RISK PERCEPTION AFFECTING CONSUMER BEHAVIOR
Consumer risk perception is another factor businesses must take into account when trying to encourage buying behaviors. The more risky a proposition is, the more difficult it is to get consumers to act. If consumers aren’t familiar with a brand of product, they can’t assess the risk involved; it could be poorly built, for instance, or too costly compared to substitutes. Businesses can overcome this hesitancy by offering as much product information as possible in the form of advertisements or by encouraging product reviews. Allowing potential customers to handle the product in stores or test it at home also decreases risk perception, as does offering a flexible return policy.
In last it is concluded the success of a business depends upon its ability to attract and retain customers that are willing to purchase goods and services at prices that are profitable to the company.
Any time customers consider purchasing a new product or signing up for a new service, they also face a set of uncertainties about the product or service collectively referred to as perceived risk. As part of the conversion process from potential customer to paying customer, businesses must develop strategies to assuage one or more of the six types of perceived risk.
One of the most common types of perceived risk, functional or quality risk refers to the fear that a product or service will fail to deliver promised functions or benefits. A new computer, for example, might fail to run the resource-intensive, audio editing program a sound engineer needs to perform her job.
Social risk refers to the possibility that buying a product or using a service can reduce a person’s status with friends, family or neighbours. If, for example, someone purchases a purebred dog and finds his friends consider adopting animals from shelters the socially responsible behavior, he suffers a loss of status.
Financial risk boils down to a fear that a potential purchase. can tax or outstrip a person’s monetary resources, now or in the future. Financial risk operates on both a subjective and objective level. A person with low or variable income can experience a high level of subjective financial risk, even with low-cost items. The purchase of a home, on the other hand, often means an objectively high level of risk, even for those with stable finances.
Physical risk refers to the perceived potential for a purchase to cause bodily harm to a person or loved one. A firearm, for example, might create a high level of perceived physical risk in the minds of some customers. A book or magazine, by contrast, prompts physical risk concerns in few customers.
The increasing pace of contemporary life means more customers worry about time risks, in particular time lost when a product turns out to need replacement or fails to deliver as promised. It can also include pragmatic concerns about how much time you might spend waiting in line at a crowded retail outlet. Many businesses seek to alleviate this concern by offering online purchase options on their websites or through online retailers.
Consumers also face questions about whether a given purchase is the morally right choice. For example, a customer may want to buy from a particular company because it offers inexpensive alternatives, but feel ambivalent due to the company’ s labor practices.
Perception is the psychological process by which the consumer drives certain meanings to what has been sensory organs. This is precisely the reason why two individuals have different kinds of perception about the product, brand idea, place and people. In the market context, such perception conditions the consumer’s psyche over a period of time. A typical consumer’s exposure to advertising message, company’s name and use/experience of various products, brands etc. get associated with the incoming marketing stimuli, and this exposure completes the process of perception.
Perception is not just limited to visual aspects such as seeing the product or the brand in the relate outlet. It could get extended to any of the input to sensory organs. For example, just the audio part without the visual to Titan’s TV commercial (the background music is used in the brand’s commercial) could trigger of visual images of the brand’s commercial in a consumer who has viewed the commercials many times over a period of several years.