0019-8501/99/$–see front matterPII S0019-8501(99)00059-0

Industrial Marketing Management

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, 521–535 (1999)© 1999 Elsevier Science Inc. All rights reserved.655 Avenue of the Americas, New York, NY 10010

Organizing Marketing in Industrial High-Tech

Firms

The Role of Internal Marketing Relationships

Kristian MöllerArto Rajala

The need for more flexible and often temporary types of or-ganizational structures in high-technology companies has re-sulted in an increasing use of teams and project groups em-ploying special know-how and expertise in carrying outmarketing activities. These form partly planned and partly in-formal intra-corporation networks. We contend that the han-dling of these intra-organizational relationships between thedifferent marketing units in industrial high-tech companies is a

key prerequisite for the successful management of their cus-tomer relationships. This argument is supported by the find-ings of a multiple-case study, investigating four major indus-trial process automation producers (ABB, Honeywell, Measurex,Valmet Automation). The main findings suggest the disman-tling of traditional marketing departments in favor of a rela-tively large collection of marketing-related units and struc-tures. The development of these internal marketing units, theestablishment of good communications between them, and thecoordination of their activities presented major challenges forthe case companies. © 1999 Elsevier Science Inc. All rightsreserved.

Address correspondence to Dr. A. Rajala, Helsinki School of Economicsand Business Administration, Department of Marketing, P.O. Box 1210, 00101Helsinki, Finland.

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INTRODUCTION

Relationship marketing, characterized by reciprocal,long-term relationships between producers and customers,has dominated much of the managerial and academic dis-cussion in business marketing during the 1990s. Followingchanging company practices, a considerable amount of re-search has been carried out on the management of cus-tomer relationships, the application of portfolio manage-ment practices in handling firm’s customer and supplierbase, and lately also on developing and managing suppli-ers and customers from a network perspective [1–4]. Muchless attention has been paid to an issue that, we contend,has equal importance for successful business marketing:the development and management of efficient intra-orga-nizational solutions for carrying out marketing activities.This theme is especially relevant in high-technology com-panies, the focus of our article.

Marketing is an increasingly demanding function inindustrial high-technology companies due to the expand-ing complexity and uncertainty faced by the manage-ment. Several factors are behind this trend. Intensifyingtechnological complexity, high knowledge intensity, andsystemic quality characterize the products of high-techindustries such as biotechnics, industrial electronics, andtelecommunication systems. These characteristics en-compass a high level of both technological and marketuncertainty [5]. Because of the inherent complexity, mar-keting tasks in high-technology companies are becomingvery knowledge intensive [6]. They demand highly dif-

ferentiated professional skills and capabilities. This de-velopment in knowledge intensity means that both sup-plier and customer companies are increasingly taking onthe role of professional organizations, staffed by highlyqualified personnel at all levels of functioning [7]. Interms of the customer–supplier interface, intensive per-sonal interaction is needed for carrying out business. Thisinvolves organizing cooperation between groups of func-tional experts within both the supplier and customer or-ganizations and between these organizations.

This specialization, together with the establishment ofbusiness process-based organizational solutions, has ledto the rapid dismantling of traditional marketing depart-ments. Marketing activities are increasingly being spreadout among several organizational units forming intricatenets of marketing activities. Complex matrix organiza-tions, multifunctional teams, account management systems,and forms of business process management are replacingfunctional departments. Only scant research is available onthis development in a high-tech context [7–10].

Another trend fragmenting marketing activities andpersonnel even further is the rapid globalization of mosthigh-tech industries. Companies are increasingly operat-ing globally; this involves the primary decision on whichactivities and operations to centralize and which to local-ize. This tension creates another organizational problemfor international high-technology corporations [11].

Finally, the organization of the interface between tech-nology and marketing is relevant for understanding howhigh-tech firms operate and compete. This aspect hasalso attracted limited attention from the traditional mar-keting perspective [12], although it is much more promi-nent in industrial network studies [2, 13–15].

Thus, in spite of their managerial significance, organi-zational issues have received only scant attention in mar-keting with the exceptions of the seminal general works ofWeitz and Anderson [16], Piercy [17], Cespedes [9], andrecently Workman et al. [18], studies related to organiza-tional buying behavior, relationship marketing, and, more

KRISTIAN MÖLLER is Professor of Marketing and Head of the Marketing Department at the Helsinki School of Economics and Business Administration.

