However, it can be applied to any supplier, although it tends to work better in complex products and services where there needs to be a degree of trust between customer and vendor. This is most effective where the customer is not really capable of assessing the quality of the advice they are getting.

Imagine you are buying high performance stereo equipment where you have a number of electronic components which need to work together. You also have unusual room structures you want the output to perform in. Further, you want to ensure you have the ability to upgrade into emerging technologies and higher internet bandwidth. Unless you wish to devote most of your waking hours for many months to understand the technologies and options, you really are at the mercy of your advisor.

This is where perceived risk can be very high. A vendor in this situation often takes on the task of finding the right solution for the customer in a situation where the customer is unable to assess the quality of the final solution. It can also take many years for some situations to play themselves out in order to discover whether the advice was correct or not. Since we often have to choose between alternatives and do not have the opportunity of trying out several solutions, we may never find out what the alternative outcome would have done for us.