perceived risk and risk reduction in holiday purchases: a cross-cultural and gender analysis

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PerceivedRisk

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and RiskReductionin HolidayPurchases:A Cross-CulturalandGenderAnalysisVincent W.Mitchell a &Vassiliades Vassosa

a ManchesterSchool ofManagement,UMIST ,Manchester,M60 1QD, GreatBritainD

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Published online:22 Oct 2008.

To cite this article: Vincent W. Mitchell &Vassiliades Vassos (1998) Perceived Risk and RiskReduction in Holiday Purchases: A Cross-Culturaland Gender Analysis, Journal of Euromarketing,6:3, 47-79, DOI: 10.1300/J037v06n03_03

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Perceived Risk and Risk Reduction in Holiday Purchases:

A Cross-Cultural and Gender Analysis

Vincent W. Mitchell Vassiliades Vassos

ABSTRACT. This studv addressed three under-researched areas of marketing, namely: culthal and gender effects on risk perception and risk reduction in package holiday purchasing using Hofstede's framework. The research identified a list of 43 risk factors and 15 risk reducers which varied significantly between cultures and gen- ders. Cypriot males perceived significantly less risk than Cypriot females. However, across the whole sample, Cypriot respondents perceived more risk than UK respondents. The whole sample findings were in keeping with expectations based on Hofstede's (1980) work, whilst the sub-sample findings were not, raising questions regarding the pace and effect of cultural change. Practical implications for travel marketers are discussed. [Arlicle copies available for a feejivnt 711e Haworrll Docume111 Delivery Service: 1-800-342-9678. E-mail addtvss: getitfo@l~aworth.comj

INTRODUCTION

The importance of the annual holiday, which is becoming increasingly viewed as a necessity rather than a luxury, is reflectcd in worldwide travel and tourism estimates of 6% of world output. Yet, relatively little is known about the consumer behaviour associated with the purchase of one of the

Vincent W. Mitchell and Vassiliades Vassos are affiliated with Manchester School of Management, UMIST, P. 0. Box 88, Manchester M60 IQD, Great Britain.

The authors wish to thank two anonymous reviewers for their hclpful sugges- tions and comments.

Journal of Euromarketing, Vol. 6(3) 1997 O 1997 by The Haworth Press, Inc. All rights reserved. 4 7 D

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48 JOUIWAL OF EUROMARKETING

most popular forms of travel, the package holiday. The complexity of the package holiday product presents a major service challenge to marketers, since: "as far as the tourist is conccrned, the product helshe buys covers the complete experience from the time helshe leaves home to the time helshe returns to it" (Medlik, 1974). International aspects of the travel product demand that marketers have an understanding of international consumer behaviour to develop an effective international marketing effort. This is particularly important' within the context of the single ~ & o ~ e a n market which is forcing many companies to face international competition. This practical necessity is complemented by a need to re-examine Hofstede's (1980) seminal work on cross-cultural differences. In a recent review of 54 articles which had used Hofstede's framework, none had examined differences in consumer behaviour (Yates & Cutler, 1996) and few have tackled the question of cultural change, despite the data being nearly 20 years old. This research does not replicate thc work, but uses Hofstede's findings as a framework for country choice and hypothesis development. The research is motivated by two questions: first, how can marketers understand consumers' travel behaviour better by using an ap- propriate theoretical framework, e.g., perceived risk? Second, how does risk and risk reduction vary between countries and how do these variations compare with Hofstcde's (1980) findings?

PERCEIVED RISK

Risk and the Holiday Product

A recent review of 120 perceived risk studies over the past 30 years concluded that the majority of studies had examined fairly low-cost convenience food and non-food goods with which there is little or no risk usually involved and that services were the second least studied product area i itch ell, 1994). Marketing academics have thcrefore generally failed to use perceived risk in high-involvement products, such as white and brown goods, or services, such as wedding arrangements and holidays where it is most theoretically valid and practically meaningful. Only a few studies have focused on any travcl context (Roehl & Fesenmaier, 1992; Moutinho, 1987; Yavas, 1987). The most detailed study identified three major risk dimensions: physical-equipment, vacation and destination risks (Roehl & Fesenmaier, 1992). This latter local environment risk was also noted by Yavas (1987). Rochl and Fesenmaier's (1992) study is important for several rcasons. First, it demonstrated that perceived risk was a feature D

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Vincetzt I!! Mitchell and Vassiliudes Vassos 49

of the travel purchase decision and raised the possibility of risk segments by identifying groups of respondents who varied in their risk perspectives. Second, it confirmed prior research in other contexts (e.g., Dowling, 1986; Gemunden, 1985; Jackson, Hourany & Vidmar, 1972; MacCrimmon & Wehrung, 1986) that risk perceptions are situation specific and therefore should be evaluated using context-specific measures. Despite these findings, many studies have not used context-specific measures, thus allowing considerable variability and ambiguity into their data collection. One major advantage of context-specific measures is that detailed perceived risks and risk-reducing strategies can be obtained. For example, Roehl and Fesenmaier (1992) only asked respondents to rate the financial risk that the vacation will not provide value for money. Whilst this captures some aspect of the consumers' overall financial concern, it fails to acknowledge the complexity of financial risk in terms of the price of food and restaurants, accommodation, gratuities, gifts, drinks, transport, activities, etc., which are most meaningful and real both to the consumer and the marketer.

Risk Measure~rient

Greatorex and Mitchell (1992) propose a multi-attribute risk model in which various product attributes are included and judged separately. If a product fails to satisfy on an attribute, some loss to the consumer will occur. These losses have been previously identified in the literature (Brooker, 1983; Jacoby & Kaplan, 1972; Kaplan, Szybillo & Jacoby, 1974; Roselius, 197 1) and include psychological (how the purchase might affect what we think of ourselves), social (how the purchase might affect what others think of us), financial (the amount of expenditure relative to income and value-for-money perceptions), time (the planning, purchasing execution and opportunity time costs), and physical (how the purchase may affect our physical and psychological well-being). In this study, we focus on measuring the risk attributes consumers perceive in the holiday purchase rather than underlying losses, although these will still be tacitly present. This has rarely been done before, despite it being much more useful for marketing management than the losses approach.