ARTO RAJALA is Assistant Professor of Marketing at the

Helsinki School of Economics and Business Administration.

Marketing tasks in high-tech companies are

becoming very knowledge intensive.

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recently, marketing networks have only made passing ref-erence to organizing marketing activities [10, 19–21]. Thediscussion concerning key account management (KAM)is one positive exception, but this only covers one limitedaspect of the organization of marketing activities [22].

This article addresses the knowledge gap concerningthe organization of marketing activities in high-tech in-dustrial companies. We contend that the interaction andrelationships between intra-organizational corporate unitsand the actors involved in marketing activities form acritical element in implementing the marketing conceptin a high-technology context. We believe that the man-agement of internal, corporation-wide marketing net-works and relationships is a prerequisite for the efficientmanagement of customer relationships. Our purpose is todescribe how successful industrial high-technology com-panies, operating in a global context, are organizing theirmarketing activities. Special attention is paid to the ques-tion of how they manage the interfaces between the dif-ferent internal marketing units and actors. In this sensewe are interested in the management of internal market-ing relationships and in emerging network solutions.

We pursue our aim by first briefly reviewing existingknowledge of organizing industrial marketing. Next wedescribe the case study approach employed in the processautomation industry which provided the empirical mate-rial for the study. We then present the results, based onan analysis of business units of ABB, Honeywell, Mea-surex, and Valmet Automation, and conclude by discuss-ing the managerial and theoretical implications of ourstudy and suggesting directions for future research.

MARKETING ORGANIZATION IN INDUSTRIAL HIGH-TECH COMPANIES

Marketing organization in industrial companies oftendiffers from that in consumer goods companies. Due to

the complexity of industrial products, a larger number ofpeople representing different types of special expertise isinvolved in development and marketing activities. Be-cause the number of customers is smaller, most companieshave to operate on a global level. In order for them to copewith these problems, marketing activities are generally as-signed to independent organizational groups or units.

Current Views on Marketing Organization

Cespedes has labeled these marketing groups productmanagement, sales, and customer service units. His stud-ies [8, 9, 23,] summarize much of the extant knowledgeof the organization of industrial marketing.

The product management unit employs one or severalproduct managers who are in charge of the marketing ac-tivities related to the products assigned to them. They areoften involved in product development activities as well.These managers form the critical interface between R&Dand sales, and between R&D, production, and the cus-tomers [24]. Product managers tend to experience roleconflicts because they face requirements from several in-ternal units and from customers.

Field sales organizations were originally established tointegrate mass production with mass distribution. Thesales function in industrial companies is often organizedas an autonomous department or a subsidiary abroad.Sales jobs vary greatly depending on the kind of productor service sold. In spite of the rapid development of elec-tronic channels, sales remain an essential part of market-ing activities, and the salesperson prevails at the heart ofthe company’s encounters with customers. Therefore,s/he also plays a key boundary role in organizations [23].

To support with field sales, industrial companies oftenhave separate units for customer service and maintenancepurposes. These units are mainly responsible for the so-called post-sale service by giving customers the neces-sary support in installation and maintenance. Cespedes

Marketing activities are increasingly being spread out among several

organizational units.

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[9] argues that customer service often also provides pre-sale support by helping customers with their purchas-ing—in favor of closing the sale. Although the role ofservice has been a supporting one in most industrial orga-nizations, it is becoming more critical as many high-tech-nology companies are generating a major proportion oftheir revenues by providing different types of services tocustomers—beginning from installation and training, andending with long-term maintenance contracts.

Internal Relationships in the Marketing of High-Technology Products

Cespedes has no doubt captured the dominant charac-teristics of industrial marketing organizations. However,

there are several trends, discussed in the introduction,that bring new challenges and changes to the manage-ment of high-tech marketing activities. These are recapit-ulated in Figure 1.

According to current research, marketing activities arecarried out primarily by the three units (product manage-ment, field sales, and customer service) depicted in thecenter of Figure 1. We contend that the coordination ofthe interfaces between these units, between them andR&D and production, and between them and the corre-sponding organizational units of customers, constitutesthe key challenge for marketing management in today’sand tomorrow’s high-tech companies.

