Perceived Value: Mediating Role of Perceived Risk

The study reports the results of two experiments designed to test the role of perceived quality, perceived sacrifice, and perceived risks on consumers' perceptions of product value. The results of the experiments involving 530 undergraduate students support the hypothesized model that suggests that perceived quality and perceived sacrifice mediate the relationships between extrinsic cues-such as price, brand, store name, and country-of-origin-and perceived performance risk and financial risk. In addition, the results indicate that perceived performance risk and financial risk mediate the relationships that perceived quality and perceived sacrifice have with perceived value. Since the findings of this research suggest both performance risk and financial risk can be reduced (thus increasing perceived value) if perceived quality is high, firms have an incentive to increase consumers' quality perceptions by means of brand name, store, country-of-origin and price.