Unlike other studies, this research not only undertakes a detailed asscss- ment of the risks involved, but also how consumers reduce those risks. The process o f consumers actively seeking to reduce uncertainty or consequences o f a decision is described as the risk-reduction process. Within the holiday context, information from brochures in the travel agency, friends and family, travel agency staff or other personal sources can be a major risk reducer. Brand loyalty, a commonly-used risk-reducing strategy in other contexts (Roselius, 1971; Mitchell & Greatorex, 1990), is more D

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50 JOURNAL OF EUROMARKETING

difficult to define for package holidays because of the multifaceted nature of the product. Consumers can be loyal to thc tour operator, the travel agent, the destination, the hotel or even family and friends. At its simplest, we can consider brand loyalty to involve only the tour-operator. Since risk reduction has bcen given little attention in previous studies, identifying how consumers reduce risk in the holiday context would be a major contribution to the literature.

Finally, although detailed analysis of risk perception and reduction can be of considerable assistance to the marketer in understanding customers and designing marketing and communication mixes, it is practically and theoretically useful to demonstrate that risk perception directly affects purchasing andlor purchase intcntions. Unfortunately, this has rarely been done in the past and the use/usefulness of perceived risk theory may well have been diminished as a result.

Risk arrd Gerrder

The emotional, time, financial and social investment in the holiday purchase means that few purchases arc as important to consumcrs. Thc holiday purchase is also often characterised by sharcd decision making between groups of friends, couples or families. Whilst there is some segmentation of the market for family purchases, little regard has hitherto been givcn to gender differenccs. Some studies have rcported gender differences in risk perccption in the purchase of lawn mowers (Kumpf, 1978), fashion (Winakor, Canton & Wolins, 1980), breakfast cereals (Mitchell & Boustani, 1993), acceptance of bovine growth hormone (Grobe and Douthitt, 1995); financial planners (Stinerock, Stem and Solo- mon, 1991) and entrepreneurship (Sexton & Bowman-Upton, 1990), but little work has pursued these differences or focused purely on risk perception and reduction. Those which have focused on risk perception report a greater propensity for males to take higher risks (Carlson & Cooper, 1974; Coet & McDermott, 1979; Kogan & Dorros, 1978; Roberts, 1975). The hypothesis might bc proposed that H, males perceive lower risk than females. On the topic of risk reduction, little work exists. One study has found support for the selectivity model which predicts fcmalcs to be comprehensive information processors who consider both subjective and ob- jective product attributes and rcspond to subtle cues (Darley & Smith, 1995). Conversely, males are selective information processors who tend to use heuristics and miss subtle cues. Given the importance of understanding gendcr differences in joint dccision making and for designing gender- D

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Yi,~cent W Mitchell und Vussiliades Vassos 5 I

related package holidays, knowledge of how risk and particularly risk reduction potentially varies could be useful.

Cross-Cultural Researclr

Cross-cultural research has historically been given little attention compared to its increasing importance to international business.' Recent- ly however, its importance is becoming increasingly recognised and cross-cultural research is appearing into many aspects of marketing, e g , price and product quality (Sjolander, 1992; Dawar & Parker, 1994), psychographics (Aaker & Keller, 1993; Winters, 1992), advertising (Seitz & Johar, 1993), brand extensions (Aaker & Keller, 1993), social values (Goldsmith, Freiden & Kilsheimer, 1993), segmentation (Nachum, 1994) and direct marketing (McDonald, 1994). However, still relatively little research exists on the cross-cultural validation of consumer behaviour theories (see Verhage et al., 1992 for e~cep t ion ) .~ Given the enormous complexity of cross-cultural consumer behaviour, much research is still to be done to understand the differences which exist and this study adds to that endeavour. In a review of 120 perceived risk studies, Mitchell (1994) found only five cross-cultural s t u d i e ~ . ~ Thrce of them were studies comparing consumer behaviour in the United States and one other country (USA and Mexico; USA and Canada; USA and Israel). Only two studies involved respondents from countries other than the U.S. This limited amount of work has concluded that perceived risk and risk reduction does vary betwecn countries (Verhage et al., 1992; Hoover, Green & Seagert, 1978). Verhage et al. (1992) conclude that marketers must examine consumers' methods of reducing risk on a nation by nation basis. However, since these studies focused solely on brand loyalty as a source of risk-rcduction, much work needs to be done to examine a wider range of risk-reduction strategies. In addition, the way in which risk was measured was relatively simple and more detailed measures may reveal further insights into cross-cultural aspects of perceived risk.

Mitchell, Yamin and Pichenc (1996) outline several conditions for meaningful cross-cultural research. First, the category or construct has to have meaning in the cultures chosen. This relates to the notion of conceptual equivalence (Hai & Triandis, 1985). Interpreting Hofstede's uncertainty avoidance index as a measure of risk perception, we argue that the perceived risk concept meets this condition in most countries. Further evidence for the universality of the risk concept comes from a systematic meta-analysis of 100 empirical findings, which concluded that "one may generalize from American to European studies" (Ge- munden, 1985 p. 92). D

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Second, the countries or cultures chosen for comparison must show significant differences in some dimension of the construct, but be similar enough in other ways so as to allow meaningful comparisons. Van Raaij (1978, p. 694) supports this second condition stating "meaningful cross- cultural comparisons can only be made between societies at the same level of development." Hofstede's studies (1980) demonstrate the importance of 'uncertainty-avoidance' and 'masculinity' as major cultural traits and provide a framework for country choice and hypothesis development. The fact that very few cross-cultural perceived risk studies exist makes it difficult to make definitive statements about which countries need to be studied. The UK and Cyprus were chosen because they fitted Mitchell, Yamin and Pichene's (1996) criterion as well as the researcher's experience. Hofstede's uncertainty-avoidance index shows Great Britain to be characterised by more willingness to take risks, whilst Greece4 (the near- est country to Cyprus) has a greater concern for security in life and is more risk averse. This leads to the hypothesis that H2 British responden~s will perceive less risk than Cypriot respondents. Hofstede's masculinity-femi- ninity index added an extra dimension to the proposed gender analysis by suggesting that this cultural trait may affect consumer attitudes within different countries. For example, since Greece is seen to be a slightly less masculine country than Great Britain, this may affect the risks perceived between British and Greek males and females. The UK and Cyprus are similar enough in economic and social terms to make comparisons possible and this is particularly so in the holiday market.

