Tuesday, 6 October 2015

Perceived risks of shoppers

Consumers who generally shop go through a definite process before selecting the chosen product. The very basic steps constituting the decision process of a consumer are shown below:

The ultra-important factor which is not being clearly shown in this, is the term we are going to deal with i.e. Perceived risks. This can be simply called the consumer’s level of uncertainty regarding the outcome of a purchase decision, especially in the case of a high priced item such as a car, or a complex item such as a computer. Apart from the technical jargon, it is all the questions which come into your mind regarding the product.

The perceived risk are as follows:
  1. Functional risks: The uncertainty that the product will not perform as expected. Especially for products whose attributes cannot be very well defined (eg. apparels) just through ads, this is a huge risk in judging and matching their price to the benefits actually provided by them.
  2. Physical risks: The uncertainty faced by a consumer whether the product offering can be harmful to self or others. Again, its related with the attributes and can cause doubts in your mind. For example in food items, whether an organic unpasteurized milk safe to drink or not.
  3. Financial risks: The feeling that the product will not be worth its cost. Due to increasing involvement of consumers and stiff competition, innovation has become a regularity. An LED TV which may be a big thing in the market in the present scenario may be available 6 months from now at a cheaper price due to finer variants.
  4. Psychological risks: The uncertainty whether the product I am looking for will suit my self image and whether the society will accept it or not. Subjective norms play a huge role in this, which is basically the how much my purchases will be acceptable and regarded by the people around me whom I consider as relevant. 
  5. Time risks: Time spent in search of the product may be wasted if it does not perform as intended or. It mainly occurs with high involvement products which need a lot of information search and comparison with the other brands.
These risks can be decreased too. A few very simple ways are by :
  • Seeking information about the product
  • Staying brand loyal to their previously sought out brand
  • Select by brand image, especially when the consumer has no experience with a product
  • Buy the most expensive model, especially when price is perceived to be an indicator of the product's quality.

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