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Understanding Virtual Reality in Marketing: Nature, Implications and Potential

January 2016
SSRN Electronic Journal

DOI: 10.2139/ssrn.2909100

Authors:

Stuart J. Barnes

King's College London

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Understanding Virtual Reality in Marketing:

Nature, Implications and Potential

Stuart J. Barnes

Department of Management

King's College London

Franklin-Wilkins Building, 150 Stamford Street

London SE1 9NH

United Kingdom

Tel: +44-207-848-4927; Fax: +44-207-848-4639

Email: stuart.barnes@kcl.ac.uk

Please cite this paper as:

Barnes, Stuart, Understanding Virtual Reality in Marketing: Nature, Implications and

Potential (November 3, 2016). Available at SSRN: https://ssrn.com/abstract=2909100

Understanding Virtual Reality in Marketing:

Nature, Implications and Potential

Abstract

A new wave of virtual reality (VR) development promises to make the technology

mainstream, and with it to provide an exciting new platform for consumer marketing. The

impacts of VR on marketing are currently not well understood. This paper provides a

framework for understanding the impact of virtual reality on consumers, integrating

individual, technology and social levels, and focusing upon the central role of presence,

consumer VR experiences and socialness in driving changes in consumer engagement. The

paper illustrates the value of VR in marketing through a number of current examples of the

use of virtual reality in marketing functions, and examines the nature of the experiences

offered. It further provides a framework for positioning the level of VR consumer engagement

based on location and interactivity. The paper rounds off with a discussion of the future of VR

and a number of problems that need to be solved.

Keywords: virtual reality; VR; presence; framework; experience; examples; consumers.

1. Introduction

Virtual reality (VR) is not a new technology. Early computerized VR began in the late-1960s

(VRS 2016), but it was not until the 1980s that the name was coined, alongside the

commercial release of head mounted displays and haptic gloves attached to a computer that

simulated 3D environments in surround stereoscopic vision (Brey 2008). VR began to appear

in computer games in the early 1990s, while Ford began using VR for design and production

of its vehicles in 1999 (Gaudiosi 2015). However, VR never became a mainstream consumer

product. Now, like tablet computers and wearable computer watches, the hope is that VR will

come of age. The impact of VR on gaming, entertainment, marketing, education, product

design, communications and other aspects of business is likely to be considerable. The

development of VR now is being compared to that of social media in 2008, prior to becoming

mainstream (Morris 2016).

According to the Oxford English Dictionary, virtual reality refers to “The computer-

generated simulation of a three-dimensional image or environment that can be interacted with

in a seemingly real or physical way by a person using special electronic equipment, such as a

helmet with a screen inside or gloves fitted with sensors.” NASA (2016) provide an even

more technical definition of VR as “the use of computer technology to create the effect of an

interactive three-dimensional world in which the objects have a sense of spatial presence”.

For a more pragmatic definition, eMarketer (2016) suggests “VR completely immerses a user

inside a virtual world or experience, typically through the use of a head-mounted display

(HMD) that is often connected to headphones, controllers and other peripherals that let users

navigate through that experience. A key characteristic of a great VR experience is the feeling

of ‘presence’—users feel like they are truly in the synthetic environment being presented.” A

related technology, augmented reality (AR), involves overlaying digital objects and/or

information in the real world through digital devices (such as Google Glass or smartphones).

A recent example is the popular mobile phone game Pokémon Go. Similarly, mixed reality

(MR), merges real-time 3D world software content with the real world, a notable example

being Microsoft’s HoloLens MR platform.

Business investment in VR in recent years has been vehement. Facebook spent $2

billion on Oculus Rift in March 2014. Google spent $542 million on Magic Leap in October

2014. From Q1 2014 to Q2 2015, more than $1 billion was invested in 91 deals in VR and AR

(eMarketer 2016). More than the technology, content is key to the success of VR. According

to Goldman Sachs, the VR branded content market could be worth $80 billion by 2025

(Bellini 2016). If predictions are correct, VR is headed to be consumer mainstream within five

years.