Third, the context of the research should be as near equivalent as possible and involve the construct under investigation. In particular, cross- cultural comparisons relating to perceived risk are likely to be meaningful only in relatively high-involvement consumption situation^.^ Thcrefore, it is important that only products that have high levels of consumer involvement in the comparison set (of countries) are chosen. The package holiday is a good example of a high-involvement 'international product' which provides a 'near-equivalent context' in the countries of choice. By consid- ering these three criteria we identified a clear opportunity for meaningful cross-cultural empirical research, namely, risk perception and rcduction in the purchase of package holidays across British and Cypriot consumers.

The overall objectives of the research were therefore:

to assess the perceived risks and risk-reducing strategies associated with the purchase of a package holiday to investigatc the effects of gender on perceived risk and risk-reduction to examine how perceived risks and risk-reducing strategies vary between British and Cypriot respondents D

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lhcertt U! Mitchell and Vassiliades Ynssos 53

METHODOLOGY

The Santple

Cross-cultural research usually requires closely comparable samples which can involve drawing matched samples from identifiable subgroups of the population like housewives and students (Van Raaij, 1978). Al- though the use of students as surrogates has been questioned, there is some evidence to support the similarities between students' and housewives' responses (Sheth, 1970). In this study, a quota sample of 152 British undergraduate students and 168 Cypriot undergraduate students was used. Respondents ranged in age from 17 to 23. A ratio of male/female quotas were drawn up from the Universities' prospectuses.6 As far as possible, the student samples were similar in age, financial resources, life stage, and prior travel experience, although only differences in the latter criterion relating to package holiday experience were assessed in the questionnaire. That said, in common with many cross-cultural studies, the samples used were not identical and therefore not completely comparable as this requires a level of respondent knowledge and matching which is normally beyond the scopc of most ~ t u d i e s . ~

The Purcltase Scenario

Roehl and Fesenmaier (1992) suggested that future research should study risk attitudes towards some fixed destination to reduce ambiguity and increase validity. Their recommendation was adopted in the present study and questions were answered with respect to a buying scenario which presented details of a package holiday to Corfu. Corfu was chosen bccause it was the only realistically affordable holiday for Cypriot students. In addition, the price of the holiday was equivalent in both coun- triesg and it is a relatively well-established holiday destination in the minds of both samples since it is visited by a large number of young visitors each summer (EIU International Tourism Reports, 1990).

The Queslion~aire

Initial focus groups and interviews in both countries were used to develop a questionnaire which contained three sections on individual risks, risk-reducing stratcgies and background information (see Appendix). Since all respondents spoke English, the questionnaire was administered in Eng- lish and data collection took place during the summer of 1994. D

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The risk model used for the measurement of each perceived risk statement was a modified form of Cunningham's two-component uncertainty and consequences model. A 9-point Likert scale was used to measure each component since it closely resembled a 0-1 probability scale with which respondents are familiar. Thc two components are usually assumcd to be independent and thus given equal weighting in the overall risk calculation. Since 1967, this model has been used by many researchers (e.g., Guseman, 198 1; Hoover, Green & Seagert, 1978; Peter & Ryan, 1976; Verhage et al., 1992) and Lumpkin and Massey (1983) have shown the two-component model to have some degree of convergent and discriminant validity. Fur- thermore, the model's probability component is important when assessing risk in services because of the higher levels of uncertainty which are associated with the purchase of services (Mitchell & Greatorex, 1993). Lastly, the model's simplicity allowed a multi-attribute approach to be taken to risk measurement.

Content validity was checked by two main tour operators: Airtours in England and Salamis Tours in Cyprus. Criterion-related validity was assessed by asking respondents whether they would consider purchasing the holiday and comparing their answers with a total perceived-risk variable. The results show that respondents with low perceived risk (group 1) are more likely to purchase the holiday than respondents perceiving high risk (group 3) (see Table 1).

Two alternative-form reliability tests were conducted using the statements "your tour operator may add a surcharge even though the brochure said there would be no surcharges," together with "you may be charged more for the holiday by your tour operator although the brochure said there would be no additional charges," where r = .68; and "the provided meals will be disappointing," together with "the meals provided by the hotel may not be satisfactory," where r = .72. The reliability co-efficients are acceptable for basic research. Cross-cultural and gender analyses were carried out using two-tailed t-tests with a 5% significance level.

TABLE 1. Mean Intention-to-Purchase Values of the Three Risk Groups

Risk Group Mean Overall Intention to n Purchase Value1

Low Medium High

1. 1 = no intention, 9 = definite purchase Dow

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Yincerlt C1! Milchell and Yassiliades Vassos 55

RESULTS

Perceived Risks

The Appendix lists 43 risk statements which respondents identified within the decision. They range from quite serious occurrences such as natural disasters to trivial matters such as the tour representative may not join in activities. The number and range of risks reflects the complexity of the holiday product.

The sample as a whole believed that the hotel charging excessively for making telephone calls and being delayed at the airport were the most likely risks, whilst the least likely were the risks of a natural disaster (such as an earthquake) and political unrest or military trouble taking place during their holiday (see Table 2). These latter two events were, however, ranked as the two most serious incidents.

The highest overall risk factors for respondents were: your hotel will not be as nice as it appears in the brochure picture, you will be charged excessively for makin telephone calls in the hotel and the meals provided will be disappointing$

Although it is likely a student sample would be more concerned about financial matters, the risk that the hotcl staff would expect tips was not seen as very serious. Follow-up interviews revealed that respondents were likely simply to ignore the expectation. However, restricted finances may be the reason for the importance of excessive tclephone charges, which cannot be ignored.

