This is a fantastic and funny find from Frank Dale, CEO of Compendium. I actually know a few companies where the marketing outpaces the user experience and services the product offers. In fact, I've actually requested demonstrations that won't even open their application, instead working off of a bright and shiny powerpoint. That's not an issue when your product is as advertised, but I've seen it tear some companies apart when the marketing is a photoshopped, exaggerated glamour shot of the actual product.
Marketing sets the expectations, sales affirms them and collects the commission, the client signs and is immediately let down. The problem simply rolls downhill to the account management and customer services teams. Those teams have retention as one of their key performance indicators… so when the companies leave or don't renew, the account management and customer service teams are held accountable. Accountable for something totally outside their control.
Is it the right thing to do? I don't think misrepresenting your product is ever the right thing to do. However, some of the companies that do it tend to grow rapidly. By growing rapidly, they are able to win market share, win investment, and reinvest to catch up to the image they've portrayed. When some of these companies are making tens or hundreds of millions of dollars, it's difficult for me to say that it's a bad tactic. It's just something I don't like. I don't like companies that do it. And I don't like recommending those companies to my clients.