Perceived risk and the consumer buying process: internet airline reservations

Headnote

Abstract

Purpose - This research aims to investigate the premise that the use of internet airline reservation systems is perceived to be riskier than traditional airline reservation shopping.

Design/methodology/approach - A survey of 263 respondents investigated perceived risk at various stages of the consumer buying process.

Findings - The results reveal that perceived risk for airline reservation services follows a pattern throughout the consumer buying process. When viewed as a dynamic process, perceived risk for internet airline services shows more radical changes in risk levels than the traditional service. The analyses indicate that performance, physical, social, and financial risk are related to perceived risk at certain stages of the consumer buying process.

Practical implications - A major finding of this study is that there is a risk premium for internet airline reservation services and the risk premium permeates all stages of the consumer buying process. It is further demonstrated that the internet risk premium does affect usage levels; implying that the internet risk premium is consequential and warrants the implementation of risk mitigation strategies.

Originality/value - Unlike previous studies on perceived risk that typically focused on the relationship of perceived risk and information search, this study examines the dynamics of perceived risk throughout the various stages of the consumer buying process.

Keywords Perception, Consumer risk, Services marketing, Internet shopping, Consumer behavior

Paper type Research paper

1. Introduction

Online airline ticket sales reached approximately $14.2 billion in 2002 (Foss, 2003). Travel business on the internet accounts for about 15 percent of overall travel sales; about one half of that is spent on airline ticket sales. Compared to e-retail sales, which accounts for only 1.5 percent of all retail sales (US Census Bureau, 2003), the growth of internet airline services has proved astounding. A survey of 1,501 people from March 2000 to 2001 (Pew Report, 2002) shows that the share of internet users who had purchased travel services had grown from 34 to 42 percent. Although the growth of internet based airline reservation services has been rapid, internet sales have generally experienced slow growth because of barriers such as perceived risk (Cases, 2002; Forsythe and Shi, 2003; Jarvenpaa and Todd, 1997; Liebermann and Stashevsky, 2002; Lim, 2003; Tan, 1999; Vijayasarathy and Jones, 2000). By examining barriers...