This paper examines the impact of the recent wave of advanced virtual reality

applications on marketing. Virtual reality affords marketers the opportunity to provide

potential consumers with the most realistic experience of a product, service or place yet

without necessary physical co-location. This provides an advanced, rich and immersive

medium that is able to deliver distinctive, high-impact and memorable messages, and engage

audiences and potential consumers (Schmitt 1999; Pine and Gilmore 1998, 1999). The

immersive value of the medium surpasses that of traditional 2D screens and some evidence

suggests that experienced presence might even surpass reality for some situations, depending

on social co-construction and physical and cultural artefacts (Villani et al. 2012). The

potential applications in marketing are many and varied and include promotion, market

research, online sales, customer service, brand management, and public relations.

In the next section, we provide a framework to help to understand the impact of VR on

consumer engagement. This is followed by some examples of VR in marketing and further

frameworks that position the value of VR to the marketing effort based on the nature of the

experience, the characteristics of the VR platform, and location of customer interactions. The

paper concludes with a discussion of the future of VR and some limitations that need to be

addressed.

2. A Framework for Understanding the Consumer VR Experience

To aid in the understanding of the impact of VR on the consumer, consider Figure 1, within

which there are three main groups of factors driving the consumer VR experience. At the

technological level, we consider the VR delivery system, which has associated artefacts,

hardware, software, communications and data infrastructure required for VR. The VR

delivery system is an enabler for developing the consumer VR experience – and thereby VR

consumer engagement – particularly through gamification, hyperpersonal content and

environment cues. At the individual-level, we consider the complex psychological drivers

influencing the consumer VR experience. These factors examine consumer predilections in

VR environments and social VR situations. At the social level, we move beyond the

individual to connected others: 3D virtual worlds are often shared with groups of other avatars

and likely to be linked into social networks, assisting in the development of social presence,

social capital and social interactions. These social influences contribute greatly to the

consumer VR experience. The ultimate outcomes of the VR marketing experience are

affective, cognitive and behavioral (conative) change at the individual level. This may

include, for example, an emotional connection with a brand, knowledge to solve a customer

service support problem, or the purchase of a product.

*** INSERT FIGURE 1 ABOUT HERE ***

2.1. VR Consumer Experience

At the center of Figure 1 is the Consumer VR Experience (CVRE) construct. The construct is

composed of three key aspects: presence, socialness and nature of experience. Each of these

concepts is founded on rich, but typically separate, streams of literature: presence from

human-computer interaction; experience from services marketing; and socialness from social

psychology, HCI and other sources.

A key element of CVRE is presence, the definition of which is complex, multifaceted,

and rich in literature on the nature of its development. Early definitions of virtual reality

focused narrowly on hardware. For example, Coates (1992), cited in Steuer (1992, p. 74),

defines virtual reality as “electronic simulations of environments experienced via head

mounted eye goggles and wired clothing enabling the end user to interact in realistic three-

dimensional situations.” Steuer (1992) was the first to define virtual reality according to the

concept of telepresence as experienced through a rich, simulated media environment. While

presence is defined as the sense of being in an environment (typically a physical environment

mediated by the senses), telepresence is the “experience of presence in an environment by

means of a communication medium” (Steuer 1992: p. 76). According to Steuer (1992), two

key dimensions of technology contribute to the feelings of telepresence experienced by

humans: vividness and interactivity. Vividness is the “ability of a technology to produce a

sensorially-rich mediated environment,” whilst interactivity is the “degree to which users of a

medium can influence the form and content of the mediated environment” (Steuer 1992, p.

80). Put simply, vividness is how real a VR environment appears to a user, which will vary

according to the number of a body’s five sensory systems (and sensory modalities) that are

used (breadth), and the quality of sensory feedback (depth) in those senses, e.g. quality of

visual, auditory feedback, or touch feedback. Interactivity can be understood as the extent and

realism of actions performed in the virtual world, which will vary according to the number of

possible actions (range), whether actions are real-time (speed), and the natural/predictive

nature of controls (mapping of controls to virtual world).

