Consumer Behavior: Risk Perception, Valuation, and Odwalla Case

This essay examines the complexities of risk perception in consumer behavior, focusing on the article 'Risk (Mis)Perception: When Greater Risk Reduces Risk Valuation' by Khan & Kupor (2016). The analysis reveals that consumers often inversely value risks, perceiving smaller risks as more significant than larger ones when both are present. Examples such as travel insurance and lottery preferences are used to illustrate this phenomenon. The essay further connects these findings to a real-world case study of Odwalla Food Product Company, highlighting the company's failure to adequately assess food safety risks, which led to severe consequences. The recommendation is that companies should invest in expert analysis and rigorous testing to mitigate potential risks and protect their market share and reputation. The study concludes by emphasizing the importance of understanding consumer risk perception for effective business strategy.

Running head: CONSUMER BEHAVIOR
Consumer Behavior
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Introduction
The article ‘Risk (Mis)Perception: When Greater Risk Reduces Risk Valuation’ by Khan
& Kupor (2016) was selected to focus on the factors related to consumer behavior. While
reviewing this article it was found out two risky factors in a single situation cannot possess the
same value. When one of the risky factors is added, the value of the other one decreases
automatically. It can be said that one factor is inversely proportional to another. To focus in this
subject, the author of this article has used the instance of medical drug and its effect.
Findings of the article
While using the example of medical drug and its effect, convulsion as a probable
outcome was highlighted. With further research on this topic, other impacts such as exhaustion
and obstruction were found out, which were considered more risky than convulsion. However,
the perception of the customers is contradictory to the reality. They consider the less risky factors
to be more risky. They have drawn this conclusion from the daily instances such as travel
insurance coverage. The travel insurance, which are accountable for covering the risk and injury
of an individual are much cheaper as they cover only a minimal amount of illness (Khan &
Kupor, 2016).
In order to emphasize more on this discussion, an instance of lottery was used by the
author in this article. A lottery might provide an opportunity to the customers to win an iPhone
but they prefer other small gifts in comparison to the expensive one. These two instances
clarified the thinking of the customers that they perceive the more risky options as less risky and
the other way round. The reason behind believing in this trend is that they view the probability of

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smaller factors as more than the larger factors. Therefore it can be said, that the potential smaller
aspects decrease the original value of the more risky factors. However, the situation is only
possible when less risky factors are included in the more risky factors.
Recommendation
The facts and findings of this article are found suitable with the real instance of Odwalla
Food Product Company of United States. The company was convicted as one of the first in food-
poisoning outbreak. They could not assess the risk related to the contamination of fruit juice,
which resulted n the death of a teenager (odwalla.com, 2018). Apart from that, they had other
issues related to food safety. Laboratory testing proved the fact that the ingredients contained in
the food products were harmful for the health of individuals, which resulted in public outrage. It
can be recommended that the company should have saved their severe loss in market share by
hiring a nutrition expert and checking if the ingredients were fit for consumption. By drawing a
comparison between the instance of Odwalla and the given article, it can be suggested the
company could have carried out laboratory testing prior to its release in the market. It would help
in saving them from the potential loss of market share and their reputation as well.

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References
Khan, U., & Kupor, D. M. (2016). Risk (mis) perception: when greater risk reduces risk
valuation. Journal of Consumer Research, 43(5), 769-786.
Odwalla® Healthy Smoothies, Juices, & Protein Drinks. (2018). The Official Odwalla®
Website. Retrieved 23 April 2018, from https://www.odwalla.com/