As consumers make decisions regarding what products to buy and services to hire, they often have concerns about the consequence of their choice. This uncertainty that consumers face in decision making is called perceived risk. Marketers must understand the different types of perceived risk and how to reduce these in order to improve the consumer decision making process.
A few of the important consumer-perceived risks include:
Functional Risk: Will the product perform as expected? For example, will the new fruit drink quench my thirst? Will the innovative mattress provide good sleep?
Financial Risk: Is the product worth the cost? For example, is the new product worth a full, non-discounted price?
Physical Risk: Will the product harm myself or others? For example, is the new shelf-stable product safe to consume if not refrigerated?
Social Risk: Will the product cause embarrassment or social rejection? For example, will others ridicule my new trendy purple sneakers?
Perception lies in the hearts and minds of consumers. The degree of perceived risk varies by consumer, with some consumers having a higher tolerance for risk than others. Consumers with high amounts of perceived risk are less likely to purchase new products than low-risk perceivers.
It is the responsibility of the marketing professional to reduce the consumer’s perceived risk through proven strategies such as product sampling and coupons.
Here is an example:
Brian sees a new protein bar on the supermarket shelf. He recalls seeing a digital ad for this product, so there is some basic familiarity. But, Brian has a low tolerance for change due to his perceived risks.
Here are some of the thoughts that run through Brian’s mind: “Would I like the new flavor?” “If I don’t like the new protein bar, then I wasted my money” “Will my friends also eat these new protein bars?” So, even though Brian is curious about this new protein bar, his perceived functional, financial and social risks keep him from purchasing the new protein bar.
Let’s look at this same scenario utilizing risk reduction strategies of sampling and coupons:
Brian sees a new protein bar being sampled for free at his health club. He recalls seeing a digital ad for this product, so there is some basic familiarity. Since Brian has perceived functional risk regarding the taste of the product, he is very glad that the sample is a small size, in case he does not care for the taste. In addition, Brian has a perceived financial risk, so he is very grateful that the sample is free. Brian notices that several of his friends at the health club are also trying the free samples, so he feels like he would have peer acceptance, thus reducing the perceived social risk.
Brian ate the free protein bar sample and enjoyed it. He notices there is a dollar off coupon attached. This coupon reduces his financial risk and is a direct inducement for Brian to purchase the new protein bar.
And just like that, a new consumer is acquired. Aha! elevates your marketing programs and increases consumer acquisition every day through our sampling programs that mitigate consumer-perceived risk.
Contact us today at firstname.lastname@example.org to learn more and speak with one of our strategists.