Page 180 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 9: Motivation and Perception

Consumers lacking actual experience with the product tend to judge the quality on the basis of Notes
extrinsic cues such as brand image, price, or even the country of origin, etc. Lacking previous
purchase experiences may lead to an awareness that higher-quality products tend to cost more
and high-price may become an indicator of higher quality and suspect the quality of low-priced
products. In India a little over a decade ago “foreign” make meant superior quality. This tendency
is still prevalent among a large number of middle and lower middle class consumers..
Kent B. Monroe and Susan B. Petroshius have summarised research findings to show how
consumers react to price variable:
1. Consumers seemingly use price as an indicator of product quality as well as an indicator
of purchase cost.
2. Consumers appear to develop reference prices as standards for evaluating prices they see
in the marketplace.
3. Consumers’ reference prices are not constant and get modified by shopping experiences.
Their exposure to price higher or lower than reference price is likely to result in upward
or downward movement of the reference price.
4. Consumers tend to develop a range of acceptable prices around the reference or standard
price. Prices above or below the reference price are likely to be judged as unsuitable and
may lead to decreased willingness to purchase the product.
5. Factors, such as brand image or store image, can soften the strength of the perceived price-
quality relationship.

6. If the prices for different alternatives are perceived as similar, then price is unlikely to
influence the choice between these alternatives.

Consumers’ Risk Perception

Whenever consumers make decisions to purchase any new brands, there is an element of
uncertainty about the consequences and a perception of risk is involved in most such purchases.
Risk perception 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 noting 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 exists but is not perceived, it will not influence consumer behaviour.
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 types of risks in making purchase decisions. The major
ones are:

Financial or monetary risk is the risk that the product will not be worth 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. The consumer wastes time in getting it repaired, or
replaced. The risk is greatest when the product is technically complex. For example, an
expensive computer.
Physical risk refers to bodily harm to self and others due to product usage. For example,
food and beverages, electrical or mechanical appliances, or medical services, etc., can

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