A number of speculative propositions, based primarilyon our current knowledge [8, 9, 19, 21, 25–27] and on the

In spite of rapid development of electronic channels, sales remains an essential part of

marketing activities.

FIGURE 1. Factors affecting the role and status of marketing in industrial high-technology companies.

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emerging anecdotal evidence, provided the focus of theempirical study.

The more complex, in terms of the number of technol-ogies involved, the product or system to be exchanged,the more it is essential to find personnel with a variety ofskills and competencies to ensure the development of thesystem, and in its selling and implementation. This tendsto increase the number of organizational units involvedwithin both the producer and the buyer companies.

The greater the technological complexity and knowl-edge intensity the higher the level of tacit knowledgeinvolved in product development, marketing, and the im-plementation of the system. This tends to impede com-munication between actors having a different knowledgebasis or logic. Communication barriers exist both withinorganizations and between suppliers and buyers.

Taken together, the above propositions imply that in-tra-organizational integration of the actors carrying outspecific activities is both important and difficult. Becauseof the knowledge intensity involved we expect to findnon-hierarchical groups such as project teams, key com-municators, and teams within a business process setting.

As far as the supplier–buyer interface is concerned, thesupplier must have the capability of implementing theproduct/system in accordance with the customer’s tech-nology. This involves mastering the technology, under-standing the customer’s business, and having the compe-tence to market the product and to implement it. Becausedifferent actors carry the necessary capabilities, we canexpect teams to be the primary mode of conveying thesupplier–customer relationship.

It follows from the last point that if there is only a lim-ited number of customers, each one can generally be han-dled by a team containing a “complete set of actors,”meaning all the actors whose special competencies areneeded in carrying out the business transaction and thenmaintaining the relationship. However, in industrieswhere the number of customers is large, we expect thecompetencies which are rare and expensive to be central-ized and provided for the customer teams only as tempo-

rary supportive services. This need for expertise on theone hand, and its scarcity and high value on the other,forms a crucial balancing problem in high-technologymarketing.

METHODOLOGY: A CASE STUDY INTHE PROCESS CONTROL ANDAUTOMATION INDUSTRY

Choice of Research Approach andCase Companies

The multiple-case method was selected as the basic re-search approach because relatively little a priori informa-tion existed about the focal phenomenon, the organizingof marketing activities in high-tech companies. Further, itbecame evident, through interviewing a few industry ex-perts, that the complexity of the organizational solutionscould not be captured without direct interviews and ac-cess to company documents. According to Yin [28], mul-tiple cases can be employed in various ways. Often theunderlying idea behind selecting more than one case is toincrease understanding of the phenomenon under studyby comparing the individual cases. A researcher can alsouse multiple cases to provide an experimental researchsetting. We used multiple cases in a replicative way be-cause of the lack of prior knowledge [29]. Replication isused by the researcher to increase understanding of thephenomenon by focusing more deeply on issues emerg-ing from the earlier cases.

Industrial electronics was chosen as the high-tech or-ganizational and marketing context due to its prominenceand rapid development in many countries. In Finland theindustry’s annual growth rate has varied between 25%–30% during the 1990s. Within the field of industrialelectronics we selected our case companies from the in-dustrial automation sector. The process control and auto-mation suppliers in this specific sector form their ownsub-industry, characterized by a multidimensional tech-nology base (instrument and measurement technology,

Each major customer should be handled by

a team containing a “complete set of actors.”

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process technology, information-processing technology),and complex systemic products involving high knowl-edge intensity. The main customer sector for the processcontrol and automation suppliers operating in Finland isthe chemical forest industry (pulp and paper mills), andenergy production (power plants).

By excluding all small firms (they do not face the com-plex organizational problems we are interested in), we re-duced the number of the suppliers available in Finland tofive: ABB, Honeywell, Measurex, Siemens, and ValmetAutomation. All these companies, except Siemens, haveproduct development and production units in Finland.Because product responsibility is a crucial aspect of ourstudy, we decided to select all the companies as case unitsexcept Siemens. ABB’s operative process automationcompany in Finland is called ABB Industry, and we se-lected the Paper and Pulp Division’s Automation unit.Honeywell was represented by its Varkaus AutomationCenter, and Measurex by its Roibox unit.

