Marketing of Service - Essay Example

Perceived risk is perhaps one of the most influential factors that shape consumers perception of the service they aim to purchase. It is a critical framework for service marketing as it contributes to consumer decision-making processes. Perceived risk has been introduced by Bauer in 1960 and is still being used as the platform for studying consumer behavior. In the following discussion, the researcher shall outline some of the perceived risks that are associated with the salon business, and particularly their importance in determining consumers loyalty and commitment towards the organization Toni & Guy, a branded hairdressing salon.

Perceived risk has its origin in 1960 when Bauer introduced the theme of consumer behavior and risks as a result of consumer choice. He is of the view that consumers main problem is of choice. Choice is an action that produces consequences. As a result, consumers are motivated to develop strategies to reduce risk. Risk is perceived differently by different consumer groups and for different products or services (Bauer 1960). The consequence of risks is usually associated with the value of the loss, either tangible or intangible, and the service quality (Groth and Dye 1999).

Thus, perceived risks are associated with consumers sensitivity towards the potential loss, which can be categorized as risk associated with service category, and risk associated with service provider (or brand) (Macintosh 2002). In this context, risk perception can be defined as "the individual judgment of the likelihood that a consequent loss could occur and the seriousness of its likely consequences" (Yeung and Morris 2006). Other authors define perceived risk as "a two-dimensional construct comprising the uncertainty involved in a purchase decision and the consequences of taking an unfavorable action" (Mitra, Reiss and Capella 1999).

Thus, perceived risk is consumers perception of the potential of loss