Sherman and Craig (2013) provide a further helpful summary of four elements that are

essential to virtual reality experiences: 1. the virtual world environment inhabited by the user

(including 3D digital objects, space and rules); 2. the feeling of immersion in the virtual world

or actually “being there”; 3. interactivity – the degree to which the user can interact with the

virtual world, its objects, characters and places, and how it responds; and 4. the selective

provision of sensory feedback to the user based on user input, such as navigation.

Steuer’s (1992) definition relies on the use of communication media. However, if VR

is delivered through a PC or an app with no remote connection, we may need to reconsider the

question of how the definition of telepresence is reinterpreted. The seminal paper of Lombard

and Ditton (1997) provides an important clue to a more suitable vision of telepresence,

suggesting that it is related to the disappearance of the technological experience during VR

interaction, as it becomes “invisible.” Zahorik and Jenison (1998) go further and use

metaphysical arguments from philosophy to argue that presence relates to successful

interaction with an environment, whether real or virtual. Riva and Mantovani (2014) offer

support for this view and argue that “presence is a core neuropsychological phenomenon

whose goal is to produce a sense of agency and control: I am present in a real or virtual space

if I manage to put my intentions into action (enacting them)” (p. 10). In synthesis, this

suggests that telepresence can be defined as the successful enactment of consumer intentions

in a VR environment where technology is invisible.

Virtual reality provides an effective platform for experience marketing (Schmitt 1999;

Pine and Gilmore 1998, 1999). In experience marketing, businesses focus on developing and

providing memorable events for customers, which in themselves become products (the

“experience”), with monetary value in the transformational benefits offered by the

experiences. From the experiential marketing perspective, consumers are both rational and

emotional and seek pleasurable experiences. Marketers can provide such experiences through

technology, such as VR, as a medium for experience provision, aiming to create holistic

experiences that integrate personal experiences into an organized whole. The types of

experiences that marketers should seek to provide include those that are sensory (engaging all

the senses), affective, creative and cognitive, physical, and related to social identity. Branding

in the experiential marketing should provide “products, communications, and marketing

campaigns that dazzle their senses, touch their hearts, and stimulate their minds” (Schmitt

1999: p. 57). Pine and Gilmore (1998) recommend that consumer experiences should be

designed around themes and include memorabilia in order to create memorable experiences

(e.g. Disney characters in Disney themed worlds), accentuating positive cues whilst removing

negative cues. Section 4 examines a number of VR experiences through the lens of Pine and

Gilmore’s (1998, 1999) Realms of Experience Framework.

One key component that is missing from traditional definitions of virtual reality is the

social dimension, the feeling of socialness stemming from the perception of and interaction

with ‘others’. Socialness can be defined as the extent to which users perceive social cues

within a virtual environment considered as a social entity (Barnes and Vidgen 2014). Various

contributory factors from the VR delivery system, social influences and psychological drivers

will influence the feeling of socialness in a virtual environment. Players encounter social cues

within the virtual reality environment that contribute to the feeling of socialness, determined

by the design of the gaming environment (e.g. environmental cues – see section 2.2), social

influences (e.g. social presence and interactions – see section 2.4), and the psychological

tendencies of each individual (e.g. self-construal and ethopoeia – see section 2.3).

2.2 VR Delivery System

Let us begin by examining the technological level. Technology provides a critical enabler for

VR telepresence experiences. Indeed, it is the advancement of technology that is providing an

impetus to the current wave of development and applications. The most obvious requirements

for VR are the special hardware interfaces, including the headsets and other controlling

devices. Juniper Research (2015) predict the number of VR headset shipments will reach 30

million by 2020, driven by video and gaming. The VR headset market could be worth $62

billion by 2025 (Munster et al. 2015). Headsets vary considerably in their cost and capability,

ranging from free giveaway Google Cardboards to advanced Oculus Rift headsets. Effectively

headsets are based around three main platforms: desktop computers, e.g. the head mounted

Oculus Rift (Facebook); computer consoles, e.g. Sony’s Playstation VR; and headsets into

which mobile phones are inserted, including the Samsung Gear VR and Google’s Daydream

platform (which will launch in November 2016) at one end of the market and the basic

Google cardboard (foldable cardboard headset) at the other. VR technologies provide video

and audio, but vary in the degree of immersion offered, for example, through the graphical

field of view (i.e. extent of observable virtual environment) and the quality of audio, e.g.

using 3D spatial audio.

