Personal Selling of High-Technology Products: The Solution-Selling Imperative

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Personal Selling of High-Technology Products: TheSolution-Selling ImperativeArun Sharma a , Gopalkrishnan R. Iyer b & HeinerEvanschitzky ca University of Miami ,b Florida Atlantic University ,c University of Strathclyde ,Published online: 12 Dec 2008.

To cite this article: Arun Sharma , Gopalkrishnan R. Iyer & Heiner Evanschitzky (2008)Personal Selling of High-Technology Products: The Solution-Selling Imperative, Journalof Relationship Marketing, 7:3, 287-308, DOI: 10.1080/15332660802409639

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Personal Selling of High-TechnologyProducts: The Solution-Selling Imperative

Arun SharmaUniversity of Miami

Gopalkrishnan R. IyerFlorida Atlantic University

Heiner EvanschitzkyUniversity of Strathclyde

ABSTRACT. Traditional focus on the study of high-technology firmsand products has practically ignored the importance and potential contribu-tions of the sales force, especially in business-to-business marketing. Thisarticle suggests that traditional sales force strategies associated with high-technology products have been supply driven (i.e., driven by the strategiesof the marketing firm). We suggest that in order to enhance the successof high-technology products and services, firms need to be more demanddriven in their sales structures (i.e., driven by the strategies of the buyingfirm). We suggest that it is imperative that high-technology firms adopt“solution selling” to enhance high-technology adoption as well as enhance

Arun Sharma, PhD, is Professor of Marketing and Chair, Department of Mar-keting, University of Miami, Coral Gables, FL.

Gopalkrishnan R. Iyer, PhD, is Professor of Marketing and Director, Center forServices Marketing & Management, Florida Atlantic University, Boca Raton.

Heiner Evanschitzky, PhD, is Professor of Marketing, University of Strathclyde,Glasgow, United Kingdom.

We would like to thank the Germany Ministry for Education and Research forsupporting this research as part of the TRANSOLVE project (FKZ: 01FD0679).

Address all correspondence to: Arun Sharma, Department of Marketing,University of Miami, P.O. Box 248147, Coral Gables, FL 33124 (E-mail:[email protected]).

Journal of Relationship Marketing, Vol. 7(3), 2008Available online at http://www.haworthpress.comC© 2008 by The Haworth Press. All rights reserved.

doi: 10.1080/15332660802409639 287

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288 JOURNAL OF RELATIONSHIP MARKETING

competitiveness. We describe this change in focus and draw out its variousmanagerial and academic implications.

KEYWORDS. High-technology, personal selling, solution selling

INTRODUCTION

Although high-technology products are the engines of innovation andgrowth in an economy, the realization that the marketing of such productsrequires a distinct and separate treatment as compared to that of moretraditional products and services is quite recent (Mohr, Sengupta, &Slater, 2005). However, despite some focused attention to marketing byhigh-technology firms in the past decade, the failure rates of new productsare still quite high across various high-technology industries. More than60% of all new-product development efforts are stopped before they arecommercialized, and 40% of the products that are launched are withdrawnfrom the market (Christensen & Raynor, 2003). The failure rate of 75%found by Christensen and Raynor is high but still somewhat conservativecompared to research by the Corporate Strategy Board that determined thatthe failure rate of new business ventures by existing firms is more than 90%and could be as high as 99% (“The Dangers of Being Distracted,” 2004).Although researchers have not separately examined failure rates of high-technology products, we expect similar failure rates for such products aswell.

A variety of reasons are offered for the high failure rates of high-technology products and new high-technology ventures. Traditionally, mar-keters have argued that high-technology product failures are due not only tomanagerial mistakes but also to environmental constraints (Hauser, Tellis,& Griffin, 2005). Some have argued that timidity and incentive problemsat large firms restrict firms’ research and commercialization efforts (H.Anderson, 2004). Others have noted the fact that several innovations inhigh technology may have limited appropriability (Rao, 2005).

There has also been due attention placed to the study of success factorsfor high-technology products. In a prescient article, Teece (1986) notedthat mere patents and legal frameworks do not ensure the successful com-mercialization of innovations. He called attention to the fact that firmsmust instead develop complementary assets to ensure the success of theirinnovations. In fact, even late entrants that follow innovators succeed ifthey have better developed and deployed critical complementary assets.

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Sharma, Iyer, and Evanschitzky 289

One such complementary asset critical for new product success andfor the product’s continued performance in high-technology industries ispersonal selling. The critical role of personal selling in high-technologymarkets is evident from the high levels of product complexity that requiremore in-depth communications about high-technology products and ser-vices. However, researchers have not yet given exclusive attention to theimportance and role of personal selling in the context of high-technologyfirms and products.

