Perceived Value And Purchase Intention Business Essay


Perceived risk in marketing literature can be defined as "the nature and amount of uncertainty or consequences experienced by the consumer in contemplating a particular purchase decision (Cox and Rich, 1964, p. 33). Uncertainty is something that varies according to the personality and the beliefs of each consumer and exists because consumers cannot foresee the outcome of their purchase decision (Yaping and Jin, 2010) or according to Peter and Ryan (1976) "the probability of loss". Consequences have to do with whether or not the desirable goals were achieved (Park and Stoel, 2005) or "the importance of loss" (Taylor, 1974; Peter and Ryan, 1976). A simpler definition would be "a consumer's uncertainty about a loss or gain in a particular transaction" (Murray, 1991).

In general terms and after a lot of research, perceived risk is considered to be a "fuzzy" concept (Dowling, 1986) as it is described using two aspects and can appear with many faces depending on the type of the loss (Dowling, 1985). For the aim of this study, purchase intention refers only in shopping through e-commerce and not in traditional way of shopping, though risk exists in both ways (Nicolas and Molina-Castillo, 2008). Moreover, no matter where the product is acquired the customers search online to find information so as to make the purchase (available at: Based on this assumption, the types of perceived risk are not less but what differs is the amount of influence on purchase intention (Yaping and Jin, 2010).

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The different dimensions according to consequences of perceived risk are:

Financial risk which has to do with the loss of money of the customers because of the purchase (Yaping and Jin, 2010; Laroche et al., 2004; Huang et al., 2006).

Social risk which refers to what other consumers will think when they find out about the product bought, in other words, the loss of esteem or respect (Murray and Schlacter, 1990).

Time risk which refers to the loss of time in order to make the purchase (Murray and Schlacter, 1990) or place the order (Sarkar, 2011) or the time spent when a customer returns a product because it did not attributed the way it should (Mc Corkle, 1990).

Psychological risk which has to do with the anxiety, the insecurity and the embarrassment that consumers might feel (Yaping and Jin, 2010; Shin, 2008) or the potential loss of self-image (Murray and Schlacter, 1990).

Performance/product risk which refers to the loss due to the product failure after the purchase is made (Laroche et al., 2004; Huang et al., 2006).

Physical risk which refers to the perception of possible negative consequences of consuming a given product (Tsiros and Heilman, 2005).

For the aim of this study and further investigation, three types of risk will be examined which are mostly connected with the online shopping and these are, financial risk, performance risk and time/convenience risk (Forsythe et al., 2006).

At this point, it's worth mentioning that the importance of the types of risk differs across the category of the product or the service (Mieres et al., 2006; Kaplan et al., 1974) and across the method of shopping (Laroche et al., 2004). For example, perceived risk for a necessity is different from the perceived risk for a luxury product as each of them creates distinct emotions for the consumer, either negative or positive (Chaudhuri, 1998).

One of the main reasons for the existence of perceived risk is the intangibility of the product (Laroche et al., 2004) or services (Boshoff, 2002) and this because a lot of properties can be evaluated only after the purchase is made (Murray, 1991). The same applies when the purchase takes place through online environments because the customers cannot sense the quality of the product before buying it (Kim et al., 2008).

Generally, customers the more risk they perceive, the less likely they are to purchase (Lim, 2003). In order to reduce the amount of risk they are facing, companies should follow some strategies concerning that or use information acquisition before taking a purchase decision (Taylor, 1974; Roselius, 1971). The two basic forms of strategies are to reduce the adverse consequences or to enhance the certainty (Boshoff, 2002). For instance, raising brand awareness and positive word of mouth as a means of advertising are ways to reduce perceived risk because customers are aware of the product they buy and the uncertainty felt is less (Huang et al., 2006). Another way is to give guarantee money-back in case of problematical product (Roselius, 1971; Boshoff, 2002). Hence the difficulty in reducing the perceived risk is that the definition is considered by many researchers misleading and unclear, as well as there is an argument concerning the dimensions (Lim, 2003).

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For this reason and only in case of shopping via the internet, perceived risk was examined through another perspective that of source dimension. According to this, four new dimensions occurred, the perceived technology risk, the perceived vendor risk, the perceived consumer risk and finally the perceive product risk (Lim, 2003). The overall perceived risk that a customer faces is a mixture of all the different dimensions (Lim, 2003). The need to understand how each dimension leads to overall perceived risk is both theoretical (for the consumer) and practical (for the companies) (Laroche et al., 2004).