Haptic devices used for interacting with the virtual world range from some of the

mass-market controllers for the Oculus Rift and HTC Vive, which tend to have pistol grips, to

more natural haptic devices aimed at detecting body and muscle movements from hands and

forearms and giving sensory feedback. Several of these technologies are more futuristic or

niche, including the Teslasuit, which enables a user to actually feel objects in the virtual world

and for VR users to interact physically, and the Virtusphere, a rolling ball that delivers the

possibility of seemingly limitless movement in VR while actually staying in the same place.

These technologies provide the means for very advanced interactivity and sensory feedback.

Alongside the VR hardware, software, data and content provide an essential enabler of

the VR experience. Central to the experience is the virtual world, which has been argued to be

a fertile bed for marketing and studies of consumer behavior (Barnes 2010, 2011; Barnes et al.

2015; Barnes and Mattsson 2011a, 2011b; Barnes and Pressey 2011, 2012; Guo and Barnes

2009, 2011; Hemp 2006; Lui et al. 2007; Pressey et al. 2013; Tikkanen et al. 2009). A ‘virtual

world’ may be defined as “an electronic environment that visually mimics complex physical

spaces, where people can interact with each other and with virtual objects, and where people

are represented by animated characters” (Bainbridge 2007, p. 472). According to Novak

(2012), virtual worlds, such as Second Life, exhibit five core characteristics experienced by

the user: a graphical 2D or 3D interface; a social context experienced by many individuals;

interactivity and vividness of the virtual environment; a shared space for interaction; and

persistence of the environment.

Virtual worlds, by virtue of their digital nature, enable the tracking of activity of the

consumer within, what they are touching, looking at or doing, or even potentially the

emotions they are experiencing using physiological interfaces (Levine 2016). Thus, it is

possible to collect data on consumer behavior in the virtual world. Combined with additional

data on the particular consumer and other available relevant data sources, advanced data

analytics could be applied, potentially combining tools from artificial intelligence and

gamification techniques to hyperpersonalize content for future experiences. Such

hyperpersonalized content is likely to be more subtle and persuasive in delivering marketing

messages for the modern consumer, requiring less mental processing resources and focusing

on the peripheral processing route in the elaboration likelihood model, including such issues

as emotional motivation, production quality, credibility and attractiveness (Cacioppo and

Petty 1979; Petty and Cacoppo 1986; Petty and Krosnick 1995). Hyperpersonalization enables

an authentic, engaging focus for VR marketing content, which can then be amplified through

a variety to techniques, such as social media (McLaren 2016).

Native advertising refers to methods for presenting consumers with commercial

persuasive messages similar to non-third-party content from the same source (Wojdynski

2016). As a method, it is growing considerably in terms of practitioner interest and

expectation, particularly due to its potential value on social media platforms. Traditional

native advertising includes sponsored content that could feasibly include VR in the future.

Native advertising has raised ethical concerns, as consumers typically are unaware of the

persuasive nature of the message contained within seemingly innocuous content (Wojdynski

and Evans 2016). Such issues can however be overcome by appropriately priming consumers

about the persuasive intent of messages (Wu et al. 2016). The practical value of matching

channel to corporate sponsor is also notable, since unprimed consumers were found to

perceive strong persuasive intent on low credibility media channels for high credibility

sponsoring companies; when primed, however, consumers perceived persuasive intent only

for low credibility sponsored content on high credibility channels (Wu et al. 2016).

Early research into hyperpersonal content systems has found mixed results. Warshaw

et al. (2015) found that consumers trusted “expert” algorithms associated with hyperpersonal

content delivery and considered them “creepily” accurate. However, Warshaw et al. (2015)

also found that people felt pressurized to use such systems and felt unqualified to modify

content. The future design of hyperpersonalization systems must pay adequate attention to

informed sharing of hyperpersonal data in social networks and user control over content

editing.