In this article, we suggest that some of the failures of high-technologymarketing may be due to the type of sales force structures that have beenused. We suggest that traditional sales forces and even relational salesforces were “supply driven.” Supply driven suggests that high-technologyproducts were first developed and manufactured by firms and then marketedto customers. With this “supply-side” perspective in mind, salespeople hadan incentive and were motivated to fulfill the needs of the selling firmrather than the customer firm. As noted recently by Kotler, Rackham, andKrishnaswamy (2006), the conventional thought within firms is to bringin salespeople only after the product is developed and the marketing plansare laid out rather than more thoroughly integrate sales and marketing.However, in high-technology firms, sales should be more integrated notonly with marketing but with the rest of the firm, including the critical tech-nology management functions that may be more the province of researchand development (R&D) and engineering.

We suggest that firms start with the customer and focus on satisfying theneeds of customer through both existing and emerging high-technologyproducts and services. The process of selling more complete solutionsrather than merely stand-alone products requires solution selling. Suchselling is “demand driven” and more appropriate for high-technologyproducts and services. Given that a large part of the failure of high-technology products and services can be attributed to the mismatchbetween the products and services and the environment, solution sellingcan inform not only the customer but also the firm. In this perspective,the conventional logic of product first is turned on its head by puttingcustomer needs first, with the salespeople being major conduits ofinformation on future R&D investments and new products rather thanconforming to the much-maligned “sales orientation,” which is assumedto be based on short-term goals. Solution selling will increase the successof high-technology products and services and create competitive barriers.This article is a call for the solution-selling imperative. Such a revisionin thinking is already under way at major high-technology firms such

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as IBM, GE, Rolls-Royse, Ericsson, and EDS, who are now competingon the basis of providing integrated solutions rather than stand-aloneproducts and services (A. Davies, Brady, & Hobday, 2006).

The organization of our article is as follows. In the following section weelaborate on the key characteristics of high-technology firms and industriesand briefly outline their impact on sales management. Next we review thescant literature on personal selling in the context of high-technology firms.We then offer a framework that elaborates on the different perspectivesof selling in high-technology firms and offer the argument that solutionselling is a critical imperative for high-technology firms and products. Inthe final section we discuss the managerial and academic implications ofthis focus on solution selling.

IMPLICATIONS OF THE DISTINCTIVECHARACTERISTICS OF HIGH-TECHNOLOGY

INDUSTRIES

Recent perspectives within marketing have elaborated on the uniqueimperatives of marketing high-technology products and services and havebuilt on earlier distinctions on how the marketing context of the high-technology firm differs from that of a typical firm (W. Davies & Brush,1997; Dunn, Friar, & Thomas, 1991; Mohr et al., 2005; Moller & Rajala,1999; Moriarty & Kosnik, 1989). Essentially, it has been offered thatthe various distinctive characteristics of high-technology industries andmarkets call for a different emphasis on and organization of marketingactivities (W. Davies & Brush, 1997; Mohr et al., 2005).

There is no single definition of high-technology products and services.We define the boundaries of high technology based on the research byMohr et al. (2005) and Moriarty and Kosnik (1989). One definition of hightechnology is from the U.S. government. The U.S. Bureau of Labor Statis-tics labels high-technology firms as having twice the number of technicalemployees and double the R&D outlays of an average firm (Moriarty &Kosnik, 1989). Technology is the relevant knowledge, skills, and abilitiesto develop new products and services and can encompass product technol-ogy (innovation in the products) or process technology (innovation in theprocess or manufacturing). In addition, high-technology has the followingcharacteristics:

• Market uncertainty. Ambiguity about the type and extent of customerneeds that can be satisfied (Moriarty & Kosnik, 1989).

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• Technology uncertainty. Ambiguity about whether the technology orfirm providing it can deliver on its promise to meet customer needs(Moriarty & Kosnik, 1989).

• Competitive volatility. Ambiguity about the future offerings of exist-ing competitors and ambiguity about emerging new competitors andtheir offerings (Mohr et al., 2005).

• Network externalities and the importance of industry standards. Thevalue of products increase as more users adopt them, and industrystandards increase the penetration of products (Mohr et al., 2005).

Other characteristics that are common to high-tech markets are unit-one costs (the first unit costs are very high and there is a very steepexperience curve), tradeability problems (difficult to value technology),and knowledge spillovers in that knowledge is relevant to other products(Mohr et al., 2005).

Personal selling in the context of high-technology business markets takeson unique dimensions as compared to personal selling in other businessmarkets. These aspects are highlighted below (based on Mohr et al., 2005)and are summarized in Table 1.

Pace of Technological Change

High-technology industries are characterized by more frequent changesin underlying processes and technology that affect their products and pro-cesses. Because the technological environment is evolving and volatile,routine order taking is of less importance as compared to the imperativesof selling new product solutions and cross-selling. The demand creationrole of salespeople is more important than routine maintenance. In thiscontext, routine maintenance involves account maintenance rather thanachievement of sales targets for specific products.