Similar to Roehl and Fesenmaier (1992) who found that the highest perceived risk factor was equipment risk, which they defined as the possibility of mechanical, equipment or organisational problems whilst on holiday, our results showed equipment risk, in the form of the hotel not being as nice as it appears in the brochure picture, was perceived as being most important. lo

The risk of a natural disaster such as an earthquake was low because Corfu is not in an earthquake zone, but it and the military unrest risk do highlight some of the situation specific destination risks which can greatly affect consumers' holiday choice. The fact that the risk of the tour operator going bankrupt was rated so lowly, reflects well on the success of industry compensation schemes in the UK (e.g., ATOL and ABTA) as well as the relative stability of the industry overall which appears to have resulted in minimal fears concerning tour operators' viability. Finally, the services of tour representatives seem marginal to the success of the holiday as risks of their leaving or not participating were unimportant. D

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TABLE 2. Average Probability, Seriousness and Overall Risk Ratings for the Five Most and Least Risky Statements

Probability

6.51

Seriousness Risk Statement Risk Rating

7.95 Your hotel may not be as nice as 40.1 1 it appears in the brochure pictures

7.91 You will be charged excessively for 37.02 making phone calls at the hotel

7.52 The provided meals will be 36.83 disappointing

7.52 You may get sick from food 35.82 or water during your trip

7.46 The meals provided by the hotel 35.53 may not be satisfactory

5.32 There may be political unrest or 19.99 military trouble during your holiday

4.79 Your tour operator will go bankrupt 19.47

4.49 There may be a natural disaster (such 19.13 as an earthquake) during your holiday

4.03 Your tour guide may quit the tour 18.88 operator company during your holiday

2.90 Your tour representative guide will 15.00 not participate in activities such as windsurfing or scuba diving

Risk Reducittg Strategies

I n total, fifteen risk-reducing strategies were identified (see Table 3). Most involved either information gathering or some form o f loyalty. The two most useful risk-relicving strategies were reading independent t rawl reviews on Corfu and purchasing somc kind o f travel insurance. These two strategies represent how risk-reduction can focus on one o f the two components ofrisk: either increasing the certainty that the holiday wi l l be good or reducing the consequences if something goes wrong. I n contrast to other studies involving brand-loyalty (c.g., Roselius, 1971; Mitchell and Greatorex, 1993), the tour-operator loyalty strategy was not rated as the most useful risk reliever. This is likely to be because o f the multi-faccted nature o f the package holiday product and the recognition that loyalty to D

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Vhlcenf W Mi~cltell and Yassiliades Vassos 57

TABLE 3. Mean Usefulness Values of Risk Reducing Strategies

Risk Reducing Strategy

Reading independent travel reviews on Corfu

Purchasing some kind of travel insurance

Visiting the tour operator or travel agent personally

Taking a similar holiday from a tour operator you have dealt with before

Reading travel brochures on Corfu

Purchasing travel items such as electrical adapters and comfortable shoes

Asking familylfriends for advice

Asking travel agent representatives for advice

Purchasing travel insurance recommended by the tour operator

Asking a Greek person about Corfu

Waiting to pay for the holiday until the last minute except for the required booking deposit

Watching a TV programme about Greece

Reading about Greek culture

Watching any travel programme about holiday traveling

Studying a Greek language phrase book

1. 1 =not very useful, 7 = extremely useful

the tour operator i s only a partial guarantee o f satisfaction. The finding highlights a major difference between holidays and other products.

The least useful strategy was studying a Greek language phrase book. This might have been expected since Corfu is a major tourist destination where knowledge o f the local language is not regarded as essential.

Gerrder and Risk Perception and Reductioir

British females were more concerned about their physical safety and being pickpocketed or conned than British males, whilst British males were more concerned that the hotel bar was more expensive than other bars nearby. However, given a 1 i n 20 chance o f a type 11 error, the fact that only four out o f 43 risk items varied between male and females i n the D

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British sample and none of the risk-reducing strategies varied, suggest littlc gender difference in risk perception and reduction. This allows us to reject our hypothesis HI that males would perceive less risk than females.

In contrast, the gender differences seen in the Cypriot sample supported the hypothesis. ~ k r i o t males had a significantl;-lower mkan nsk than Cypriot females for all of the risks and these reached significance in half of the cases (see Table 4). Some of the largest differences were seen for the risks of unsatisfactory hotel meals, illness from food or water, having a worse hotel than expected, airport delays and a noisy hotel. This is in keeping with most previous research which has found males to perceive less risk than females. The overall risk-reducing variable (the sum of all 15 risk-reducing strategies) showed Cypriot females found risk relievers more useful than Cypriot males and reflects the fact that most strategies were rated more useful by Cypriot females. However, only three reached statisti- cal significance. These were: purchasing some kind of insurance, waiting until the last minute to pay for the holiday, and reading travel brochures.

One explanation for the contrasting gender effects in the two samplcs relates to the military expericnce which Cypriot males are cxpected to undergo before entering higher education. Military service can be a de- manding and highly formative experience which could de-sensitise males to the risks of the hotel meals not being satisfactory, becoming ill from food or water, being pickpocketed or conned and not having good secure locks on hotel doors and windows. This line of explanation was supported by cross-cultural comparisons between the two male populations, which showed Cypriot males to perceive less risk than their British counterparts.

Cross-Cultural Risk Perception atrd Reduction

Overall, the combined Cypriot sample perceived significantly more risk than the British sample (sde Table 5). This confirms previous work that risk uerce~tion does varv markedly between nationalities as well as allowing i s to kcept our hypothesis & that British respondents will perceive less risk than Cypriot respondents, which was based on Hofstede's uncertainty-avoidance-findings. All of the 43 risk statements had a higher mean for the Cypriot sample and these rcached 5% significance in 25 cases. The likelihood of the tour operator going bankrupt was rated less risky by the Cypriot sample possibly because of Cyprus' small, closely-knit business community in which there is relatively less competition. Under these circumstances, it is perceived as less likely that a tour operator will go bankrupt.

