br> <br> <br> * What is the relationship between the Crossing the Chasm book by Geoffrey Moore and the Chasm Institute? Both have existed for more than 15 years. Moore is chairman of the Chasm Institute and I am the managing director. The latest edition of the Chasm book has 25 all new examples of recognizable companies that have crossed the chasm – taking technology and disruptive products to market and getting them into mainstream markets. The Chasm Institute helps high-tech teams learn, apply, and implement best practices in market development strategy.<br> <br> <br> <br> <br> <br> <br> * How does the Product Life Cycle model differ from Target Market model? The diagrams below are helpful to compare the models.<br> <br> <br> <br> Product Life Cycle (PLC) Model<br> <a href="https://productinnovationeducators.com/wp-content/uploads/2016/07/image.png"></a><br> The PLC is in place in most companies. It is used by product managers and others in organizations to make decisions about launching a product, managing it, and obsoleting it.<br> <br> Target Market Model<br> <a href="https://productinnovationeducators.com/wp-content/uploads/2016/07/image-1.png"></a><br> The Target Market model is about the product category stage the product is in and how mature that category is. The stages of the model convey how customers’ buying behavior changes depending on product category maturity. The stages are (the interview includes product examples for the stages):<br> <br> * <br> Early market – when the product category is new. 80% of the total customers’ requirements need to be fulfilled in the product. This is where a minimum viable product (MVP) is used to understand the needs of the customers.<br> <br> <br> <br> * <br> Chasm – to cross the chasm, the 80% whole product from the Early Market must now develop into a 100% whole product. Not a perfect product, but 100% of what the pragmatist customer in the Bowling Alley needs to satisfy their compelling reason to buy (CRTB). This 100% whole product can be best thought of as: “Everything the pragmatist customer needs – and nothing they don’t need – to get their compelling reason to buy fulfilled, so they can confidently buy and use.”<br> <br> <br> <br> * <br> Bowling Alley – the first pin or niche that the product can be a whole product for, then identifying adjacent niches that would also buy the product, knocking down niches (market segments) to create rapid growth.<br> <br> <br> <br> * <br> Tornado – this is the stage of hyper growth that is characterized by not only offering a whole product but a friction-free product. This is one that is easy to buy, understand, and use.<br> <br>
