(image borrowed from internet thanks to owner)
Perception: the process by which people translate sensory impressions into a coherent and unified view of the world around them.
Consumer: An end user who buy a product and use it actually.
Risk: It is an uncertainty which is associated with each product.
Consumer Risk Perception: whenever consumer make decisions to purchase any new product there is an element of uncertainty about the consequences and a perception of risk is involved in most such purchases. Risk perceptions can be defined as “the consumers” perceptions of uncertainty that they face when they are unable to foresee various consequences of their purchase decisions’. The relevant risk dimensions are the uncertainty and the consequences. It is worth nothing that the influence of risk depends on individual’s perception. This means that the risk actually may or may not exist and even if a real risk exist and even if a real risk exists but is not perceived, it will not influence consumer behavior.
Several Situations may influence the consumer’s perception of uncertainty or consequences. For example, there may be uncertainty regarding buying goals, uncertainty about alternatives, or uncertainty about perceived possible undesirable consequences.
Consumers may face several different type of risks in making purchase decisions.
Financial or monetary risk is the risk that the product will not be worth of its cost. Expensive products and services are most subject to this risk.
Performance risk, which is associated with the possibility that the product will not perform as anticipated or may even fail that consumer wastes time in getting it repaired, or replaced. The risk is greatest when the product is technically complex.
Example and expensive computer.
Physical risk refers to bodily harm to self and others due to product usage. For example, food and beverage, electrical or mechanical appliances, or medical services etc. can sometimes prove risky. When cooking gas (LPG) was first introduced in India, consumers physical risk perception about it was high. Similarly some consumers consider the use of pressure cooker as risky.
Social risk, which means that a poor product purchase may not meet the standards of an importance reference group and may result in social embarrassment.
Psychological risk relates to loss of self-esteem or self-image as a result of poor choice and making her/him feel stupid.
Example: High-involvement category products or services.
The degree of risk perception among consumers varies and depends upon the person, product situation and the culture. Some consumers who are high-risk perceives or risk avoids, limit their product choices to a limited number of safe alternatives to avoid risking a poor selection. More often than not, they stay brand loyal to avoid risk.
Consumers who are low risk perceives or risk takers tend to consider their choices from a wider range of available product alternatives. They prepared to risk poor selection instead of not considering several alternatives from which they can make a selection. They are more likely to buy new products before they are well new products before they are well established. Risk takers are often higher-income consumers, having upward social mobility and show personality traits such as need for achievement. Dominance and change. Help taken from book