Some individual risks like the aeroplane being overcrowded or othcr- wise uncomfortable and the hotel being excessively noisy seemed to D

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TABLE 4. Gender Differences in Risk Perception and Reduction in the British and Cypriot Samples

British Males British Females

Overall Risk - n

26.47 59 T-value p-value 27.35 46 - 0.74 0.464

Gender Differences in Individual Perceived Risks

Your tour representative will not speak Greek Your hotel bar will be more expensive than other bars nearby You will have difficulty cashing traveller's cheques or exchanging money at the hotel You will get pickpocketed or conned

Overall Risk Value Cypriot Males 23.1 5 Cypriot Females 30.52

Gender Differences in Individual Perceived Risks Risk Variable

The meals provided by the hotel may not be satisfactory You may get sick from food or water during your trip The provided meals will be disappointing You will be placed in a worse hotel than that shown in the brochure

British Male Mean 20.46 32.69 20.71

32.05

n - 30

45

Cvariot Male Mean

26.27

28.03 30.33

30.20

British Female Mean

p-value 0.001

Cvoriot Female MEm

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0, TABLE 4 (continued) Gender Differences in Individual Perceived Risks M&&@& You may be delayed at the airport Your hotel may be excessively noisy

You will have to pay extra for use of pool

Your aircraft may experience technical or mechanical problems before take-off Your tour operator may add a surcharge even though the brochure said there would be no surcharges

Your hotel will not be as nice as it appears in the brochure picture

Your tour representative guide will be moody or otherwise uncooperative

Your hotel will not have good security locks on doors and windows Your baggage may be misplaced or delayed (by the airline, hotel or shuttle) during your holiday

Your tour representative guide will not have time to give you adequate attention Your hotel bar will be more expensive than other bars nearby You will be charged excessively for making phone calls at the hotel

You may get separated from your tour group Your hotel view will be obstructed by construction Your hotel may restrict water for hot showers

The hotelier may temporarily shut-down facilities such as the pool You will get pickpocketed or conned

Cvoriot Mah Mean 28.40 30.07

13.93

20.10

26.67

35.77

21.57

22.03

27.57

22.00

20.93

32.07

17.60

23.14

20.10 17.93

25.83

Cvoriot Female & 40.36 0.009 42.41 0.003

25.91 0.001

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Cypriot Males Cypriot Females

Individual Strateaies Risk-Reducina Variables



Waiting to pay for the holiday until the last minute except for the required booking deposit

Overall Risk Reduction Value n p-value

QprhJJ Male Mean Female Mean

4.34 5.06 0.01

5.72 6.23 0.06

3.37 4.48 0.01

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TABLE 5. Perceived Risk and Risk Reduction Differences Between British and Cypriot Samples

British

Cypriot

Individual Perceived Risks Risk Variable

Your tour operator will cancel your holiday because of overlunder-booking

Your aircraft may experience technical or mechanical problems before take-off

Your airplane will be overcrowded or otherwise uncomfortable

Your tour representative guide may not have previous experience with the particular holiday destination

Your tour operator may add a surcharge even though the brochure said there would be no surcharges Rain, wind or cold weather will spoil your holiday

Your hotel may not be as nice as it appears in the brochure picture

You may be delayed at the airport

Your tour representative guide will be moody or otherwise uncooperative

Your hotel bathroom, shower or toilet will be dirty

Overall Risk

25.53 29.02

British Mean

23.21

21.55

21.89 19.57

28.11

23.62 38.13 32.01 22.51

26.93

n

152 p-value

168 0.000

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The holiday package will attract too many young children

Your baggage may be misplaced or delayed (by the airline, hotel or shuttle service) during your holiday Your tour representative will not have time to give you adequate attention

The provided meals will be disappointing There may be political unrest or military trouble during the holiday You may get sick from food or water during your trip

You will be placed in a worse hotel than that shown in the brochure

Your hotel may restrict electricity for high-power consumption items such as a hair dryer

You will have difficulty cashing traveller's checks or exchanging money at the hotel You will be charged excessively for making phone calls at the hotel

You may get separated from your tour group

The hotel staff may expect tips

Your tour guide may quit the tour operator company during your holiday

Your hotel may be excessively noisy

You may be charged more for the holiday by your tour operator although the brochure said there would be no additional charges

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TABLE 5 (continued)

lndividual Perceived Risks Risk Variable

You will have to pay extra for use of pool The meals provided by the hotel may not be satisfactory

British

Cypriot

Overall Risk Reduction n k&e 4.53 1 52

4.52 168

lndividual Risk Reducing Strateaies Risk-Reducina Variable Reading travel brochures on Corfu Visiting the tour operator or travel agent personally

Purchasing travel insurance recommended by the tour operator Purchasing some kind of travel insurance

Watching a television programme about Greece

Reading about Greek culture Studying a Greek language phrase book

British Mean Mean

18.69 22.30 32.39 38.36

p-value

0.915

British M e a

4.65 4.85

4.86 5.73

4.10

3.52 3.69

Cv~riot Mean 5.28

5.20 4.55 4.73

3.77

3.98 3.04

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Yirlcenr C1! Mi~chell and Vossiliudes Vussos 65

worry the Cypriot sample much more than the British sample. This again rcflects the differing holiday requirements of the samples. The Cypriot sample was also much more worried about any political unrest or military trouble which is likely to be linked to the Turkish army's occupation of part of Cyprus and the sample's exposure to the subsequcnt political con- trovers y.

For the overall risk-reducing strategy variablc, no difference was seen between the nationalities. However, scven of the fifteen individual risk-reducing strategies showed significant differences at the 10% level. For example, the British sample seemed to favour risk-reducing strategies like the purchase of travel insurance and watching a TV programme about Greece, whilst the Cypriot sample favoured strategies like visiting the tour operator or travel agent. No clear pattern in the mean differences between the two countries can be seen.

Given the observed gender differences it was thought prudent to ana- lyse cross-cultural differences whilst controlling for gender. Overall, Brit- ish males perceived much more risk than Cypriot males. Thirteen individual risks were significant with large differences seen for fear about hotel security, spoiled view and expensive hotel bars. On this level, results do not allow us to accept our hypothesis that British respondents will perceive less risk than Cypriot respondents.

