EXPLAIN RISK AND HOW DOES IT INFLUENCE BUYER BEHAVIOR?

The way people perceive risk has a significant impact on how they assess risk, make decisions, and
behave. Although the relationship between risk perception and consumer purchasing behavior has been
extensively studied, it is not universally accepted.

The uncertainty a consumer feels when making a purchase, especially one that is very expensive, like a
car, a house, or a computer, is known as perceived risk. Every time a consumer thinks about purchasing
a product, they have some doubts about it, especially if the product is expensive.

The following are some ways that these kinds of risks affect a buyer's behavior.

Functional - One type of perceived risk is the consumer's worry or uncertainty that the product they are
purchasing won't fulfill the purpose for which they are purchasing it. The buyer might worry that if they
purchase a car, the engine or other components might break down.

Social – This category of risk relates to the social standing of the consumer. People from higher or
wealthier social classes tend to want to purchase goods that their friends would also purchase. For
instance, they might decide against purchasing a cheap car out of concern for the opinion of their
friends or because they think it will lower their social standing with their peers.

Financial - This risk is something that every consumer faces to some degree. They worry that a purchase
might rob them of their current or future sources of income. For instance, purchasing a car might leave
them with little to no money or with loans that will have an impact on their income for the near future.

Physical - A threat to a person's or their family's physical well-being is a physical threat. Buying a firearm,
as an example. Accidents could happen if the gun unintentionally malfunctions. On the other hand, a
book almost never harms anyone physically.

Time - If a product needs to be replaced after it fails or breaks a few days after purchase, this is a time
risk. You'll waste time having to return to the store and wait in line to have it fixed or replaced.