Attitude toward risk

Having confidence in the company that offers a solution is an extremely important factor. According to marketing managers, this trust is an even more important purchasing factor than the technology used and is equal to the price of the product (see Figure 3.5, which is based on interviews that I conducted).

In the high-technology industry, customers are often faced with a technically complex solution, the elements of which they do not understand. These customers, however, do realize that this solution is likely to change quickly over time and can suddenly become obsolete. Finally, innovation can often be disturbing for buyers.

I p Percentage of responses

Cost of product or service

Confidence in selling organization

Product performance

Product quality

Service

Figure 3.5 Purchasing criteria for high-technology goods and services. Tabulation of responses to the question: Which are the deciding factors that influence your customers in a purchasing decision?

With this in mind, customers prefer security. They choose a company they can trust and that they know will be around for a sufficient length of time to guarantee the durability of the solution. This was the strength of IBM in the computer industry of the 1970s—no one was ever fired for selecting an IBM product.

Arianespace's marketing director Ralph-Werner Jaeger expressed this same idea: "In our business, there is a development toward criteria of trust and reliability of service. All our activities are ultimately materialized in about 30 minutes, after a 3-year waiting period and million-dollar invest-ments...customers prefer that we spend more so as to supply an extremely reliable product."

The same reaction can be found concerning high-tech consumer products, because many consumers feel radical product innovations are risky purchases [26]. Faced with a complex and changing supply, consumers prefer either the least expensive brand or the most prestigious brand. For that matter, a successful licensing strategy helps to decrease customer perplexity, leading to bigger market acceptance for a given technology. So, when Philips NV settled on licensing the VHS videocassette recorder format from Matsushita, rather than continuing to pursue its own V2000 technology, it decreased the number of technologically incompatible VCR formats from three to two. Further, this move contributed significantly to the growing approval of the VHS format by the market, as well as the manufactures of complementary products.

Consequently, the marketing strategy for large companies should include improving their image and reputation. Smaller companies must rely on recommendations that reassure their potential customers, on a selling style that can establish confidence, and on a long-term support commitment for the solutions that these smaller companies offer.

In any case, according to marketing managers, technology is not a necessary and satisfactory element for convincing the market. The marketing manager must understand the client's needs in terms of performance but also in terms of psychological expectation. He or she must also try to reduce the risk aversion that inhibits the behavior of many buyers (final consumers or businesses) toward a high-tech product.

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