This was based on ~ofs tede 's (1980) uncertainty-avoidance results which showed Britain to have a much lower uncertainty avoidance index and higher masculinity index which should result in lower risk perceptions. Several explanations for the contrast need to be considered. First, and possibly most important, the contrasts are seen only when a gender analysis is conducted. When the samples are treated as a whole, the results concur with our hypothesis (Hz) and Hofestede's findings. Such rcsults serve to highlight thc large intra- and inter-cultural variations which Hof- stede's work does little to address and act as a warning to marketers not to unquestioningly use Hofstede's seminal work. The contrasting result may be due to a genuine change in thc uncertainty-avoidance trait within each sample which has occurred over the past 20 years. However, other explanations must also be considered. Second, the different samples used in the two studies (students versus IBM workers) may account for the rever- sal, although quite why the two samplcs should be so radically different is unclear. Third, it may be that perceived risk and uncertainty avoidance are conceptually non-equivalent and thcreforc unrelated in the way we as- sumed. Fourth, the gcncral trait of uncertainty avoidancc may not have an effect on specific individual purchases, such as package holidays. Fifth, because holiday purchases tend to be uniquc, infrequcnt and very special, D

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they may engender some non-typical behaviour and be at odds with consumers' general pre-disposition. Some limited evidence for this has been found which supports Sitkin and Pablo's (1992) conception of risk as a current tendency based on cumulative historical outcomes rather than a fixed dispositional characteristic as suggested by Kogan and Wallach (1964) (Sitkin & Weingart, 1995). Finally, it might indicate either the sample-specific nature of risk perception, e.g., Cypriot males may be more relaxed because of their military experience or their background farniliari- ty and knowledge of Greek culture and custom, or the non-comparability of the Cypriot and Greek communities on which our expectations were based.

The fact that British males rated five risk-reducing strategies (R.R.S.) more usefkl than did Cypriot males is likely to be related to their increased risk perception. The greater usefulness in the UK of watching television programmes about the holiday destination might be due to the fact that such TV programmes are a relatively new concept in Cyprus. One strategy was more useful for Cypriots, i.e., delaying booking payment. Interviews suggested that this is likely to be due to the use of verbal bonds which allow Cypriot men to delay final booking payments. The fact that only one strategy was significant at the 5% level between British and Cypriot females does not support the familiarity explanation proposed to explain partially why Cypriot males perceive RRS as less useful than British males and gives more weight to the military experiencc explanation.

In contrast, tcsts betwecn the two female samples showed no significant differences in overall perceived risk; however, some individual risks did vary and Cypriot females perceived more risk about the tour representative, uncomfortable aeroplanes and the presence of too many children. The fact that the holiday may attract young children, the aircraft may be overcrowded and there may be a moody tour rcpresentative seemed to wony Cypriot females more than British females. Subsequent respondent interviews, which presented the results, ascertained that these diffcrences re- flected the differing expectations of the samples. It appeared that Cypriot females were looking for a quieter and more relaxing holiday without any fuss, whilst British females were searching for a more adventurous and entertaining trip. Cypriot females perceived significantly less risk that the tour operator would go bankrupt, partly because of the small, tightly-knit business community in Cyprus. Equally, no difference was noted in overall risk reduction, although three individual strategies varied significantly. Making a visit to the travel agent was more useful for Cypriot females, whilst purchasing some kind of travel insurance was much more useful for British females. These two findings exemplify a conunon theme within the D

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Vincen, N! Mitcltell and Vussilindes Vossos 67

results, namely that Cypriots tend to seek a social reassurance whereas Britons tend to seek paper reassurance. This reflects and reinforces the cultural identities of the two nations by highlighting the close social interac- tion and sense of community differences between the two countries. The results also highlight the importance of a gender analysis, since very different cross-cultural results are found for males and females (see Table 6 ).

CONCLUSIONS AND IMPLICATIONS

The study has made one of the most detailed and comprehensive assessments of the risks and risk-reducing strategies in the under-researched area of travel marketing. Its application of a multi-attribute approach to risk measurement has emphasised the approach's uscfihess in identifying meaningful and actionable risks and risk reducers. The most likely risk of excessive hotel telephone charges and the most serious risks, of a natural disaster and political unrest or military trouble, might give tour operators some ideas for brochure information which might reduce consumers' fears. Travel agents too have a role to play in this during the personal selling process. One of the highest risks was the hotel not being as nice as it appears in the brochure picture. Such results emphasize the misleading impression which consumers feel they receive from brochures and has implications for marketers and brochure writers to be more faithful in their verbal and pictorial representations of holiday destinations. The lowest risks relating to the tour representative not participating or leaving the company prescnt both an opportunity and a threat for tow operators. On the one hand, tow operators should be relieved that their representatives' Lack of participationwill not be seen as much of a problem, since main- taining a high quality of service from reps can be difficult. On the other hand, it also suggests that the role played by representatives in the package holiday experience is currently seen as peripheral and this could present an opportunity for product development and competitive differentiation.

The criterion-related validity results obtained showed a ~ronounced link between perceived risk and consumers' purchase intentions, something which previous research has often failed to examinc or failed to demonstrate. Clearly the strength of this link can vary with the measure of risk and intentions used as well as the nature of the purchase decision. As a result, few general conclusions can be drawn from the current findings. However, the finding has significance within the decision context and highlights the ease with which such assessments can be made. The im- plication is for future researchers to examine criterion-rclated validity in this way and to see how the strength of the relationship varies across D

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TABLE 6. Perceived Risk and Risk Reduction Differences Between British and Cypriot Males and Females

British Males

Cypriot Males

Individual Perceived Risks Risk Variable

Your hotel will not have good security locks on doors and windows

Your hotel view will be obstructed by construction Your hotel bar will be more expensive than other bars nearby

You may get pickpocketed or conned You may get sick from food or water during your trip The meals provided by the hotel may not be satisfactory Your tour operator will go bankrupt

The hotel may not have a business contract with your tour operator company You may experience or witness violence during your holiday Your hotel will not provide toilet paper Your hotel may restrict water for hot showers