1

Valmet Auto-mation is a subsidiary of its Finnish parent company(Valmet Corporation), and takes care of all automationand instrumentation-related business. It should be notedthat, although we only had four case units, they coveredclose to 50% of the global sales of process control and au-tomation systems for the paper and pulp sector [30].

Data Collection Process andAnalytical Heuristic

The data was collected through personal interviewsand with the help of archival industry data. A total of 20

interviews were made. The managing directors, or the di-vision heads, of the case companies were contacted in or-der to get permission for carrying out intensive inter-views. These managers suggested the key informants, inmost cases communication managers, who then providedadditional informants when necessary. Also, three indus-try experts were interviewed before the primary data col-lection in order to increase the understanding of industrycharacteristics, technical terminology, and to enhance theoverall validity of the themes and topics. Two to threerounds of interviews, tape recorded with permission,were carried out using the technique of drafting the in-terim case descriptions that formed the bases of the nextround. This procedure, and the cross-checking betweenthe multiple respondents and the archival data, were usedto enhance the validity of the data [28]. The interviewswere carried out during late 1994, 1995, and the first halfof 1996.

The following issues and “working heuristic” wereused in both the data collection and the analysis. First, weneeded to see the overall organizational structure of thecompanies in order to understand the context in whichthe marketing activities were carried out. Second, weidentified all the units and actors carrying out marketingor marketing-related activities. Cespedes’ [9] listing ofmarketing activities formed the basic classification de-vice. Third, we needed to identify all the internal unitsand external organizations with which these marketingunits interacted. Fourth, we tried to examine the characterof the interaction and the type of skills required in effect-ing satisfactory interaction. The charting of the organiza-tional arrangements and the reasons given for these bythe company representatives concluded the analysis. Thisheuristic enabled us to highlight the specific role and sta-tus of each marketing unit.

Reorganization has resulted in the assignment of more responsibility and

power down to the product lines and product

managers.

1

Honeywell and Measurex merged in 1997 and the new company is calledHoneywell-Measurex.

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ORGANIZING MARKETING IN THE PROCESS CONTROL AND AUTOMATION INDUSTRY: MARKETING DOMAINS AND INTERNAL MARKETING RELATIONSHIPS

Overall Organizational Structure

The case companies, and their parent corporations,have established world-wide matrix structures involvingof several business (industrial systems, building control,power generation, etc.) and market areas (Europe, theAmericas, and Asia-Pacific). This multi-level matrixstructure, illustrated in Figure 2, seemed to be quite simi-lar in the four case companies.

These global, corporate-wide matrices determine thegeneral structural arrangements used to organize market-ing activities at the company and business unit levels.Typically, each of the business areas comprises a number

of different industry sectors which, in turn, are assignedto the so-called product responsibility units (PRU). Themarket areas consist of local sales and service affiliatesin different countries.

The product responsibility units operate on a globalbasis in their particular industry sectors. These sectorsform separate so-called vertical markets. A particularPRU may also serve different vertical markets by modi-fying the basic platform product according to the specificcustomer application needs in each market. For example,a supplier’s process control and automation systemscould be used in the production processes of the pulp, pa-per, energy, and graphics sectors.

Because of the key position of the PRU (the oval inFigure 2) we analyzed the inter-organizational relation-ships from that perspective. Figure 3 illustrates the piv-otal role of the PRU as a nexus of the matrix formed by

A significant aspect is the emergence of the

dualistic product development system.

FIGURE 2. Matrix structure used by the case companies.

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vertical and horizontal markets. Vertical markets de-scribe the different industry sectors, or customer groups,to which the unit is selling its products and systems. Hor-izontal markets, on the other hand, consist of the differ-ent product and system applications the unit is develop-ing for the different customer groups. As the figureshows, some of the systems can be used in several verti-cal markets, whereas one application (C) is only targetedto a specific market.

