Sales practice and market evolution: the case of virtual reality

Abstract

This paper analyses how sales practices of industry pioneers influence the evolution of a new market — with particular reference to the case of virtual reality (VR). In the underlying diffusion process, the probability of a new user adopting this technology depends on the quality of experience enjoyed by existing users. Good sales practice is expensive but leads to a high proportion of satisfied users, which is good for subsequent diffusion. While suppliers may be tempted to ‘hype up’ the technology to obtain additional sales in the short term, those customers persuaded by ‘hype’ are often dissatisfied with their experiences, and that is bad for diffusion in the longer term. The paper draws on a detailed study of the selling process in VR to develop a simulation model, which is used to explore how sales practice influences adoption decisions, customer satisfaction and the ultimate evolution of the market.