You will have to pay extra for use of pool

The hotelier may temporarily shut down facilities such as the pool

Overall Risk MUe 26.82 22.41

British Males

38.24 30.23 31.20

33.16 37.91 34.43 21.78

25.09

28.45 21.48 27.59

17.70

25.30

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British Males

Overall Risk n - - Reduction Value

4.66 45 p-value

Cypriot Males 4.09 34 0.02

Individual Risk-Reducina Strateaies Risk Reducing Variables Reading independent travel reviews on Corfu

British Males Cvoriot Males @%&@

5.57 4.79 0.041

Purchasing some kind of travel insurance 5.82 5.00 0.020

Asking travel agent representatives for advice 4.73 4.06 0.041

Watching a TV programme about Greece 4.07 3.00 0.010

Studying a Greek language phrase book 3.70 2.79 0.028

Waiting to pay for the holiday until the last minute except for the 3.73 4.47 0.071 required booking deposit

British Females

Cypriot Females

Individual Perceived Risks Risk Variables Your tour operator will go bankrupt

Overall Risk - n

27.35 46 p-value

28.97 60 0.336

British Females Cvpn'ot Females & 24.17 18.29 0.038

Your airplane will be overcrowded or otherwise uncomfortable 22.04 30.32 0.004

Your tour representative guide may not have previous experience 19.02 25.39 0.025 with the particular holiday destination

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TABLE 6 (continued)

Individual Perceived Risks Risk Variables British Females Cvoriot Females & Your tour representative guide will be moody or otherwise 21.96 29.07 0.022 uncooperative

The holiday package will attract too many young children 19.33 27.15 0.019

The hotel staff may expect tips 21.78 28.17 0.042

Qverall Risk Reduction n Value

British Females 4.70 46 p-value

Cypriot Females 4.51 60 0.231

Individual Risk-Reducina Strateaies Risk-Reducina Variables


Visiting the tour operator or travel agent personally


British Females Cv~riot Females & 5.07 5.57 0.083

4.96 5.40 0.094

6.24 4.68 0.000

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Viilcent W. MirclreII and Vassiliades Vassos 71

products and measures in order to build up a more general picture of perceived risk's explanatory power.

The most important risk reducer was reading independent travel reviews, e.g., Let's Go, Rough Guides, etc., on the holiday destination. Tour operators might consider making such information more widely available within travel agencies and elsewhere in order to help potential customers reduce risk. The idea of a travel agency becoming a travel information bureau with CD multi-media exhibits of destinations and travel arrangements could prove to be very effective in reducing risk, stimulating customer interest, knowledgeability and goodwill, as well as in creating competitive advantage and sales. Risk reduction information can lead to a more targeted marketing mix for holiday companies operat- ing in both countries. For example, the British sample seemed to rely more on travel insurance, whereas the Cypriot sample relied more on personal communication between the customer and the tour operator. The results also give some indication of the complexity of the holiday product and in particular how this can affect the concept of brand loyalty. Although we used only tour-operator loyalty, the expansion of traditional loyalty to include hotel, destination, airline, friends, as well as tour operator raises important questions concerning the nature of loyalty concept both in travel and tourism and other equally complex products. The concept might be extended and reinterpreted to include precise product benefit loyalties related to the marketing mix. Thus, rather than customers being described as "brand loyal" they would be described by their reasons for so being. For examplc, customers may be price loyal, loca- tion-convenience loyal, taste loyal, advertising-theme loyal, etc. This more refined version of loyalty is not only more accurate in concept, but also gives a much greater insight into the competitive strengths and weaknesses of a product.

The gender analysis showed differences for both samples. British males tended to regard the possibility of the hotel bar being more expensive than other bars nearby as a high risk and this concern might be addressed by emphasising in brochures cheaply-priced drinks or special drinks promo- tional evenings. Overall one can conclude that perceived risk does vary by gender in Cyprus, but not the UK. As hypothesized, Cypriot males perceive less risk than Cypriot females. When male and female samples were combined for one country, inter-country differences were in line with our hypothesis (Hz) that British respondents perceived less risk. However, this was not the case for the gender sub-samples.

Many differences were related to the fact that Cypriot females looked for a safe and quiet trip, whilst British females look more for adventure D

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and excitement. Cypriot males in particular perceived a lower risk than British males, whilst females showed fewer risk differences. The gender/ cultural differences suggest that whilst generalizations about country differences may he valid, this does not extend to segments of the population, something which is of more interest to marketers. The fact that our results were similar to predictions based on Hofstede's findings adds support for some of the assumptions made in the research. However, the risk differences were not as great (25143 significances) as expected given the very large divergence between the countries on the uncertainty-avoidance index. Notwithstanding the explanations already discussed to explain the gender differences, our results raise the question of whether the ever changing nature of social culture has produced significant changes in countries' positions on Hofstede's axes. Hofstede's empirical work is now nearly 20 years old, yet few have replicated his work, nor attempted to use it to track cultural change. We propose that this would be a worthwhile pursuit for international marketers within large multinational organiza- tions which have large investments in many foreign markets and could use the information to benefit the marketing of the many products they bring to market in different countries.

LIMITATIONS

Several limitations of the research need to be borne in mind when evaluating its significance. First, the necessity for context-specific measures and the small student sample with its different gender structure places sevcre restrictions on the generalizability of the results which should be considered as provocative and indicative rather than definitive. This means that future research can continue to investigate the questions posed in the research, using other situations and' samples, e.g., family holidays and retirees, etc., as well as other decision contexts, e.g., white and brown goods. Second, that some of the differences noted may be attributable to factors which wcre not explicitly measured and controlled for in the study, e.g., disposable income, family influences and total previous travel experience. Third, the question of respondents' experiential knowledge of the destination and their pre-disposition towards seeking variety or loyalty in travel purchasing would appear to have an effect on risk perception reduction. These limitations might be addressed in further work. D

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Kncenr K Mitchell arid Vassiliades Vassos

NOTES

I. Adler (1983) conducted an extensive review of 24 diffcrent management journal articles from 1971 to 1980 and concluded that only 3.6% were cross-cul- turd studies. During 198 1 to 1987, Peng et al. (1 991) indicated a small increase to 6.0% of 8,403 articles sampled. However, the apparent increase may be an arte- fact ofjournal selection.