Rapid Technological Obsolescence

Rapid technological volatility implies more rapid technological andproduct obsolescence in existing technological environments. This leadsto extremely short product life cycles. Sales forces require very frequentproduct training and technology expertise development. Often, salespeoplewill find themselves selling both existing technologies as well as emerg-ing technologies. Anticipating demand for new products as well as thecustomer-required changes to existing products becomes a key function ofthe sales force.

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TAB

LE1.

Hig

h-Te

chno

logy

Mar

kets

and

Impl

icat

ions

for

Sal

esM

anag

emen

t

Indu

stry

Indi

cato

rD

escr

iptio

nIm

plic

atio

nsfo

rS

ales

Man

agem

ent

Pac

eof

Tech

nolo

gica

lC

hang

eH

igh-

tech

indu

strie

sar

ech

arac

teriz

edby

mor

efr

eque

ntch

ange

sin

tech

nolo

gyth

ataf

fect

thei

rpr

oduc

tsan

dpr

oces

ses.

Bec

ause

the

buye

r’ste

chno

logi

cale

nviro

nmen

tis

vola

tile,

ther

ear

em

ore

oppo

rtun

ities

for

selli

ngne

wpr

oduc

tso

lutio

nsas

wel

las

cros

s-se

lling

and,

ofte

n,le

ssop

port

uniti

esfo

rro

utin

eor

der

taki

ng.

Rap

idTe

chno

logi

cal

Obs

oles

cenc

eV

olat

ility

inth

ete

chno

logi

cale

nviro

nmen

tens

ures

that

prod

uctl

ifecy

cles

for

man

ypr

oduc

tsar

esh

ort.

The

sale

sfo

rce

will

have

toun

derg

ofr

eque

ntre

trai

ning

inan

ticip

atin

gde

man

dfo

rne

wpr

oduc

ts.I

deal

ly,t

hesa

les

forc

eis

also

ake

yso

urce

ofin

form

atio

non

futu

repr

oduc

tcha

nges

.D

isru

ptiv

eC

ompe

titio

nH

igh-

term

firm

sfa

ceth

epr

ospe

ctof

disr

uptiv

eco

mpe

titio

nfr

omne

wan

des

tabl

ishe

driv

als.

Sal

esfo

rce

depe

nden

ceon

curr

entc

usto

mer

sm

ayth

reat

enth

efir

m’s

futu

repo

sitio

nas

ase

ller.

Com

petin

gIn

dust

ryS

tand

ards

Bec

ause

the

mar

keti

sst

illev

olvi

ng,t

here

may

not

bea

sing

lein

dust

ryst

anda

rd.

Sal

esfo

rce

effo

rts

shou

ldbe

dire

cted

tow

ard

reta

inin

gth

ein

stal

led

cust

omer

base

asw

ella

sre

crui

ting

new

cust

omer

s.K

now

ledg

eS

pillo

vers

Net

wor

kex

tern

aliti

esar

ehi

ghgi

ven

spill

over

sof

publ

ickn

owle

dge.

Pro

duct

adop

tion

and

incr

ease

sin

the

inst

alle

dcu

stom

erba

sepr

ovid

ere

venu

ean

dcr

oss-

selli

ngop

port

uniti

es.

Low

Mar

gina

lCos

tsA

fter

Uni

t-O

neC

osts

Bec

ause

mos

ttec

hnol

ogic

alpr

oduc

tsar

ede

velo

ped

afte

rin

tens

ive

capi

tali

nves

tmen

tsin

rese

arch

and

deve

lopm

enta

ndar

ekn

owle

dge

prod

ucts

,cos

tsof

addi

tiona

luni

tsar

elo

wan

dde

clin

ing.

Long

-ter

mco

ntra

cts

are

esse

ntia

lto

amor

tize

supp

lyan

dsa

les

cost

sov

era

long

ertim

epe

riod.

Pro

duct

Com

plex

ityH

igh-

tech

prod

ucts

are

tech

nolo

gica

llyco

mpl

ex.

The

sale

sfo

rce

has

tobe

educ

ated

inth

ere

leva

ntfie

ld(e

.g.,

engi

neer

ing)

,and

deta

iled

prod

uctk

now

ledg

eis

esse

ntia

l.P

rodu

ctA

dapt

atio

nsH

igh-

tech

firm

sof

ten

adap

tsup

plie

rs’p

rodu

cts

tom

eett

heir

own

requ

irem

ents

.T

hesa

les

forc

eis

ake

yso

urce

ofin

form

atio

non

how

“lead

user

s”ad

aptt

heir

prod

ucts

.C

ompl

exB

uyin

gD

ecis

ions

Buy

ing

deci

sion

sar

eco

mpl

exdu

eto

tech

nolo

gica

lan

dca

pita

lcon

side

ratio

ns.

The

sale

sfo

rce

mus

tope

rate

inte

ams

ofm

ultid

isci

plin

ary

spec

ialis

ts.

