How much do plant guarantees reduce perceived risk?

Bridget K. Behe and Jessica E. Fry

Journal of Risk Research, 2020, vol. 23, issue 2, 242-258

Abstract: Consumers do perceive risk in purchase decisions and seek to reduce both uncertainty and probability of loss. Risk also varies across persons and purchasing situations. Retailers promote product guarantees as risk reducers, but the quantitative evidence is lacking. They offer guarantees to help resolve outcomes from post-purchase problems mainly, product performance. We used an online survey to investigate the role of risk mitigation by money-back guarantees (MBGs) on a live product: plants. We obtained online responses from 504 US residents ≥ age 18 years who had made at least one live plant purchase in the six months prior to the study. As MBG length increased, perceived risk (PR) decreased. PR was higher for men than for women and declined as income increased. Subjects with a higher level of product involvement, expertise, delight, repurchase intentions, and regret had a higher level of PR. We conducted separate Chow tests for annual and perennial plants by price and MBG length and found several break points. As price increased from $5 to $10, a 30-d MBG reduced PR for annual plants while the reduction in PR was incrementally decreased for all guarantee lengths when annuals were priced over $20. With perennial plants, the MBG had an increasingly larger effect on reducing PR for each $10 increase in price. Overall, for each day increase in MBG length, we observed a 0.0337 decrease in PR, which meant that a 90-d MBG on a plant would reduce PR by 3%. This quantitative evidence of reduction in PR should encourage the use and communication of MBGs which have the potential to improve purchases, customer retention, and profitability.

Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13669877.2019.1569092 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jriskr:v:23:y:2020:i:2:p:242-258

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJRR20

DOI: 10.1080/13669877.2019.1569092

Access Statistics for this article

Journal of Risk Research is currently edited by Bryan MacGregor

More articles in Journal of Risk Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().