As the term indicates, the PRU or platform productmanagement is in charge of the basic products and sys-tems, such as Alcont in Honeywell and Damatic in Val-met. Because these product managers focus on productsacross different markets, concentrating on technical devel-opment aspects, there is also an evident need to managethem at the business level which involves, for example,traditional product-market decisions. In order to do this,case companies have established application product man-

agement systems which approach markets across the dif-ferent products that the PRU develops and sells. The ap-plication product managers form a direct link to the fieldsales units and end customers by providing technical helpand expertise, for example. The vertical marketing func-tion forms the global dimension of the PRU’s business.

Identification of the Internal Marketing Domains

We will not describe the different marketing units andactors in each company in detail. Instead, we attempt tosynthesize the common characteristics of the marketingorganizations in the four case companies. These findingsare summarized Figures 4 and 5. Figure 4 portrays thethree identified basic marketing domains, and the actorsforming the internal marketing network. We have pur-posely used the term “domain,” instead of “unit,” to indi-cate that these do not necessarily represent any formal or-ganizational units, but rather refer to an interconnectedset of marketing activities, organizational groups, units,and persons. Figure 5 illustrates the interaction betweenthe different marketing domains and their actors.

As Figure 4 shows, the sales and service domain ofmarketing comprises sales personnel, account managers,project managers, and customer service and maintenancepersonnel. Most of the case companies have also estab-lished project manager positions. These managers are re-sponsible for carrying out customer projects after thesales personnel have negotiated a project contract. Thesales and customer services in all the case companies arelocalized into market area-based units, which form exten-sive networks of sales and service subsidiaries or affili-ates located in 30–50 countries throughout the world.

An interesting dualistic differentiation is taking placein the product management domain. Separate units are

Paradoxically, the dismantling of the traditional marketing department has

created a need for centralized

coordination systems.

FIGURE 3. Example of a product/market matrix in aproduct responsibility unit (PRU).

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emerging to take responsibility for customer applicationdevelopment and basic technology or platform develop-ment, as we indicated earlier. Platform development isorganized according to the different products groups. Themain ones include distributed control systems (DCS),which comprise a basic process control system in whichthe functions are distributed to different stations which,in turn, are connected to each other through a bus inter-face (DCS offer complete process control tools); qualitycontrol systems (QCS offer tools for controlling specificparts of the process); and production management and in-formation systems.

Application development consists of product lines thatare based on the different customer segments such aspulp, paper, and energy (PPE), also called vertical mar-kets. Efficient information exchange between these twoproduct management groups is essential for effectiveproduct development. The application developers pro-vide the customer point of view, whereas the platformdevelopers are in charge of following the developmentsin basic technologies. It can be argued that combiningthese two capabilities is one of the basic requirements forsuccessful high-tech product marketing.

Global corporations such as ABB, Honeywell, andMeasurex have also established their own customer sec-tor-related research centers. This centralization, althoughregarded as essential for product development, was alsoperceived by some of the interviewees to distance the de-velopment engineers from the customers. Many applica-tions need cooperative development with specific pilot

customers. Maintaining these direct customer contacts, inspite of the centralized “centers of excellence,” mayprove to be an essential issue in the future.

The marketing communication domain often com-prised a small unit, the key person being the marketingcommunication manager. However, marketing commu-nication seems to have been playing an increasingly stra-tegic role because it has formed links from the businessunits up to the company, and even up to the corporationlevel of marketing. In the global context, the communica-tion manager also interacted with the other communica-tion managers representing the same business area (in-dustry automation), but in charge of other market areassuch as North America or Asia-Pacific.

Identification of InternalMarketing-Based Relationships

The complex matrix structures utilized in the case cor-porations created a need for effective coordination andinformation exchange between the different internal do-mains and their units and actors. Figure 5 gives a sum-mary of our empirical results on the interaction betweenthe three identified marketing domains and between thedifferent units and actors in each domain.

All the actors in the sales and service domain—salesrepresentatives, account managers, project managers, andservice and maintenance personnel—have, naturally, in-tensive interaction with customers. The internal contactsbetween these persons were also of great importance.

FIGURE 4. Marketing domains in an industrial high-technology context.

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The need for domain-specific coordination is intensifiedby the project selling character of high-technology sys-tems where correctly timed involvement of all the actorsin the sales and service domain is needed. The key ac-

count manager positions, established fairly recently, arespecifically targeted at establishing this coordination ofcustomer contact.