3.1 E-wom and purchase intention

It was mentioned earlier, that the influence that e-wom has on consumers is of great importance and worth to be further noticed. The internet has turned consumers to seek information about what they want, in internet sources (Prendergast et al., 2010), for example in social network sites as they happen to be suitable for the diffusion of e-wom. The active use of these sites may turn to an increase in the purchase intention of the users simply because they feel engaged to the SNS (Prendergast et al., 2010). Among other things, users feel connected or related with the other members of SNS and they share opinions. As a result, when they have to take a decision about the purchase of a product, they will seek for recommendations or older posted views (Arora, 2012). It can be concluded that purchase intention is influenced by e-wom.

H1: A correlation between E-wom in SNS and online purchase intention of high-tech products is expected.

3.2 Advertising and purchase intention

In order to research the impact of advertising on SNS, users' motives of involvement with SNS should be considered (Taylor et al., 2011). Vakratsas and Ambler (1999) indicate that advertising input has three in-between advertising effects: affect, cognition, and experience which then lead to product purchase. Theory as well as research point to the fact that positive attitudes towards advertising may affect brand or product perception and ultimately affect positively the will to purchase the product (Shimp, 1981; Mackenzie et al., 1986; Mackenzie and Lutz, 1989).

H2: A correlation between attitude towards SNS ads and online purchase intention of high-tech products is expected.

3.3 Perceived value and purchase intention

As it was mentioned earlier, perceived value no matter what definition will be used, comprises of price and quality, it is a trade between these two ( Monroe 1990, cited in Chen and Dubinsky, 2003). Firstly, Dodds and Monroe, 1985) proved that, by developing the value-intention framework according to which an individual is eager to act in a certain way as a result, of the influences of perceived value of behavior consequences. After a lot of research, perceived value is considered to be a useful predictor of purchase intention (Zeithaml, 1988; Dodds et al., 1991; Chu and Lu, 2007). Moving a step further, today there is sufficient evidence of perceived value having positive effects on purchase intention (Szybillo and Jacoby, 1974; Zeithaml, 1988; Dodds et al., 1991; Ho 2007 cited in Chi et al., 2009).

Î-3: Value for money of high tech products is positively related to online purchase intention of high-tech products.

3.4 Brand familiarity and purchase intention

Brand familiarity according to Baker et al., (1986) is likely to: "1) Enhance perceptual identification of a brand, 2) increase the probability of inclusion in the evoked set, 3) generate positive affect toward the brand, and 4) motivate purchase behavior". For example, brand familiarity is positively connected with choice due to the fact that a brand, being more familiar compared to the rest of the competition, will probably be chosen (Brady et al. 2008). Moreover, purchase intention is influenced, because for someone who is familiar with the brand, less thinking is required during the selection process and later on, during the purchase process, as customers rely on habit so as to act (Laroche et. al., 1996). There has been research about brand familiarity and how it connects with purchase intention either immediate (Dursun et al., 2011) or through some other variables for example trust (Benedikctus et al., 2010). Based on those the next hypothesis is made.

H4: The higher the brand familiarity of high-tech products the greater the consumer's online purchase intention of such products.

3.5 Perceived benefit and purchase intention

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Both dimensions of perceived value are important and related to purchase intention with the difference according to research, that hedonic value can influence unplanned shopping experience whereas utilitarian value cannot (Babin et al., 1994). In addition, as Wolfinbarger & Gilly, (2001) stated, both types of the incentives are important for the prediction of online shopping. As a result, consumers according to their incentives, seek to maximize their benefits when they decide to purchase something online and that's the main reason why purchase intention is related to perceived benefit (Forsythe et al., 2006). According to research, perceived benefit not only is related to purchase intention but is also positively related (Forsythe et al., 2006).

H5: Perceived benefit is positively related to online purchase intention of high-tech products.

3.6 Perceived risk and purchase intention

Purchase intention is a part of the consumer behavior and it involves risk because all kinds of actions the consumer do, cause some effects that will be treated with some uncertainty (Bauer, 1960 cited in Chaudhuri 1997). For example, shopping online is an action that will cause risk and according to research, online shoppers perceive more risk than traditional shoppers do (Bhatnagar and Ghose, 2004; Lee and Tan, 2003). It has been noticed that when actions are taken to reduce risk, the attitude towards purchase intention is positive (Keeney, 1999). It can be concluded that, perceived risk and online purchase intention are negatively connected (Kwon and Lennon, 2009; Forsythe et al., 2006; Heijden and Verhagen, 2004).

H6: Perceived risk is negatively related to online purchase intention of high-tech products.