292

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Disruptive Competition

Disruptive competition from both existing firms as well as prospectivenew entrants makes buyer–seller relationships less stable. Sales forcesneed to develop very strong social linkages or be regarded as technologyexperts. Ideally, buyers should consider salespeople “partners” who guidethem through the complexities of different technologies and work withthem to adapt the supplier technology to their own firm’s needs.

Competing Industry Standards

In many instances, technological standards are not developed or theremay be competing standards in the industry. Moreover, which standard mayprevail is often unpredictable and may not always depend upon marketleadership (Rosen, Schnaars, & Shani, 1988). Firms attempt to obtaina market leadership position so that customer acceptance ensures thattheir own adopted standards will prevail. The firm’s sales force plays animportant part in expanding and retaining the firm’s installed customerbase.

Knowledge Spillovers

Network externalities are high in high-technology markets due tospillovers of public knowledge. Firms build proprietary technology andprocesses over knowledge from the public domain. The proprietary natureof such technologies comes through product and process adaptations aswell as unique configurations. Salespeople are an important source for theidentification of such future adaptations and configurations that will helpincrease installed customer base revenues and margins as well as increasecross-selling opportunities for the selling firm.

Low Marginal Costs After Unit-One Costs

Most high-technology products are developed after intensive capital in-vestments in R&D. Decline in costs as well as prices of additional unitsare also not uncommon. Margin pressures for supplier firms are especiallyacute in later stages of product evolution as the downstream price extractedby their customers declines. Firms marketing to end customers attempt to“lock in” customers through longer term contracts. In business markets aswell, salespeople need to enter into long-term or high-volume contracts.However, technological unpredictability may make such long-term or vol-ume contracts unattractive for the buying firm. Supplier responsiveness to

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future changes, especially through sales force interactions, is critical inobtaining long-term commitments from buyers.

Product Complexity and Adaptations

High-tech products are technologically complex and are typicallyadapted to customer needs. This requires a more educated and qualifiedsales force. Moreover, because the buying firms are technologically ori-ented, they may engage in making adaptations to the source product ontheir own. Such “lead users” are a critical source of inputs for new productdevelopment by the supplier firm. The sales force is a key source of in-formation on such lead usage and, thus, on new product development andcustomized offerings by the supplier firm.

Complex Buying Decisions

High-technology buying decisions are complex due to technological andcapital considerations. The use of sales teams in high technology is notuncommon because the buying group may include personnel from multiplefunctional areas. Such teams need to be composed of multidisciplinary spe-cialists. Moreover, integrated solutions require organization of the teamsacross product specializations as well.

PERSONAL SELLING IN THE CONTEXT OFHIGH-TECHNOLOGY PRODUCTS AND SERVICES

R. E. Anderson (1996) in his comprehensive review identified threeareas in which the sales force would be impacted by new technologies:sales force automation, virtual sales offices, and electronic sales channels.However, in each of these cases, possible shifts in sales force structuresare not an issue.

Research on sales management issues in high-technology or new productdevelopment is sparse. We provide some exemplars of this research inTable 2. Although research has highlighted the importance of sales forcein the success of new products (Di Benedetto, 1999), excellence in salesstrategies has not been researched. The research on sales managementin this area addresses issues such as sales force organization, informationtransfer, compensation, goal setting, and new product adoption by the salesforce.

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TAB

LE2.

Sel

ecte

dR

esea

rch

onH

igh-

Tech

nolo

gy/N

ewP

rodu

ctan

dP

erso

nalS

ellin

gan

dS

ales

Man

agem

ent

Ref

eren

ceC

onte

xt/S

ourc

eof

Dat

aF

indi

ngs

Dar

r(2

006)

Stu

dyof

capa

cito

ran

dre

al-t

ime

com

putin

gD

ram

atic

shift

insa

les

stra

tegi

esfo

r“o

ld”

and

“em

ergi

ng”

indu

strie

s.S

hift

inre

crui

tmen

t,sa

les

proc

ess,

eval

uatio

n,an

dco

mpe

nsat

ion.

Juds

onet

al.(

2006

)24

6U

.S.s

ales

man

ager

sfr

omm

ultip

lein

dust

ries

Sal

espe

ople

are

invo

lved

inth

ene

wpr

oduc

t/ser

vice

deve

lopm

ent

proc

ess.

Insp

iteof

this

cont

ribut

ion,

man

yfir

ms

dono

tdire

ctly

rew

ard

sale

speo

ple

for

thei

rin

volv

emen

t.O

fferin

gap

prop

riate

ince

ntiv

esco

uld

grea

tlyin

crea

sesa

lesp

eopl

e’s

effo

rts

toco

llect

info

rmat

ion

for

new

prod

uct/s

ervi

ceid

eage

nera

tion.

