Understanding Consumer Behavior: Risk Factors in Cryptocurrency

This report provides a comprehensive analysis of consumer behavior within the cryptocurrency market, focusing on the definition of consumer buying behavior, the concept of consumer risk, and the consumer buying process. It explores micro and macro dimensions of consumer behavior, applying theories from relevant academic fields to enhance understanding. The report also analyzes a model of risk management, specifically applying it to cryptocurrency as a product or service, and defines risk mitigation in relation to the consumer buying process. Furthermore, it outlines three strategies for consumers to reduce risk during the buying process: word of mouth, brand loyalty, and store loyalty, critically evaluating the effectiveness of each risk identified in the context of cryptocurrency investments. This document is available on Desklib, a platform offering study tools and resources for students.

Consumer Behavior

Table of Contents
Assessment 1...................................................................................................................................3
1. Definition of consumer buying behavior..................................................................................3
2. Define consumer risk................................................................................................................4
3. Define and describe the consumer buying process and apply to cryptocurrency consumers......5
References........................................................................................................................................8

Assessment 1
1. Definition of consumer buying behavior
Consumer behavior is considered as the specific concept which is related with the
individuals and also organizations. This concept is helpful to select and also utilize the
products and services. The main concern of this concept is on the psychology,
motivation and also behavior of the consumer (Palalic and et.al.,2020).
 Micro and Macro dimensions of consumer behavior.
The micro and macro environment falls in the category of environmental scanning
which is the component of global environmental analysis.
Micro environment is the psychology of how consumers think, feel, reason and
select between different alternatives available in the industry. This environment defines
how consumer is influenced and their behavior or buying patterns while making
purchase decisions.In context of micro dimension, this dimension mainly includes some
specific considerations which are related with the suppliers, customers, common
stakeholders like and other regulating bodies (Pelto, 2019).
Macro environment is responsible to create impact on business and all factors
which are outside of their control. The macro environment is larger and external
environment within which business operate. In term of macro dimensions, it includes
those factors which may provide impact on the small businesses but those businesses
are outside of the control. This is a wider term that maintains the performance of
industry or businesses externally. Some specific diamonds are involved such as
industries, companies, competitor and market (Martinkenaite and Breunig, 2016).
Micro consumer behavior – This factor mainly focus individually and the main concern
of this factor is on some specific factors such as experimental psychology, clinical
psychology, development psychology, human ecology.

Macro consumer behavior - The main concern of macro consumer behavior is on the
social psychology, sociology, semiotics, literary criticism, demography, history and
cultural anthropology.
 Example of each dimension by referring to a specific Academic field.
There are two types of dimensions are considered in context of consumer
behavior first as micro dimensions and second are macro dimensions. In case of micro
dimension, suppliers, customers, local stakeholders are involved. On the basis of macro
dimensions, industries, organization, competitors are involved.
 Elaborate on this by analyzing how a theory from this field helps
Understanding of consumer behavior.
There are various factors are involved in the theory of the consumer behavior because
it's theory Bailey deal with how a particular consumer spend their money among various
types of goods and services. There are various factors are involved which can useful to
consider this particular situation such as natural and classification of the human wants,
consumer surplus, marginal utility analysis (Mothersbaugh and et. al., 2020).
2. Consumer risk Analyze of model/ theory of risk.
Model risk management (MRM) Framework
Model risk management is the approach of overseeing risk which has been
defined by potential adverse outcomes from decisions whichare based on incorrect
models. This risk management framework is thesubset of operational risk which can be
defined as the risk of change in value caused by the fact of actual losses which are
incurred for inadequate or poor internal processes. The four main components of risk
management framework are risk measurement and assessment, risk mitigation, risk
reporting and monitoring and risk governance (Dodgson, 2020).

This is considered as the specific model which is work like a best practice and useful
to maintain the regulatory guidelines. There are various elements are involved in this
model such as modeling risk standard, model risk appetite, model risk identification,
model risk assessment and measurements. Model risk mitigation, model risk related
monitoring and reporting. All these factors are useful to maintain the risk factor and also
determine each and every risk situation in an appropriate way (FCA , 2021).
 Apply this theory to analyze the risk in crypto currency as a
product/service.
This is helpful to maintain the risk factor related with the crypto currency product and
services. The main concern of this theory is to identify the risk factor and also prepare a
specific plan in order to maintain the risk mitigation activities. It is analyzed that there
are various number of adults in the UK are video considering the crypto currencies
activities such as Bit coin. BK investment on crypto currencies is also considered as the
risky decision. It is determined that Earlier this year, Bank of England governor Andrew
Bailey stated that bit coin has "no fundamental value at all," adding, "I've remarked a
number of times: 'Always buy bit coin if you're ready to lose all entire money.'" The
market of crypto currency is very risky and there is requirement to pay more attention on
it (Jones, 2021).
3. Define and describe the consumer buying process and apply to cryptocurrency
consumers.
Consumer buying process is helpful to maintain the effectiveness of the
organization and also improve the involvement of customers. There are 5 steps are
considered in this process which are explain in context of crypto currency consumers.
1. Problem recognition - it is necessary for the organization to identify the specific
problem and it is identified that crypto currency consumers are facing various
types of risk related with the brand loyalty (Dahiya and Gayatri, 2018).

2. Information gathering - After analyzing the situation and recognized problem it
is necessary for the organization to collect appropriate information which can use
food to reduce the risk factor and improve the involvement of the consumers in
context of crypto currency product and services.
3. Evaluation solutions - After gathering all the relevant information it is necessary
for the company to evaluate specific solutions in order to solve the current
problems of the customers related with a crypto currency customer.
4. Purchase phase - In the purchasing face most of the consumers are facing
various problems like confusion on investment and security.
5. Post purchase phase - After post purchase phase if employees are getting
benefits then they provide positive feedback about the crypto currency
(Nadanyiova, 2021).
 Define risk mitigation and its relevance to the consumer buying process.
Risk mitigation
Risk mitigation is considered as an specific strategy which can useful to prepare of an
effective plan in order to reduce the impact of threats which are facing by the
organization. Risk mitigation strategies are useful to reduce the risk factor and improve
the efficiency of the organization. There are five steps are involved in the consumer
buying process such as identification of the problem, information gathering, evaluation
solution, purchasing phase and post purchasing. In contents of the crypto currency
product and services it is necessary for the organization to maintain the risk and dry I to
use an appropriate strategy in order to mitigate the risk factors (Sreedevi and Saranga,
2017).

 3 strategies for consumer reducing risk in the consumer buying process
Consumer reducing risk strategies are helpful to improve the effectiveness of the
consumer buying behavior process so that crypto currency product and services can
effectively maintain their market value (Ariffin, Mohan and Goh, 2018).There are three
types of strategies are considered by the organization such as word of mouth, brand
loyalty, store loyalty. All these three activities are useful to the market value and reduce
the risk factor (FCA ,2021)
 Critical evaluation of the effectiveness of each risk identified
The effectiveness of risk identification is more because it can useful to analyze
and general is each and every factor which are providing risk in the organization. In
order to maintain each and every activity of the organization, it is mandatory for the
manager to identify the respective and address each and every factor so that they can
easily reduce the impact of risk (Kraus and et.al., 2016). In case of crypto currency,
there are various types of risks are identified such as highly volatile, non-regulated stock
market, intangibility. These are considered as the most specific factors which can
provide various risks ok so it is necessary for the organization to prevent themselves
from the criminal and also illegitimate activities and prepare a specific plan to reduce the
risk factor. ( Jones ,2021)

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