The Sales Learning Curve

The HBS article outlines the life cycle of selling a new product and launching additional products of existing product lines.  The article also analyzes several cases and what those did wrong when selling a new product as well as what they could have done to avoid the problems that they encountered.  The first case discussed the sale strategy of the software company Scalix.  The company began selling their email software to large corporations, but the company over estimated the marketability of their new product. Scalix expanded its sales force too quickly, over reaching its budget.  The company had predicted that their product would be easy to sell with its low cost; however, the sales team were not selling to the right people and therefore were not making the profit and sales quotas they had anticipated. Due to their rapid sales expansion, the company lost money.  Veritas, another software company made the mistake of marketing a new product line that was not ready for sale.  This mistake can also cause a company to lose money and in the case of Veritas, abandon the product completely.  
These examples can be applied to future ventures, providing a number of lessons learned to start-up companies and new product launches.  The article continues to emphasize the need for businesses to determine the number of sales representatives necessary to maintain a products growth in the market based on the three phases of a a products life cycle.  It is necessary to start slow when selling the product and once it has achieved traction in the market, sales can begin to "ramp up."

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• Aggressively marketing and selling unfinished products too quickly will result in the potential failure of the product.
• In the case of Veritas, the company has a large and well planted base for its other product lines; but with the introduction of a new product line, the company expanded too quickly which ended in failure
• Rapid sales expansion too early after the introduction of a new product or beginning a start up company.
• Expanding too quickly will drain a company of sales and marketing finances without the proper customer backing already in place.
• The time that a product can bring revenue decreases when there is already a market for a previous product in a line.
• With a set buyer in mind, they are more familiar with the product therefore an addition to an already established product line would sell faster than a new product

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Buyer's Viewpoint

A buyer interested in a new product is not initially as familiar with the product as the company.  A company can make the mistake of rapidly expanding the sales of a new product because they are under the impression that a customer is more interested then they actually are, causing a company to over reach.  The buyer needs time to learn about a new product, compare it to competitors, and determine if the product is reliable.  This process takes time, which means that a company needs to sell the product under these time constraints. 

Seller's Viewpoint

From the sellers viewpoint the company needs to expand its sales based on the customers interest. Thus, it is in the sellers best interest to understand and research the possible customer.