Perceived risk is a set of uncertainties that consumers have in their minds while purchasing a product regarding the outcome of the product usage. It is kind of a psychological and functional risk that consumer feels is taking while purchasing that product. It is basically a level of uncertainty that consumers have regarding worth of buying product.
This uncertainty regarding the product outcome is generally for high priced products and high complex items like laptops and mobile phones. Thus before buying this sort of products, consumers tend to collect information and ask peers and experts for reviews. To avoid such kind of risks consumers tend to buy products that are leading in the market and avoid using new products and brands.
There are basically six kinds of perceived risks can be seen in consumers. They are-
• Functional Risk
This risk is one of the most common risks which come up with the fear of quality of product whether product will deliver promised benefits or not.
• Social Risk
This risk boils down to a fear of losing status because of buying the product.
• Financial Risk
This risk comes up when consumer has fear that purchasing the product can tax his monetary resources.
• Physical Risk
This type of risk is related to fear of getting harmed by using certain product. For example, purchase of beauty products
• Time risk
It is related to the fear of time lost when a product is needed for replacement or not fulfilling promised functions.
• Psychological Risk
This kind of risk is associated with the uncertainty of product regarding its moral rightness.
Marketers and manufacturers try their best to reduce these uncertainties and anxiety by providing guarantees, by obtaining some recognised groups and roping in well-known and respected celebrities as spokesperson for the product.
Risks are common in consumers while buying any product. It is responsibility of manufacturers and marketers to take care of these kinds of risk and make sure that consumers feel secured while purchasing their product.
Hence, this concludes the definition of Perceived Risk along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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