The account manager system attempts to make the in-

FIGURE 5. Interaction between marketing domains in the process control and automation industry.

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teraction as easy as possible for the customer. As onemarketing manager suggested: “Account managers are,in a sense, customer representatives in the company.”These positions were perceived to be even more impor-tant when the company had several products or productlines. Before the account management system, eachproduct line had direct contacts with its customers, whichhad led to situations where several supplier representa-tives contacted a specific customer in an uncoordinatedfashion.

The service personnel also play an important role inthe sales and service domain. Besides carrying out theirmain service or system maintenance-related tasks, theyare often in charge of providing feedback informationconcerning customer satisfaction, customer needs, andcompetitor action. In order to fully carry out this infor-mation activity, service personnel must have close con-tacts not only with the other actors in the sales and ser-vice domain (project and account managers and salesengineers), but also with the product management do-main. It seems that the customer service and maintenancepersonnel are also taking a greater role in the pre-salesphase, keeping the other parts of the marketing organiza-tion informed about what is happening in the field, suchas when customers are planning to buy a new paper ma-chine or are rebuilding an old one.

The product management domain consists of twotypes of actors: system or platform product managers andapplication product managers. The distinction betweenthese types was explained in the previous section. Theapplication product managers reported intensive interac-tion with sales personnel and project managers. Personsfrom the application development side provide sales sup-port and technical expertise to the sales subsidiariesthroughout the world. These product managers are usu-ally involved in different customer projects in order tobring in the specific technical expertise and know-how ofcustomers’ processes (e.g., paper or pulp production) tothe project.

External supplier relationships were also found to beimportant in maintaining the developmental capability ofthe two product management units. Because of the wayprocess control and automation business is set up, sub-contractors and other suppliers carry out most of thehardware and component production. This dependenceon external resources is also increasing in core areas suchas systems programming, and even in traditional researchand development activities. Close contacts with researchlaboratories and universities, and with information tech-

nology and systems suppliers, and a network of compo-nent suppliers, are crucial for the management of thesedevelopments.

Because the different marketing domains are managedquite independently in the case companies, coordinationwas needed in order to disseminate marketing-related in-formation between the different product lines (or productresponsibility units), the market areas, and between thethree marketing domains. Interestingly, the marketingcommunication domain seems to have been given partialresponsibility for this internal communication, to add tomore traditional marketing communication tasks such asadvertising, sales support material production, organiz-ing seminars and trade fair participation, and managinggeneral publicity. The major automation sector trade fairsare especially important, as new products or versions areoften released through them. The communication man-ager cooperates with the product managers from the dif-ferent PRUs on product release occasions. The establish-ment and maintenance of a corporate or a company-wideimage for all the products and product line units was re-garded as essential. This can be understood, becausemany case corporations had built up their process auto-mation companies through acquisitions which had re-sulted in a number of different business cultures insidethe company, and in some uncertainty about the lines ofresponsibility among the customer industries.

DISCUSSION

We have examined the organizational arrangementsfor carrying out marketing activities in high-technologycompanies. Our basic perception is of the complexity ofthe internal interfaces between and within the three mar-keting domains identified. The sales and service domain,the product management domain, and the communicationdomain together made about a dozen internal connec-tions between various marketing units, in addition totheir external interfaces. The solutions identified aremore complex than the organizational structures previ-ously reported in industrial companies [8, 9, 23].

Another striking finding was the emerging enhancedrole of marketing communications.

Organizational Solutions forManaging Complexity

Marketing and its organization turned out to be amulti-faceted phenomenon in the high-tech companies

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we examined. We suggest that this is primarily related tothe functional specialization driven by technologicalcomplexity, and to the necessity to be close to the cus-tomers in order to understand their application needs.The global character of the case industry also contributedto the organizational complexity; all the companies oper-ated through customer sector and market area matrices.

As our findings show, functionally focused depart-ments have vanished during the early 1990s. This has re-sulted in a numerous collection of marketing-orientedcross-functional teams and projects. Due to the rathertemporary nature of these organizational arrangements, alarge number of actors such as account managers, projectmanagers, product managers, and marketing communica-tion managers are involved in customer relationships.The organization of good communication between theseactors, as well as the coordination of their activities, pre-sented a major challenge to all the case firms.