Gamification relates to the application of game design principles to non-game goods

and services in order to increase perceived customer value and influence value-creating

behaviors, for instance increased loyalty, consumption, engagement and brand or product

advocacy (Blohm and Leimeister 2013; Hofacker et al. 2016). Hofacker et al. (2016) use

Schell’s (2008) Tetrad Model to explain how such gamification can be achieved in the mobile

marketing context, emphasizing that story, mechanics, aesthetics and technology will play key

roles, and will be moderated by the type of product/service and the nature of the consumer,

particularly goals and characteristics. Clearly, a number of VR platforms have been designed

principally as conduits for gaming, such as the Sony Playstation VR. The visual

representations (vividness) are also notable elements in developing a game-like environment.

Notwithstanding, it is clear that the VR platform presents a number of other features which

render it a fertile bed for developing consumer value and subsequent value-based outcomes.

For example, the VR medium offers the opportunity for narrative transportation, as the

consumer becomes immersed in the particular storyline presented in the marketing content

offered (van Laer et al. 2014). This may be more effective where there is a congruence

between the game and marketing goals through regulatory fit (Hofacker et al. 2016), which

can increase motivation to process information, consumer engagement, time spent in-world,

and intensify positive and negative reactions (Lee et al. 2010). Further, the reward structure

presented in VR and its interaction with the goals of consumers, such as extrinsic or intrinsic,

will be important determinants of reactions to marketing content (Hofacker et al. 2016).

A key element that marketers must focus on in order to deliver high quality consumer

experiences is the provision of environmental cues (Pine and Gilmore 1998, 1999). The

development of such cues in the delivery of VR content must attempt to accentuate positive

experiences through positive cues and reduce the prevalence of possible negative cues.

Positive environmental cues act to affirm a positive experience, creating a stronger, more

memorable impression on consumers. For example, visual and aural cues may provide

information about what the VR consumer will experience next, and act as a priming tool, such

as “your adventure is about to begin” (Pine and Gilmore 1998). Such cues may also act to

encourage certain types of in-world behavior, such as arrows or other signage to encourage a

consumer to press a button to activate a module of experience content. The consistency of

design of environment cues is paramount; if they are not properly designed or utilized this can

create an unpleasant experience for consumers who follow the “wrong” path. Similarly,

negative cues in VR content should be removed or reformulated into neutral or positive cues.

For example, an item on a shelf in a VR supermarket application should not be marked as

“not available” but rather as “available soon” or removed altogether, while in-world avatars

that provide service information to all consumers should be “pull” rather than “push”

activated.

2.3 Psychological Drivers

Research has suggested a number of psychological influences that are likely to impact

consumer engagement in VR environments.

The effect of social factors on the consumer is likely to vary due to psychological

factors. One such factor is self-construal, which examines “an individual’s nature or

relationship with other people” (Keng et al. 2016, p. 432). Self-construal can be either

independent or interdependent; independent self-construal refers to an individual’s behavior

that is constructed with reference to his or her own personal thoughts, feelings or actions,

whereas interdependent self-construal refers to behavior composed with reference to the

thoughts, feelings or actions of others (Keng et al. 2016), typically as part of a group (Singelis

1994). Self-construal has been found to be significantly related to social media use and word

of mouth (Hoffman et al. 2012), and to influence impulsive consumption behavior (Zhang and

Shrum 2009). Keng et al. (2016) found that self-construal moderated the relationship between

mere virtual presence with product experience and both brand attitudes and purchase

intention.

Presence in VR environments can be influenced by the tendency of the respondent

towards absorption, “episodes of total attention that fully engages one’s representational

resources” (Kober and Neuper 2013, after Tellegen and Atkinson 1974), since evidence

suggests that an absorbed individual centers their attention on the virtual environment rather

than the real world (Wirth et al. 2007). Mental imagination is the general ability to imagine an

assortment of sensory modalities without actual sensory presentation (Sheehan 1967). A

number of studies have shown that the ability of an individual to create mental images of

people, objects or events influences their experience of telepresence in VR (Sas and O’Hare