Raj

atan

avin

&S

peec

e(2

004)

15in

terv

iew

sw

ithsa

les

man

ager

sfr

omth

ein

sura

nce

indu

stry

Sal

esag

ents

acta

sa

mai

nin

form

atio

ntr

ansf

erm

echa

nism

,br

ingi

ngin

cust

omer

view

sth

roug

hth

esa

les

man

ager

s,w

hopl

aya

role

inne

wse

rvic

ede

velo

pmen

t.A

lack

ofcr

oss-

func

tiona

lte

amw

ork

can

caus

efa

ilure

inde

velo

ping

new

prod

ucts

and

serv

ices

.M

iche

alet

al.(

2003

)18

7A

ustr

alia

nsa

les

man

ager

s,m

anuf

actu

ring

indu

stry

Fir

ms

dono

tmak

eth

em

osta

djus

tmen

tsfo

rpr

oduc

tsw

ithth

egr

eate

stde

gree

ofm

arke

tnew

ness

exce

ptin

the

sale

sm

anag

emen

tstr

ateg

yca

tego

ries

ofco

mpe

nsat

ion

and

supe

rvis

ion.

Org

aniz

atio

n,tr

aini

ng,q

uota

san

dgo

als,

and

sale

ssu

ppor

tas

wel

las

sale

sm

anag

emen

tstr

ateg

ych

ange

sw

ere

grea

test

inin

cide

nce

whe

nth

ene

wpr

oduc

twas

new

toth

efir

mbu

tnot

new

toth

em

arke

t.H

ultin

k&

Atu

ahen

e-G

ima

(200

0)97

high

-tec

hnol

ogy

firm

sfr

omT

heN

ethe

rland

sS

ales

forc

ead

optio

nof

new

prod

ucts

ispo

sitiv

ely

rela

ted

tose

lling

perf

orm

ance

.Sal

espe

ople

who

sim

ulta

neou

sly

exhi

bit

com

mitm

enta

ndef

fort

will

achi

eve

high

erle

vels

ofne

wpr

oduc

tse

lling

perf

orm

ance

.Out

com

e-ba

sed

cont

rol,

inte

rnal

mar

ketin

g,an

dm

arke

tvol

atili

tyar

epo

sitiv

ely

rela

ted

tone

wpr

oduc

tsel

ling

perf

orm

ance

.( C

ontin

ued

onne

xtpa

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295

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Di Benedetto (1999) examined success factors in new product launchesand found that successful launches were related to perceived superiorskills in marketing research, sales force, distribution, promotion, R&D,and engineering. Di Benedetto (1999) found that the sales force and salesstrategies impacted the success of new products but did not identify theexact structure that aided new product success. Others have emphasizedsales force shifts. For example, Micheal, Rochford, and Wotruba (2003)found that firms do not make the most sales management adjustmentsfor products with the greatest degree of market newness except in thesales management strategy categories of compensation and supervision.Organization, training, quotas and goals, and sales support as well as salesmanagement strategy changes were greatest in incidence when the newproduct was new to the firm but not new to the market (Micheal et al.,2003). The nature of the change was not the focus of this study.

Asaf Darr’s (2006) ethnographic exploration of the sales processes forexisting and high-technology industries examined sales strategies andstructures for high-technology firms. It was found that there was anincrease in both the educational level and technical skills of the high-technology sales force. In addition, sellers’ and buyers’ engineers engagein co-development, and long-term collaborative relationships are replacingbrief sales encounters. A number of tasks performed in the design or pro-duction phases have become part of the sale of emergent technologies. Thesalespeople at high-technology firms act as remote members of customers’R&D teams, willing to weigh in on customers’ decisions early, if necessary,and solve customers’ problems. Salespeople in high-technology marketsrely on maintaining a technical dialogue, offering technical support, andsharing their engineering occupational backgrounds with buyers to main-tain contacts. Darr (2006) also highlighted the growing interdependenceof social and technical skills in high-technology markets.

In the following section we note the evolution of personal selling andemphasize the imperative of a demand-focused view of personal sellingrather than the dominant supply-oriented paradigm that has been in voguefor quite some time.

EVOLUTION OF PERSONAL SELLING INHIGH-TECHNOLOGY MARKETS

The rapid growth of marketing took place after the Second WorldWar, when the product was the focus and production capacities exceeded

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demand in many industries. At this stage, marketing strategies werecreated to enhance demand and in some cases reduce demand (Kotler,1973). Traditional marketing focused on the products and services thatfirms provide. The goal of marketing was to create demand for the productthat matched organizational requirements, and, therefore, marketingmanagement has traditionally been viewed as demand management(Kotler, 1973). This version of demand management was the supplier’sperspective, making the process supply side driven. In marketing terms,one of the popular options in business-to-business markets for creatingdemand was the establishment of a sales force.

The origins of sales force structures matched the growth of firms. Ini-tially, for the small firms, salespeople served only their local markets. Asfirms grew larger in size, sales organizations were created and salespeopleworked from a specific location and served a geographical area. Sales-people were assigned customers in a geographical area, and customerstypically interacted with the assigned salesperson during typical businesshours. Also at this stage, salespeople were typically product experts, withsome firms having multiple sales forces selling different products. Thisconfined the sales force to locational, product, and temporal limits. Thesales force followed the demands of the production schedule (supply-sideperspective). In times of surplus, salespeople attempted to sell more prod-ucts, and in times of shortages they attempted to ration the products to theirbest customers (Kotler, 1973).

