Service-Based Perceived Risk in Milestone Events

Consumers process perceived risk in purchases as varied as a new car or choosing a travel destination. Researchers have focused primarily on consumer goods purchases, so a gap exists addressing how consumers assess risk when making service-based purchases. This study addresses this gap, proposing a scale to measure service-based perceived risk (SBPR) and how perceived risk influences well-being when making a service-based purchase. This study also introduces a new dimension of event research, milestone events, such as weddings, mitzvahs, and quinceanaras, which reflect events that are infrequently celebrated, include a life transition and a significant financial commitment, and for which the celebrant has no prior experience planning. Milestone events are the service-based purchase reflected in the perceived risk studies. Study 1 develops a scale to better understand the psychological underpinnings of SBPR by producing a multi-item scale. This study proposes a scale composed of 4 constructs: social, psychological, relational, and locational risk. This scale was developed using a mixed methods approach, including a qualitative analysis using an extensive literature review and interviews with consumers actively involved in a service-based purchase and a quantitative analysis involving an exploratory factor analysis identifying the constructs. Confirmatory factor analysis was used to test the model, including construct validity, reliability, and discriminant validity. Study 2 tests the hypothesis that the dimensions of SBPR moderate the effect of uncertainty on a consumer’s hedonic well-being when planning a service-based purchase. Using milestone events, specifically the choice of a wedding venue, respondents were brides and grooms actively planning their wedding within the next 24 months. This study used an experimental design, where respondents were randomly presented one of two conditions reflecting either a high (new wedding venue) or low (well-established wedding venue) uncertainty service-based purchase. Using PROCESS v. 3.5 for SPSS v. 27, the moderating effect of each dimension on the relationship between uncertainty and hedonic well-being was measured and found to be significant for three of the four SBPR constructs: relational, psychological, and locational. Specifically, at lower levels of uncertainty, consumers’ hedonic well-being showed an increase at lower levels of relational, psychological, and locational perceived risk. The quantitative portion, within the milestone events context, shows that brides and grooms are susceptible to perceived risk and that it can have a significant impact on their hedonic well-being when choosing a wedding venue. This study indicate that social, psychological, relational, and locational risk are salient for consumers making service-based purchases. This study also defines and outlines the dimension of milestone events within the event literature. Within this context, specifically psychological, relational, and location risk present an opportunity for practitioners to alleviate consumers perception of risk when making event-based purchases. By providing assurances, references, opportunities to preview the consumption experience, and access to the facility prior to purchasing, venue representatives can address the most common risk concerns for brides and grooms choosing a venue and mitigate the reduction in hedonic well-being associated with that perceived risk. Future research can begin to test these proposed interventions to determine best practices for practitioners to alleviate service-based perceived risk. Additionally, this study addressed an affective impact of perceived risk, hedonic well-being, but future research can investigate how perceived risk and the resultant impact on well-being would impact behaviors such as purchase intention and willingness to pay a premium price.