2. In the present paper, the terms "cross-national" and "cross-cultural" are used to represent a comparison of nation states, which have their own individual cultural identity.

3. One must take account of the English language speaking bias inherent within the abstracting service used. The Asian and non-English European literature tend to be under-represented.

4. We assume that Hofstede's findings for Greece are largely relevant to Cy- prus because of common ancient history, language, beliefs and other characteristics.

5. It is relevant to note in this context that Hofstede's work focused on work- related values. In any culture, work-related decisions are rarely routine and can be characterised more usually as 'high-involvement.'

6. For the UK university, the proportion was 70% men to 30% women, whilst in Cyprus it was 20% men and 80% women. This quota imbalance was due to the fact that the only Cyprian university is newly established and that Cyprian males are expected to finish their 26-month military service before registering at university. Although cross-cultural research normally requires samples which are closely matched, we argue this should not be at the expense of distorting or misrepresent- ing the cultural diversity within a population by only using matched respondents.

7. Prior package holiday experience was assessed but proved to have little affect on risk perception and reduction. This may have been due to the restrictive measure of travel experience used.

8. Large financial discrepancies between the two countries could have sub- stantially affected the risk aspects involved. We acknowledge that the same destination may not be absolutely comparable as the reviewers noted, partly because Corfu is a destination within the Cypriots' own cultural boundaries. However, to attempt to create a 'comparable' holiday purchase scenario using diffcrent dcs- tinations in each country, raises interesting but difficult issues of what constitutes comparability. Moreover, it would appear impossible to meaningfully test cultural differences using context-specific measures if exactly the same context is not used. Choosing the same purchase context was seen as the lesser of two evils and fitted more closely with the objectives of the study which were to examine gender differences as well as cross-cultural differences. The over-riding decision was that Corfu was the only realistically affordable destination for the Cypriot sample and therefore it had to be the same for the UK sample. Choosing another destination such as France would have presented additional problems relating to how valid and realistic the scenario was for each sample and on what basis it was comparable. D

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9. Whilst this concern for good meals may be genuine, worries about unsatisfactory meals might have been increased by a TV programme about the poor quality meals offered on some lonian islands, including Corfu, shown during the data collection period.

10. Lt is dificult to directly compare the two studies since sample, method differences and perceived risks' context specificity confound comparisons. For example, Roehl and Fesenmaier's average respondent was 37 years old with an annual income of $30,000 and lived in a three-person household. In addition, the purchasing scenario used by the authors was based on the respondents' personal experience and was not a fixed scenario as used here.

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- APPENDIX

Risk Factors Identifed in the Study

Your tour operator will go bankrupt. Your tour operator will cancel your holiday because of overlunder booking. Your aircraft may experience technical or mechanical problems before take-off. Your airplane will be overcrowded or otherwise uncomfortable. Your tour representative guide may not have previous experience with the particular holiday destination. Your tour operator may add a surcharge even though the brochure said there would be no surcharges. Rain, wind or cold weather will spoil your holiday. Your tour operator may changc or substitute components of the package holiday. Your hotel will not be as nice as it appears in the brochure picture. You may be delayed at the airport. Your shuttle service will be late. Your tour representative guide will be moody or otherwise uncooperative. D

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13. Your hotel will not have good security locks on doors and windows.

14. Your hotel bathroom, shower or toilet will be dirty. 15. Your tour representative guide will not participate in activities such

as windsurfing or scuba diving. 16. The holiday package will attract too many young children. 17. Your baggage may be misplaced or delayed (by the airline, hotel or

shuttle service) during your holiday. 18. Your tour representative guide will not have time to give you ade-

quate attention. 19. The provided meals will be disappointing. 20. Your tour representative may not speak Greek. 2 1. There may be a natural disaster (such as an earthquake) during your

holiday. 22. There may be political unrest or military trouble during your holi-

day. 23. You will be placed in a worse hotel than that shown in the brochure. 24. Your hotel bar will be more expensive than other bars nearby. 25. The hotel may not have a business contract with your tour operator

company. 26. Your hotel may restrict electricity for high-power consumption

items such as a hair dryer. 27. You will have difficulty cashing traveller's cheques or exchanging

money at the hotel. 28. You will be charged excessively for making phone calls at the hotel. 29. You may get separated from your tour group. 30. You may experience or witness violence during your holiday. 3 1. The hotel staff may expect tips. 32. Your hotel will not provide toilet paper. 33. Your tour guide may quit the tour operator company during your

holiday. 34. Your hotel will be far from the beach. 35. Your hotel view will be obstructed by construction. 36. Your hotel may be excessively noisy. 37. You will get pickpocketed or conned. 38. You may be charged more for the holiday by your tour operator al-

though the brochure said there would be no additional charges. 39. Your hotel may restrict water for hot showers. 40. You will have to pay extra for use of the pool. 41. The hotelier may temporarily shut down facilities such as the pool. 42. The meals provided by the hotel may not be satisfactory. Dow

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Risk-Reducing Strategies IdetrtiJied in the Study

1. Reading independent travcl reviews on Corfu. 2. Purchasing some kind of travel insurance. 3 . Visiting the tour operator or travcl agent personally. 4. Taking a similar holiday from a tour operator you have dealt with

before. 5. Reading travel brochures on Corfu. 6. Purchasing travel items such as electrical adapters and comfortable

shoes. 7. Asking family or friends for advice. 8. Asking travel agent representatives for advice. 9. Purchasing travel insurance recommended by the tour operator.

10. Asking a Greek person about Corfu. 11. Waiting to pay for the holiday until the last minute except for the

required booking deposit. 12. Watching a television programme about Greece. 13. Reading about Greek culture. 14. Watching any travel programme about holiday travelling. 15. Studying a Greek language phrase book.

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perceived risk and risk reduction in holiday purchases: a cross-cultural and gender analysis

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