The sales force functions matched the persuasion model AIDA (Aware-ness → Interest → Desire → Action), attributed to E. St. Elmo Lewis in1898 (Strong, 1925). At this stage, the selling process was designed aroundpersuasion models, as the salesperson was the communication channel forthe firm and also participated in the customer selection process. This pro-cess evolved into the seven steps of selling, which were typically (a)prospecting, (b) pre-approach, (c) approach, (d) presentation, (e) overcom-ing objections, (f) close, and (g) follow-up (Dubinsky, 1981). In matchingthe seven steps of selling and persuasion processes, one sees that the firstthree steps were associated with customer selection and attention, the nexttwo steps were associated with interest and desire (awareness, knowledge,liking, preference), the sixth step was associated with action, and the finalselling step was follow-up for future sales.

One of the interesting issues at this stage was that sales processes wereregarded as discrete, with each sale being a new process. In some cases, thesales force was divided into hunters (those salespeople who were good atgetting new customers to the firm) and farmers (those salespeople who were

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good at maintaining sales relationships). In addition, some sales managershired prospectors to identify and qualify customers before handing the leadto the sales force.

Emergence of Relationship Marketing and Relationship Selling

Relationship marketing has always been of interest to practitioners. Re-lationship marketing came into the mainstream marketing mindset duringthe 1990s. The underlying premise of relationship marketing is that cus-tomer satisfaction leads to loyalty, which in turn leads to higher levels ofprofitability for the firm. In the same context, the past decade has witnesseda growing interest in relationship selling, which stresses the development oflong-term buyer–seller relationships (Frankwick, Porter, & Crosby, 2001;Gonzalez, Hoffman, & Ingram, 2005; Ingram, 1996; Jolson, 1997). Anoffshoot of the relational sales force is the system supplier or system inte-gration sales force (Helander & Moller, 2007). Such sales forces sell andinstall large-scale, complex systems and regard personal relationships ascritical to the process.

These forms of sales organization are still supply oriented because oftheir emphasis on the organization’s own marketing needs. In addition,some of the basic assumptions of relationship marketing have been ques-tioned (Reinartz & Kumar, 2000), and relationship selling is evolving intoother forms of marketing.

The Service-Dominant Logic of Marketing

The focus on the demand side of marketing has been stressed recentlyin “new dominant logic” in marketing, highlighted by Vargo and Lusch(2004). This new logic is called service centered and reflects a dramaticchange in perspective. Having a service-centered view of exchange impliesdeveloping customized offerings to better fit customers’ needs and identi-fying firm resources (both internal and external) to better satisfy the needsof customers. The logic also implies movement away from the exchange oftangible goods and toward the exchange of intangibles, specialized skills,and knowledge and processes. Service-centered firms develop networksthat allow them to offer solutions to customers that may involve both in-sourcing and outsourcing. Goods, in this perspective, are merely appliancesfor service, and ownership is no longer critical for firms (Vargo & Lusch,2004).

Vargo and Lusch (2006, p. xvii) suggested that the use of the singularservice as opposed to common services is intentional. They suggested that

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service implies a process in which firms use resources to benefit customers,whereas the term services refers to the output. Ultimately, in this evolvinglogic in marketing, the most successful organizations are those whosecore competence is marketing along with related market-sensing processes(Day, 1999; Haeckel, 1999). This is where the critical role of the sales forceemerges. Vargo and Lusch (2004) suggested that most communication inthe past was characterized as one-way communication that flowed fromthe marketing firm to the customer. They suggested that a service-centeredview suggests that the communication process will be characterized bydialogue as well as by asking and answering questions.

The following are some of the fundamental premises that Vargo andLusch (2006) suggested are relevant to the personal selling and sales man-agement context:

• The application of specialized skills and knowledge is the fundamen-tal unit of exchange;

• Goods are distribution mechanisms for service provision;• Knowledge is the fundamental source of competitive advantage;• The customer is always a co-creator of value;• A service-centered view is customer oriented and relational (p. 44).

In this emerging era, the role of the salesperson will change from asupply focus to a demand focus. Because suppliers’ specialized skills andknowledge will become more important to customers, salespeople willbecome more information agents than persuasion agents. Salespeople’s re-liance on selling of goods will decrease, and their knowledge of customersand solutions will become a source of competitive advantage. In this sce-nario, salespeople will need to be more customer experts (demand side)than product or service experts (supply side). As stated earlier, salespeoplewill offer solutions to customers that may involve both insourcing andoutsourcing, and ownership will no longer be critical for firms (Vargo &Lusch, 2004). Thus, a solution-selling sales force will be more appropriatein this context.

