Post by tayl5 on Oct 2, 2015 12:20:39 GMT -5
The "Crossing the Chasm" concept was articulated by Geoffrey Moore (see book of the same name, 3rd edition). It was developed to explain challenges experienced by new entrants in the tech industry, but easily extends to others where an innovative product requires a significant investment by customers or a change in user behavior. It's been mentioned in a few other threads but I believe deserves more discussion.
I've been investing in MannKind since 2005 (long, no lending) but only started posting to this board this year. Like Corey Field, I'm a professional marketer.
The idea is that many novel products, particularly those that are disruptive, follow a market entry progression where they first attract the attention of "technologists", who appreciate the novel technical and functional aspects of the product, then "visionaries" who can see how the product might positively impact their organization if adopted and want to gain a competitive edge.
These early adopters are followed by "pragmatists" who are open to change but want solid proof of efficacy and clear signs of broader market acceptance. The real prize, the bulk of the mass market, follows along behind these pioneers. Mass market customers are typically not adventurous and just accept the emerging standard, while the final market segments, late adopters and skeptics, are resistant to change and unlikely to adopt the product until it is well-established and all uncertainly has been erased.
The chasm referred to in the title is a revenue growth gap that commonly appears between the early sales to technologists and visionaries and the mass market pragmatists. The reason for this gap is that the proof points and marketing approach that worked for the early adopters are insufficient for the pragmatists. This forces the company to pivot hard toward meeting the requirements of this much more demanding group of customers or face the consequences of missing the initial sales projections.
In the case of Afrezza and MannKind/Sanofi, the parallels are clear. The technologists in this case are patients like Sam Finta, Eric Fenar and others who proudly show their CGM plots and HbA1c numbers on Twitter and other social media. The visionaries are those endocrinologists who early on assessed the potential value of Afrezza in their practices and are embracing the therapy. Sanofi's initial marketing push was focused on contacting leading endocrinologists to get them on board and spark initial sales. This approach also allowed the company to uncover objections and address performance issues while the user base is still small. While one could argue about scale, this effort was successful in attracting a cohort of engaged patient advocates and endocrinologists who have broadly incorporated Afrezza into their practices. Sales from the early adopter community are gradually increasing, but not at a rate that will satisfy most stakeholders. This is a hallmark of a product and company in the chasm.
What do the pragmatists need to get on board? These busy medical practitioners don't have the time or patience to help patients work through insurance hassles, spirometry requirements, and a new dosing paradigm. Perhaps they see the potential value of the drug, but want more independent clinical validation, broader insurance coverage, and a clear signal that other doctors are prescribing before they make a move. This creates a catch-22 in that the pragmatists tend to engage only when they see other pragmatists using the product successfully. One trigger that can drive pragmatist adoption is the patient demand generated by direct-to-consumer (DTC) advertising and patient evangelists on social media. DTC may not be sufficient by itself to drive sales but could push enough pragmatists to prescribe and talk about the drug that others will begin to take note.
An important recommendation outlined in the book is that companies crossing the chasm need to identify a beachhead where they can focus their marketing efforts and win against competition. In this initial landing stage, the objective is to fully meet the needs of pragmatists in that market segment, then leverage that success to enter adjacent segments. For example, if Sanofi followed this recommendation with Afrezza, they might target Type 1 diabetics as the most amenable customers, then take on Type 2. T1D is only 10% of the diabetes market, but winning there would provide the credibility to make a bigger splash in T2D.
There are no guarantees, but once the pragmatist pump is primed much of the mass market (and investor success) may follow. Conversely, if Sanofi fails to cross the chasm and provide the pragmatists with the reassurances (and insurances) they need to go ahead, sales will continue to lag. While many products disappear after failing to cross the chasm, some companies just continue to make sales to the early adopters and live with their unfulfilled expectations.
GLTA.
I've been investing in MannKind since 2005 (long, no lending) but only started posting to this board this year. Like Corey Field, I'm a professional marketer.
The idea is that many novel products, particularly those that are disruptive, follow a market entry progression where they first attract the attention of "technologists", who appreciate the novel technical and functional aspects of the product, then "visionaries" who can see how the product might positively impact their organization if adopted and want to gain a competitive edge.
These early adopters are followed by "pragmatists" who are open to change but want solid proof of efficacy and clear signs of broader market acceptance. The real prize, the bulk of the mass market, follows along behind these pioneers. Mass market customers are typically not adventurous and just accept the emerging standard, while the final market segments, late adopters and skeptics, are resistant to change and unlikely to adopt the product until it is well-established and all uncertainly has been erased.
The chasm referred to in the title is a revenue growth gap that commonly appears between the early sales to technologists and visionaries and the mass market pragmatists. The reason for this gap is that the proof points and marketing approach that worked for the early adopters are insufficient for the pragmatists. This forces the company to pivot hard toward meeting the requirements of this much more demanding group of customers or face the consequences of missing the initial sales projections.
In the case of Afrezza and MannKind/Sanofi, the parallels are clear. The technologists in this case are patients like Sam Finta, Eric Fenar and others who proudly show their CGM plots and HbA1c numbers on Twitter and other social media. The visionaries are those endocrinologists who early on assessed the potential value of Afrezza in their practices and are embracing the therapy. Sanofi's initial marketing push was focused on contacting leading endocrinologists to get them on board and spark initial sales. This approach also allowed the company to uncover objections and address performance issues while the user base is still small. While one could argue about scale, this effort was successful in attracting a cohort of engaged patient advocates and endocrinologists who have broadly incorporated Afrezza into their practices. Sales from the early adopter community are gradually increasing, but not at a rate that will satisfy most stakeholders. This is a hallmark of a product and company in the chasm.
What do the pragmatists need to get on board? These busy medical practitioners don't have the time or patience to help patients work through insurance hassles, spirometry requirements, and a new dosing paradigm. Perhaps they see the potential value of the drug, but want more independent clinical validation, broader insurance coverage, and a clear signal that other doctors are prescribing before they make a move. This creates a catch-22 in that the pragmatists tend to engage only when they see other pragmatists using the product successfully. One trigger that can drive pragmatist adoption is the patient demand generated by direct-to-consumer (DTC) advertising and patient evangelists on social media. DTC may not be sufficient by itself to drive sales but could push enough pragmatists to prescribe and talk about the drug that others will begin to take note.
An important recommendation outlined in the book is that companies crossing the chasm need to identify a beachhead where they can focus their marketing efforts and win against competition. In this initial landing stage, the objective is to fully meet the needs of pragmatists in that market segment, then leverage that success to enter adjacent segments. For example, if Sanofi followed this recommendation with Afrezza, they might target Type 1 diabetics as the most amenable customers, then take on Type 2. T1D is only 10% of the diabetes market, but winning there would provide the credibility to make a bigger splash in T2D.
There are no guarantees, but once the pragmatist pump is primed much of the mass market (and investor success) may follow. Conversely, if Sanofi fails to cross the chasm and provide the pragmatists with the reassurances (and insurances) they need to go ahead, sales will continue to lag. While many products disappear after failing to cross the chasm, some companies just continue to make sales to the early adopters and live with their unfulfilled expectations.
GLTA.
