Reports

Virtual Reality for Shopper Research

Raymond R. Burke, 2017, 17-116

The success of new consumer products and their marketing programs often depends on their ability to stand out from the competitive clutter and engage shoppers’ attention and interest. Unfortunately, the research techniques that are routinely used to screen new marketing ideas do not have sufficient realism in terms of the concept presentation, the competitive context, and the measurement of customer behavior to adequately assess the value of innovation. Lacking hard evidence of customer demand for significant change, firms tend to focus on incremental improvements that produce limited brand and category sales growth.

Virtual reality simulations offer several advantages over conventional research techniques for testing new marketing ideas. They allow manufacturers and retailers to gauge shopper response to new products, packaging, promotions and merchandising in realistic, competitive settings while maintaining a high degree of control and confidentiality. Simulations can be quickly assembled using existing digital assets, such as planograms and store floor plans from commercial space management systems, and product images from CAD packages and online shopping systems. They can deliver detailed behavioral data on the shopping process and purchase outcomes, and are faster and less expensive than in-store field tests. They provide quantitative estimates of sales, market share, sources of volume, and profitability that relate directly to the firms’ objectives.

The results from several academic and commercial validation studies demonstrate that virtual shopping simulations can accurately predict shoppers’ in-store behavior, and perform best when they provide the same cues that consumers use to shop and choose in conventional stores. Past studies have focused on simulating the visual and auditory aspects of the shopping experience, but hybrid approaches can incorporate physical product interaction and the senses of touch, taste, and smell.

In this report, three experiments illustrate the application of simulations for studying the dynamic impact of new marketing programs. These were conducted to measure shopper response to (1) the introduction of new consumer packaged goods products, (2) updating the packaging of existing products, and (3) 30%-off price promotions. The first simulation study revealed that price promotions can produce an immediate and dramatic sales lift (especially for nonperishable products), primarily due to stockpiling by the promoted brand’s current customers. In contrast, new product introductions and package changes have a more gradual positive impact on sales, attracting brand switchers and new customers.

To determine whether the large price effect observed in the first study was due to its novelty in the laboratory context, a second study examined how consumers respond to repeated price promotions by competing brands. The simulation revealed that, contrary to the habituation hypothesis, consumer response to the target brand’s price promotion increased with repetition. However, consumers gradually stopped buying this brand during nonpromoted periods.

A third simulation suggested that new products can get lost in the clutter at the point of purchase, especially in the presence of competitive promotions, and it may be necessary to use additional merchandising and offers to attract consumer attention.

Conclusion

The ongoing development and refinement of virtual reality simulations will continue to enhance their performance and expand the range of applications. These include identifying which new marketing concepts stand out from the competitive clutter, estimating the relative contributions of product design, branding, packaging, pricing, and promotion to product sales, and measuring the impact of possible competitive retaliation. By using the simulation at the early stages of the new product development process, firms can test a broad selection of marketing ideas in a realistic setting, and thus improve their chances of identifying breakthrough concepts that will expand their businesses.

Further, with improvements in computer graphics, immersive and augmented reality display technologies, mobile computing, network connectivity, and product fulfillment, the virtual store is evolving from a research tool to a viable channel of distribution. Virtual stores can combine the convenience and transparency of today’s online shopping environments with the emotional engagement and reward of a video game or movie. They can carry an unlimited variety of products, styles, flavors, and sizes, shown in entertaining and relevant contexts. New products can be stocked which do not yet physically exist, but are produced in response to the desires of shoppers. The store can be tailored to the preferences and purchasing habits of individual customers, displaying just those products with the features, price, and performance they require. Simulations can also bring these benefits into physical store environments, creating engaging and responsive hybrid experiences that effectively connect supply and demand.

Raymond R. Burke is the E.W. Kelley Chair of Business Administration and Professor of Marketing at Indiana University’s Kelley School of Business, the founding director of the School’s Customer Interface Laboratory, and a research partner of the Center for Education and Research in Retailing. 

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