We suggest that some of the problems of high technology arise fromthe supply-side emphasis of firms. For example, a supply-side process ora traditional high-technology process starts with product development andmay look like this:

Product Development → Manufacturing → Marketing/Sales → Cus-tomer

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In contrast, a demand-side process starts with customer needs and thendevelops the product/service to satisfy those needs. The process may looklike this:

Customer → Marketing/Sales → Product Development → Purchas-ing/Manufacturing → Customer

In this case, the customer is at both the start and the end of the process.This would reduce some of the uncertainty associated with high-technologymarkets. For example, market uncertainty arises from ambiguity about thetype and extent of customer needs that can be satisfied. If the developmentof the high-technology product or service is based on the need of thecustomer, then the ambiguity will decline. Similarly, competitive volatility,tradeability, and knowledge spillover issues may decline in a demand-oriented model.

This shift toward service and solution selling should increase the successof high-technology products and services. As stated earlier, the practiceof service-dominant logic should reduce market uncertainty and reduceuncertainties around competitive volatility, tradeability, and knowledgespillover issues.

SOLUTION-SELLING SALES FORCE

There has been an increase in the focus on solutions-focused selling(also called customer-focused selling or consultative selling; Arnett &Badrinarayanan, 2005). Solutions are customized and integrated offeringsof products and services that are designed to solve a particular customerneed/want or problem. The process of solution selling involves the defini-tion of the customer’s requirement, the requisition of the products/service,the customized integration of products and services, product/service de-ployment, and any possible post-purchase support.

Among the most common reasons cited for the increasing solutionselling is the prospect of charging a premium for solutions comprisingconfigurations of products rather than the individual products themselves(Cichelli, 2005). Even if the integrated solutions approach involves onlyservicing the installed base, the revenues are estimated to be about 10 to30 times the value of new product sales (Wise & Baumgartner, 1999). Ithas been estimated that at Rolls-Royce and IBM, services adding value to

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a physical product bring in more than 50% of firm revenues (A. Davieset al., 2006).

Solution selling has been gaining in popularity, at least among largefirms that are also market and technology leaders in their areas of opera-tions. Such firms include those from diverse industries such as informationtechnology, automobiles, aircraft manufacturing, and telecommunications(A. Davies et al., 2006). However, the shift to solution selling has not beeneasy for many firms. In a survey by Charlotte-based consultancy firm SalesPerformance International, 69% of the 134 sales managers surveyed noted“moving to solution type sell” as the most difficult transitional challenge,more than any other difficulty (“Shift to Consultative Selling,” 2006). Theconsultancy firm’s CEO Keith Eades noted, “Solution selling is whereleading companies want to be. Not only does a consultative approach af-ford a competitive advantage, but it also makes a more honorable seller.The salesperson becomes a problem solver and builds a better relationshipwith the customer” (“Shift to Consultative Selling,” 2006, p. 30).

One reason for the difficulty in transition to solution selling is the factthat such a transition requires a fundamental shift in focus from the supplyside to the demand side. Current approaches to selling are all orientedtoward the supply side, whereas solution selling requires a demand-sideorientation. An example is the movement of customers from ownershiptoward the on-demand or the subscription model (Sharma & Gupta, 2002).The shift toward solution selling has changed the role of the salespersonfrom a spokesperson for the firm’s product to that of a consultant forthe buying firm. This involves salespeople understanding the problems ofcustomers and seeking solutions for the customer firm (Hannan, 1995; Liu& Leach, 2001). Moreover, the transition requires changes in establishedways of doing things, including new product development and a focus onoperations and production strategies at the supplier firm.

In the solution-selling model, each customer will have its own balancesheet (i.e., sales organizations will become profit centers rather than costcenters). Therefore, we expect that in the future sales organizations willbe customer experts (rather than product experts) and will be able to sellsolutions that may require the outsourcing of some products and services.The model is IBM Global Services, which can install and allow functioningof their own products as well as the products of their competitors (seehttp://www-1.ibm.com/services/us/index.wss/home). Sales organizationshave traditionally left fulfillment to other functions in the organization. Inthe context of a customer-focused sales organization, salespeople will needto become experts in fulfillment also. This is a fertile area of research.

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It has been noted that in a true solution-selling culture, sales reps rou-tinely do the following:

• “[They] talk big-picture business goals with a CEO, and financialramifications with the CFOs.

• When asked, they can list each client’s unique businesschallenges—specific obstacles that may change from month tomonth.

• They rarely rely on boilerplate sales presentations; instead, they pep-per each presentation with carefully crafted questions designed touncover a client’s toughest challenges.

• They are constantly bringing in additional revenue from existingcustomers, because of their efforts to regularly identify their clients’changing needs.

• They spend an insane amount of time with clients—not just givingpresentations. They attend clients’ staff meetings, go on plant tours,and spend time getting to know customers, rather than just selling tothem.” (Ligos, 2004, p. 4).

