While a customer’s decision to amend or cancel a buying decision is influenced by a number of factors, one of the main factors is the customer’s perceived risk. According to Kotler et al (2009), consumers may perceive many types of risk in buying and consuming a product. For example:
Functional risk: The customer may feel that the product will not perform up to his/her expectations. This feeling reduces the importance of buying the product to insignificance.
Physical risk: Physical risk is another important factor to consider. A customer may avoid buying a product if it seems to contain any features or capacities which may affect his/her physical well-being.
Financial risk: The customers may conclude that the product is not worth paying for. They may also feel that buying the product/service will incur some financial loss which may be unbearable. For example, customers are very cautious to purchase properties during recession.
Social risk: Some customers are very aware of their social status. Buying certain products may invite some unwanted looks. It may also result in embarrassment from others. How many buyers will buy a product/service with a fear of embarrassment?
Psychological risk: Many customers are very aware of their self-image. If the product does not conform to their self-image and social status, the customers may not buy it. The customer may be concerned of his image being tarnished by associating with such products.
Time risk: Customers may return a product if it is not delivered on time. People sometimes buy products to celebrate an occasion or participate in a social event. This is when timely delivery becomes extremely important. A customer may not buy a product if the delivery date does not match their time requirements. This is why online retailers such as Amazon.com, ebay.co.uk and others have different delivery options to address the time requirements of the customers.
Certainly, the amount of perceived risk may vary due to a number of factors e.g. the amount of money at risk, time and so on. Marketers must understand the factors which cause a feeling of risk in consumers and take necessary steps to reduce perceived risk. No doubt that buying decision is sometimes complex and time-consuming. Therefore marketers need to apply robust marketing techniques to make customers’ purchasing experience convenient, and fun if possible.
The article publication date: 30 August 2016
Kotler et al. (2009) Marketing Management, 1st European Edition, Prentice Hall
Photo credit: Pixabay
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.