148 The Marketing Book
practice according to convention or conveni-
ence, even within the framework of a cen-
tralized policy. Sheth (1973) concludes that the
greater the degree of centralization, the less
likely the company will tend towards joint
decision making.
Organizations with several operating sub-
sidiaries, particularly if these are overseas, will
have an overall policy regarding centralization.
Even where control is highly centralized, sub-
sidiaries may, nevertheless, be given varying
degrees of freedom in choosing suppliers of
specified product categories. The degree of
centralization may therefore be vital to both the
composition of the buying centre for these
services, and also relevant to the development
of a strategy for international marketing.
Finally, Sheth (1973) suggests that the
composition of the buying centre will be
dependent upon the company orientation. If a
company is technology orientated, the buying
centre is likely to be dominated by engineering
people who will, in essence, make the buying
decision.
These various research findings highlight
the necessity for a supplier’s marketing man-
agement to know the policies and buying
routines of its customers. By studying both
existing and potential customers, suppliers can
develop marketing strategies targeted to the
important buying influences.
Product factors
The product variable embraces a number of
characteristics, including product essentiality,
technical complexity, value of the purchase,
consequence of failure, novelty of the purchase
and frequency of the purchase.
Weigand (1968) defines a product as ‘a
variety of promises to perform’. Performance
will be judged according to the expectations
that the individual has of the product, and it is
important to remember that different people
and organizations will have different percep-
tions and expectations of the product. As
Alexanderet al. (1961) have pointed out:
The broad basic differences between types of
goods arises not so much from their variations
in their physical characteristics as differences in
the ways in which and the purposes for which
they are bought.Where a product is central to an organization’s
operations it is likely that the purchase will be
decided upon jointly by all the parties con-
cerned. This is also likely to be true in instances
of high capital expenditure. In both of these
instances the consequence of failure may be
severe and so where the possibility or the
consequence of failure are perceived to be
higher it is likely that purchase decisions will
be shared.
Bauer (1960) coined the term ‘perceived
risk’, and Cyert and March (1963) applied the
concept of risk avoidance as one of their basic
concepts explaining the behaviour of the firm.
They suggest that, in order to avoid uncertainty
and failure, organizations avoid the necessity of
having to anticipate events in the future by
emphasizing short-term feedback, and impose
standard operating procedures to ease the
burden of decision making.
Hill and Hillier (1977) use the term ‘risky
shift’ to explain how members of a group take
decisions involving a higher degree of risk than
they would do as individuals. The ‘risky shift’
concept is central to the composition of the
buying centre, and highlights the point that its
composition will vary as a result of the charac-
teristics of the product being purchased and
particularly in relation to the perceived risk of
the buying situation. More recent work by
Greatorex et al. (1992) has demonstrated the
importance of perceived risk in computer sys-
tems purchasing.Buying situation
Product complexity will be situation specific
and should not be regarded per se, but rather in
the way it is related to the purchaser’s technical
knowledge and expertise. Knowledge and
expertise will arise out of previous experience