30 YEARS OF PERCEIVED RISK: SOME RESEARCH ISSUES V.-W. Mitchell, UMIST- Manchester, England ABSTRACT This article explores how perceived risk has been used to explain behaviour over the past 30 years using convenience and shopping goods as well as services in the consumer and industrial fields. From a review of 120 studies, a consumer product and U.S. dominance can be seen in the literature, which may have stifled theoretical developments in perceived risk. INTRODUCTION From the early 1960's perceived risk has been of interest to marketers and consumer be- haviour researchers and the case can easily be made for marketing practitioners and research- ers to continue to be interested in perceived risk and hence be interested in a review of the literature. Perceived risk theory plays a role in facilitating marketers seeing the world through their customer's eyes. The theory has intuitive appeal and can be almost universally applied. It is suggested that perceived risk is more powerful at explaining consumers' behaviour since consumer motivations in purchasing are more often to avoid mistakes rather than to maximise utility in purchasing. Analysis of risk can be used in deciding on marketing resource allocation decisions. For example, a study of risk relievers used by consumers can help to increasing marketing efficiency by targeting resources and strategies which consumers find more useless while withdrawing them from those which they find less useful. Risk analysis can be used in brand image development, tar- geting, positioning and segmentation. For example:- highlighting risk aspects in compara- tive advertising; repositioning commodity products to give added value, segmenting con- sumers as on the basis of their risk reducing strategy usage. Examining in risk perception can also generate new product ideas. For exam- ple, in a recent study of breakfast cereals (Mitchell and Boustani, 1993) one of the risk consumers perceived was a result of disliking milk. This suggests the development of non- milk based breakfast products such as the recently UK-Iaunched Kellogg's pop tarts. Methodological observations include; a heavy use of student samples with relatively low sample sizes; a lack of attention to purchase detail, purchasers' buy-phase and demographics which can affect risk perception. Suggested areas for further research are high-value products, not-for-profit organisations and industrial services. The relationship between risk and uncer- tainty has often been confused by marketers, despite clear ideas from Knights on the subject as far back as 1948. Knight's ( 1948) definition separates the concepts of risk and uncertainty. 'Risk' is defined as having a known probability associated with various decision outcome while 'uncertainty' exists when knowledge of a precise probability is lacking. However, as Cox ( 1967) has commented, consumers are rarely in a position to know the probabilities associated with purchases exactly, therefore much of the work on consumers has not found Knight's thinking to be helpful. One of the most fre- quently used operations of definition has been a two component approach where Overall risk rn Probability of loss; X Importance of loss;. Numerous studies have used its tenet to help explain buyer behaviour in a variety of different contexts, but detailed examination of the range of these contexts and methodologies has eluded the literature. This article reviews applications of the theory over the past 30 years and attempts to document areas where the work has been done, highlight some of the general problems with the literature and gener- ate ideas for future research. A survey of the literature using abstracting services and the reference-tree method revealed some 1 20 empirical studies which formed the basis of the analysis. For ease of reporting, the studies have been collated into four sections: conve- nience products; a mixture of convenience and comparison goods; services, including profes- sional services; and non-purchase related areas. - 350 -