Explain how consumer overcomes perceived risk in buyer decis

Explain how consumer overcomes perceived risk in buyer decision making.

Solution

The consumers decides to make a purchase when the perceived value of the material is more than the price / risk associated with it. The overall perceived risk is constituted owing to Product Category Risk & Product Specific risk which can lead organizational losses.

The broad and basic organization behavior to counter perceived risk is through

It is imperative and important for the organization to evaluate the predominant category on which the consumers percevied risk belongs. The way to overcome perceived risk is provided below.

1. Functional Risk - Risk of expecting that the product wouldn\'t perform as expected

The consumers when assured that product meets and exceeds all government and safety standards. Projection of the goods as safe through various communication means will also ensure that the consumer instil its faith and reduce the perceived risk. When the consumer is assured of safety design, its resort to write back to the orgnaization and most importantly he being heard and acted upon by the organization is the key turnaround for the minimization of functional risk.

2. Financial Risk - Risk of pricing of goods more than the value perceived

The perceived value of the goods / service should be more than the price paid by the consumer and the risk being faced by them. Pricing of products competitively is extremely important for the consumer. And consumers is going to hate the product / organization if the consumer discovers that the product price is high in comparison to others for no apparent reason or technology being offered.

Competitive pricing is one of the key steps for the consumer to reduce the perceived financial risk

3.Social Risk - How others perceive the product as

Another important aspect is to regarding the market perception and perception of the goods in the social set up of the consumer. If the product enjoys a good reputation and becomes the status symbol for the consumer, naturally the social perceived risk of the product is reduced dramatically. However, if a product, despite being competitively priced and technologically superior, is considered poorly in the social, demographic, religious setup shall be shunned. Therefore, the consumer also looks into the market and social perception of the product to minimize his social perceived risk. Another important aspect is \'who\' is using the product. If the \"right\" people use the product the social risk is minimum and vice versa.

4. Psychological Risk

How does the product do for the consumers\' self concept? 2 people may look at the same product but with different risks for no apparent reason. This risk is the most difficult to evade by an organization. However, if a consumer perceives a product to enhance his own being or adding value to his self concept then the product shall enable him to reduce his psychological risk.

Therefore, broadly a consumer tries to evaluate the product\'s perceived risk from its functional, financial, social and psychological aspects. These 4 factors also have the tendency to influence each other too. Garnering support and evidence on these four factors enables the consumer to overcome / reduce and minimize the perceived risk.

The broad steps the consumer undertakes which caters to the above-mentioned 4 aspects.

These actions ensure the consumer to overcome the perceived risk in buyer decision making.