The dismantling of marketing departments is also a re-sult of adopting a process-based view of arranging tasksand activities, which makes a department-based line or-ganization inefficient. Process organizations require moreflexible and lean structures than the traditional ones. Ac-cording to our results, this reorganization has resulted inthe assignment of more responsibility and power down tothe product lines and product managers. However, itneeds to be borne in mind, that although the formalboundaries (i.e., departments) between the units havebeen removed, the basic business functions (such as mar-keting, R&D, and production) still exist in the companiesas activity flows. However, the new organizations arebetter suited to supporting the diverse professionalsneeded in high-tech marketing than the traditional cen-tralized marketing departments.

The marketing activities were mainly organized inthree marketing domains, identified as sales and service,product management, and marketing communication.These domains comprise several sub-units employingpersonnel with specialized expertise and responsibilities.

Emergence and Consequences of Customer Value Orientation

Although we have emphasized the importance of cop-ing with technological complexity and change, it becameevident that technological competence no longer guaran-tees competitive advantage in the process automationsector because most suppliers can offer the latest technol-ogy. Suppliers are therefore starting to emphasize the

value that the customer receives from process automationsystems. This change in orientation is reflected in the rel-atively recent establishment of account manager posi-tions. These managers are boundary spanners and theycoordinate the interaction between the company and itscustomers. This emphasis on customer interface is alsorelated to the finding that the role of service personnel isbecoming stronger. Besides being responsible for post-project implementation activities such as maintenance,they are also involved in the pre-sales phase (consultingthe sales personnel about customer needs) and in the im-plementation phase supporting the project managers.

Product Management as CoreBusiness Competence

It can be argued that the product responsibility units(PRU) in the product management domain form the coreof business competence in this high-tech branch becausethey take care of product management. One significant as-pect is the emergence of the dualistic product developmentsystem comprising a basic platform development unit andan application development unit. This complicates the tra-ditional product management organization, but it seems tobe an important vehicle for keeping abreast of develop-ments and utilizing the advancement of both basic and cus-tomer-sector technologies. Product management interactsintensively with sales and project personnel, thus provid-ing customer-specific technical support.

Coordination of a Customer Relationship

Figure 6 portrays a supplier–customer relationship as acombination of the basic activity “groups” of projectmarketing: sales, implementation, and maintenance. Thissimplistic framework illustrates the boundary-spanningrole of both the account managers and the project manag-ers. In the case of developing a new customer relation-ship sales, supported by product management, initiatesthe negotiations. If a contract is achieved, a project man-ager takes over the responsibility of coordinating the ac-tors needed in installing and starting up the product orsystem. This involves technical personnel, the cus-tomer’s personnel who need to be trained, and often alsoinformation systems personnel. The service and mainte-nance personnel take over the post-implementation rela-tionship. If the customer is important enough, an accountmanager is nominated who is in charge of both mediatingcustomer needs concerning both the present system andother product lines of the supplier.

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The account manager is expected to act as the key inte-grator of the supplier’s and the customer’s personnel.The supplier’s performance, as perceived by the cus-tomer, is very much dependent on the smooth manage-ment of the interconnections in the activity chain—pre-suming obviously that the individual activities can bemanaged competently.

New Product Generations: Product Responsibility Units as Internal Marketers

The above comments focused on managing an individ-ual customer relationship. On a more aggregate level, andon a longer-term basis, the issue of bringing technology(new product generations or new designs) to the marketis crucial. This requires collaboration between systemsand application development, account and project manag-ers, and marketing communications. A specific feature inour international case companies was that the PRUs havefirst to sell their products to the corporation’s interna-tional sales organization, and later to offer support. Salesorganizations, and especially account managers, act asgatekeepers, and PRUs are competing for their interestand time in introducing their products to the customers.This means that PRUs need internal marketing skills intheir relations to the sales organizations. In a more ab-stract sense, all internal marketing units and actors can beshown to have internal customers. It seems that internalmarketing [31] will play an increasingly important part in

implementing the marketing concept in high-technologycompanies.