In the past, salespeople were traditionally selected based on their abilityto bring new customers to the sales organization. With the traditionalturnover in customers, the consistent emphasis on new customers necessaryfor growth meant that salespeople who were able to bring in new customers(i.e., hunters) were at a premium. The shift toward consultative sellingrequires personnel who can be problem solvers and managers of theiraccounts. Instead of charisma and push, salespeople will need to emphasizecustomer understanding and their ability to provide high levels of customerservice. This is another great opportunity for research, as our understandingis anecdotal rather than empirical.

The consultative selling process will lead to selling steps that are ori-ented toward problem identification, presentation of solution, and contin-ued customer support. This will lead to the end of the traditional sevensteps of selling. This is another area for research, as this change will havetremendous implications for training.

When salespeople practice solution selling, the traditional compensationbased on sales may not be adequate. A profit component will be needed,and an indicator of customer satisfaction will be necessary. Profit has beenused in sales to compensate salespeople, but it has been used predominantlyin areas in which the salespeople control pricing decisions. This is anotherarea for research inquiry.

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The final shift in the organization of personal selling and sales manage-ment will be in the area of internal marketing. Internal marketing was firstintroduced by Berry (1981) and is now commonly used in the context offirms needing to market to employees, and employees in one functionalarea needing to market to employees in another functional area. Ahmedand Rafiq (2003) suggested that by satisfying the needs of internal cus-tomers, an organization should be in a better position to deliver the qualitynecessary to satisfy external customers. They suggested that implicit in in-ternal marketing is the assumption that fulfilling employee needs enhancesemployee motivation, and, as a consequence, there is a greater possibilityof generating external satisfaction and loyalty. Because sales organiza-tions will need resources from the selling organization to satisfy customerneeds through fulfillment, sales organizations will need to become betterat obtaining resources from their own firms.

DISCUSSION

High-technology products and services are very important for firms andnations. However, the high failure rate of new product introductions is aconsiderable source of angst among managers, academics, and policymak-ers. There has been considerable research in the areas of high-technologyproduct development and high-technology product adoption in both con-sumer and business markets. In this article, we concentrate on the orienta-tion of the firm.

We suggest that firms need to shift from a supply-oriented focus to ademand-oriented focus to aid the success of high-technology products andservices. The primary reason is that the drivers of the high-technologycreation process are customers, who are also the consumers of high-technology products and services. We furthermore suggest that this shifttoward a solution-selling focus is an imperative for the long-term successof high-technology firms.

Changes in business practices can be profound. As we stated earlier,marketing function has traditionally been organized from a “customeracquisition to market products” viewpoint. With the shift to the demandside, the focus will change to customer retention. Customers need to beviewed as financial assets (Srivastatva, Shervani, & Fahey, 1998) that mustbe nurtured, protected, and harnessed. Within this context, marketers needto provide offerings that a customer will seek out rather than those thatneed to be pushed. By maintaining close ties with business customers and

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developing an ability to predict customer preferences, firms can create avery loyal base of customers who will seek them out.

Firms will need to reconsider the control and integration of the mar-keting function. In this context, the separation of sales from marketing aswell as customer service functions in the current organizational structureneeds to be reviewed. Marketing in high-technology industries needs to beaccorded greater say over key decision areas, such as pricing and productdevelopment. In this context, virtually all functions will be market oriented.The marketing function needs to formally incorporate upstream linkagesthat are the domain of the purchasing department. Key suppliers need tobecome an integral part of the marketing team and need to be involved instrategic planning and new product development.

This article suggests that it is imperative that firms selling high-technology products and services shift from a traditional sales force toa solution-oriented sales force. Solution-focused sales forces will concen-trate on the needs of customers and will satisfy the needs of customersthrough internal or external procurement. For example, consulting firmssuch as Accenture and IBM Global Services use their own products andservices as well as the products and services of competitors to satisfy theneeds of their customers. The dynamic of business relationships changes,as a business may be both a competitor and an ally. The phrase coopetitionhas emerged from this domain.

In the sales arena, some profound changes in the high-technologybusiness-to-business sales force are also expected. First, the structure ofsales organizations will change. The traditional sales organization that sep-arated order taking from delivery activities will decline. The salespeoplewill be in charge of both order taking and order fulfillment. In addition, thesales process will change from being an ad hoc process to a more designedprocess. The need identification and satisfaction process will become moreformal and unique to organizations. Second, the personnel will change.Rather than being acquisition specialists, salespeople will increasingly berelationship oriented. This will require a shift in personnel, and technicalspecialists will increasingly become a part of the sales force. Third, evalu-ation and systems will change. In addition to profitability, share of walletand satisfaction will be increasingly more important to both the evaluationand compensation of salespeople. Finally, salespeople will need to becomemore adept at internal marketing. Salespeople’s ability to marshal internaland external resources will become increasingly important. The role of the“new” salesperson will be similar to that of a general manager rather thana persuasion agent.

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Personal Selling of High-Technology Products: The Solution-Selling Imperative