Editing Consumer behaviour (section)

=== Risk perception and risk reduction activities ===
The consumer's [[risk perception|perceptions of risk]] are a major consideration in the pre-purchase stage of the purchasing decision. Perceived risk is defined as "the consumer's perceptions of the uncertainty and adverse consequences of engaging in an activity".<ref>Dowling, Grahame R. and Richard Staelin (1994), "A Model of Perceived Risk and Intended Risk-handling Activity", ''Journal of Consumer Research'', 21 (June), pp 119-34.</ref> Risk consists of two dimensions: ''consequences'' which refer to the [[degree of importance]] or the severity of an outcome and ''uncertainty'' which is the consumer's subjective assessment of the likelihood of occurrence.<ref>Mitchell, V.‐W. and Boustani, P., "A Preliminary Investigation into Pre‐ and Post‐Purchase Risk Perception and Reduction", ''European Journal of Marketing'', Vol. 28 No 1, 1994, pp.56 - 71</ref> For example, many tourists are fearful of air travel because, although the probability of being involved in an airline accident is very low, the consequences are potentially dire.

The marketing literature identifies many different types of risk, of which five are the most frequently cited:<ref>Ross, I., "Perceived Risk and Consumer Behavior: A Critical Review", in ''Advances in Consumer Research,'' Volume 2, Mary Jane Schlinger, (ed) MI, Association for Consumer Research, 1975, pp 1-20 <Online: http://acrwebsite.org/volumes/5741/volumes/v02/NA-02></ref>
[[File:Givenchy store at EPCOT.jpg|thumb|left|Facilitating trial of a product may help to alleviate risk perceptions.]]
* '''Financial Risk''': the potential financial loss in the event of a poor decision
* '''Performance Risk''' (also known as ''functional risk''): the idea that a product or service will not perform as intended
* '''Physical Risk''': the potential for physical harm if something goes wrong with a purchase
* '''Social Risk''': the potential for loss of social status associated with a purchase
* '''Psychological Risk''': the potential for a purchase to result in a loss of self-esteem

If a consumer perceives a purchase to be risky, they will engage in strategies to reduce the perceived risk until it is within their tolerance levels or, if they are unable to do so, withdraw from the purchase.<ref>Büttner, O.B., Schulz, S. and Silberer, S, "Perceived Risk and Deliberation in Retailer Choice: Consumer Behavior towards Online Pharmacies", ''Advances in Consumer Research'', vol. 33, 2006</ref> Thus, the consumer's perceptions of risk drive information search activities.

Services marketers have argued that risk perception is higher for services because they lack the search attributes of products (i.e. tangible properties that can be inspected prior to consumption).<ref>Mitchell, V-W. and Greatorex, M. "Risk Perception and Reduction in the Purchase of Consumer Services", ''The Service Industries Journal'', Vol. 13, no. 4, 1993, pp 179-200</ref> In terms of risk perception, marketers and economists identify three broad classes of purchase: [[search good]]s, [[experience good]]s, and [[credence goods]] with implications for consumer evaluation processes.<ref>Zeithaml, V. A. ''How Consumer Evaluation Processes Differ Between Goods and Services,'' (1981), in:  ''AMA Conference Proceedings'', James H. Donnelly and William R. George (eds), Chicago IL: [[American Marketing Association]], p. 186-190</ref> Search goods, which include most tangible products, possess tangible characteristics that allow consumers to evaluate quality prior to purchase and consumption. Experience goods, such as restaurants and clubs, can only be evaluated with certainty after purchase or consumption. In the case of credence goods, such as many professional services, the consumer finds it difficult to fully appreciate the quality of the goods even after purchase and consumption has occurred. Difficulties evaluating quality after consumption may arise because the cost of obtaining information is prohibitive, or because the consumer lacks the requisite skills and knowledge to undertake such evaluations. These goods are called credence products because the consumer's quality evaluations depend entirely on the trust given to the product manufacturer or service provider.<ref>Jourdan, P., "Search Or Experience Products: an Empirical Investigation of Services, Durable and Non-Durable Goods", in:  ''Asia Pacific Advances in Consumer Research '', Volume 4, Paula M. Tidwell and Thomas E. Muller (eds), Provo, UT, Association for Consumer Research,(2001), pp 167-174 Online:http://acrwebsite.org/volumes/11342/volumes/ap04/AP-04</ref>

Typical risk-reduction strategies used include:<ref>Dowling, G.R. and Staelin, R., "A Model of Perceived Risk and Intended Risk-Handling Activity", ''Journal of Consumer Research'', Vol. 21, No. 1, 1994, pp. 119-134</ref><ref>Mitchell, V-W.  and Greatorex, M., "Risk Perception and Reduction in the Purchase of Consumer Services", ''Service Industries Journal'', 1993, pps 179-200</ref>

[[File:US Navy 060513-N-5174T-045 Lt. Taylor Forester makes a few last minute decisions before purchasing a gold necklace from a Navy Exchange vendor aboard the Nimitz-class aircraft carrier USS Ronald Reagan (CVN 76).jpg|thumb|Prospective purchasers carefully inspect the merchandise before purchasing expensive gold jewellery.]]
* '''Advertising and Promotional Messages''': pay closer attention to product or brand related promotion including advertising messages
* '''Shopping Around''': comparing offers and prices, inspecting the merchandise
* '''Buy Known Brand''': using a known, reputable brand as an indicator of quality merchandise
* '''Buy from Reputable Store''': relying on a reputable retail outlet as an indicator of quality
* '''Product Reviews''': reading independent reviews in main media (e.g. newspapers, magazines), written by independent experts
* '''Online product reviews or consumer-generated testimonials''': reading about the experiences of other consumers (e.g. TripAdvisor, Amazon customer reviews)
* '''Sampling or Limited-scale Trial''': where practical, obtaining samples, free trial or a 'test-drive' prior to purchase
* '''Manufacturer Specifications''': reading information provided by manufacturers e.g. brochures or specs
* '''Referrals''': obtaining referrals from friends or relatives
* '''Sales Representatives''': talking to sales reps in retail outlets
* '''Product Guarantees''': looking for formal guarantees or warranties