Can Marketing Communications Coordinate the Marketing Organization?

We have repeatedly emphasized the need for internalcoordination and integration among marketing actors.This demands efficient support systems and internalcommunications for orchestrating marketing-related ac-tivities. In the case companies, marketing communica-tion was, quite unexpectedly, given the task of interact-ing with and coordinating the different marketing units. Itplays an internal boundary-spanner role. The problemsthe case companies reported in coordinating marketingactivities between different product lines (or product re-sponsibility units), between customer sectors, betweenaccount and project managers, and between project man-agers and product application managers, gave us seriousdoubts about the capability of current marketing commu-nication units to master the demanding coordination task.The communication units did not have enough resourcesor competence, nor were they given adequate decision-making authority.

GENERAL THEORETICAL ANDMANAGERIAL CONCLUSIONS

What conclusions can be drawn on a general level? Weargue that current research into business relationships andnetworks has overlooked the importance of the organiza-tional arrangement of marketing activities. Our findingssupport the argument that, in a high-technology context,the competent management of the internal marketing net-work is a prerequisite for the successful management ofthe portfolio of customer relationships. Obviously this pro-posal has to be validated with future studies in other high-tech industries. In order to derive a deeper understandingof effective organizational arrangements, we suggest thatthe marketing and organizational perspectives should becombined with the resource and capability-based theory ofthe firm [32–34]. The capability view is relevant for ana-lyzing the interrelatedness of the specialized skills andcompetencies needed in the successful linking of internalmarketing domains with customer organizations. Anotherrecommendation is to go more deeply into customers’ or-ganizational arrangements, although this would make theresearch setting very complex.

From a managerial perspective, our findings indicate

FIGURE 6. Supplier’s activity chain in a high-technol-ogy supplier–customer relationship.

534

that, by dispensing with their marketing departments,companies have created highly specialized and flexible,and as such necessary and successful, marketing sub-units. The number of these units and their decentralizedcharacter puts great pressure on inter-unit coordinationand communication. Paradoxically, this has created aneed for new centralized coordination systems. Estab-lished marketing communication units do not have thecapability, resources, or authority to meet this challengeproperly. We contend that new marketing centers, com-prising representatives from all the relevant units, shouldbe formed. These centers should have responsibility forinterfunctional coordination and the integration of the di-versified marketing units. There are signs that this kindof “marketing excellence center” seems to be emerging.

Another important aspect, which needs further exami-nation, is the impact of the managing part of marketingand sales activities through external relationships. Typi-cally, manufacturing and logistics-related functions havebeen outsourced in this manner but there are also signsthat certain key marketing and R&D activities are carriedout by outside vendors, especially in small and medium-sized companies. This development involves organiza-tional challenges, such as how to integrate outside vendorsunder the companies’ account management umbrella andhow to ensure the total quality of the offered products,systems, and customer service.

As the external outsourcing of marketing activities wasnot explicitly addressed in the current study, only a few,speculative, comments are offered. Employing an exter-nal sales force is obviously a potential solution, espe-cially for small and medium-sized companies with a lim-ited product range. In high-tech fields this involves atricky incentive problem. How can the firm get an exter-nal sales network committed to its products and custom-ers with an affordable compensation? One solution is todevelop partnerships with equally small companies de-voted to the specific high-tech area in question, and as-sign them the direct responsibility of managing the cus-tomer relationships in their geographical area. Followinga kind of modified franchising format these value-addeddistributor partners would be supported by a centralizedproduct excellence center. They would also need to feedthe essential customer knowledge back to the product de-velopment centers. Another important theme concernsthe involvement of extra-organizational members incross-functional teams of a marketing firm. Besides thecommitment problem, this issue involves the question ofsharing vital company and customer information with

these new team members. Because of this, a partnershiptype of relationship seems again like a viable solution.The external marketing/sales partners have to be commit-ted to the parent company and its customers, whichmeans that they are not able to serve competing compa-nies. The limited availability of this kind of specializedsales and customer service organizations in high-techfields restrains the pace of outsourcing marketing andsales activities.

The above comments are very simplistic. With the in-creasing trend of outsourcing activities we need more re-search in order to identify efficient organizational solu-tions for the high-tech companies of the new millennium.

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