2003; Wallach et al. 2010). Further, the responsivity of an individual to others’ experiences

and the ability to adopt and see their perspective, empathy, is also considered an influence on

presence. As Nicovich et al. (2005) point out, empathy and telepresence effectively use the

same projective “tool set” to become part of the experience of a virtual world or another

person. Various studies have found support for the role of empathy in developing telepresence

experiences (Kober and Neuper 2013; Nicovich et al. 2005; Sas and O’Hare 2003; Wallach et

al. 2010). Finally, the tendency of individuals to experience flow, increased involvement or

immersion while conducting certain activities has been shown to be a driver of telepresence –

referred to as immersive tendencies. Numerous studies have shown that those that are more

inclined to immersion are more likely to experience a richer sense of telepresence (Kober and

Neuper 2013; Laarni et al. 2004; Wallach et al. 2010; Witmer and Singer 1998).

Numerous other factors have been found to contribute to VR telepresence experiences,

although sometimes with very mixed results. For example, impulsive tendencies, whereby an

individual acts without thinking and planning is posited to use the same part of the brain as

telepresence (Beeli et al. 2008), and Larni et al. (2004) found support for its influence on

telepresence in VR. However, Kober and Neuper (2013) found no such support. Similarly,

people who feel a lack of control over the events that unfold in their lives, referred to as an

external (i.e. outside of the person) locus of control, have been hypothesized to experience a

heightened degree of telepresence (Murray et al. 2007; Wallach et al. 2010). However, again,

Kober and Neuper (2013) could not find empirical support for this supposition.

Media equation theory asserts that humans treat computers and media as other

humans, even when they know that they are not (Moon 2000). The theory is founded on the

principal that individuals mindlessly apply social rules and expectations to computers and

exhibit the same responses to computers as they would to human actors (Nass and Moon

2000). Such behavior occurs regardless of whether the communication is via text, voice or

anthropomorphic virtual agents, and the theory has recently been applied to studies of user

behavior in virtual worlds (Zhao et al. 2010). VR may include avatars, either human or

computer controlled. Research has found that human or autonomous avatars will evoke a

social response from consumers (von der Pütten et al. 2010). Responses to autonomous agents

are automatically triggered by social cues from social situations – the ethopoeia concept (Nass

and Moon 2000).

2.4 Social Factors

While Facebook has a massive user base (estimated at 1.65 billion in Q1 of 2016; Statista

2016), its platform for communication lacks the degree of socialness offered through richer

channels such as virtual worlds. Facebook’s purchase of the Oculus Rift is most likely aimed

at bringing a greater degree of social interaction into its social network platform in the longer

term. Indeed, the company is developing social VR that creates strong social presence through

detailed avatars, facial expressions (eyes and mouth), body language, hand and head motion

and positional tracking (Carbotte 2016). Connecting to friends, family, and other consumers

by linking existing social networks to virtual worlds will provide the much-needed dimension

of socialness to VR.

Social capital and social interaction have been found to be key elements in

encouraging consumer engagement (Chu and Kim 2011). From a marketing perspective,

social networking provides an important medium for enabling word-of-mouth

communications (Yadav and Pavlou 2014). Word of mouth (WOM) –which describes person-

to-person communication such as personal recommendations – has for many years been

recognized as an important element in distributing product and market information (Gilly et

al. 1998). Such communication tends to be more trusted and to have more credibility and

believability for consumers than formal marketing (Feick and Price 1987), and WOM

recommendations via social media can have more commercial value than traditional

marketing vehicles (Trusov et al. 2009), affecting purchase behavior through embedded

information and persuasion (Goh et al. 2013). Moreover, the valence elasticity of WOM in

social media appears higher for privately consumed, low trialability products that would

appear suitable for VR experiences (You et al. 2015). The value of engagement and WOM in

social networks is strongly linked to their social capital, including tie strength, trust, shared

frame of reference, normative and informational influence (Chi 2011; Chu and Kim 2011;

Ellison et al. 2007; Hung and Li 2007; Utz and Muscanell 2015). Ashley and Tuten (2015)

find that experiential message appeals are significantly related to social capital via Klout

scores and engagement measures through Engagementdb. They also find that other aspects of

social media engagement are related to social capital features such as numbers of

followers/fans, Klout score and engagement score.

Social presence is an established concept that refers to the extent to which a medium

facilitates a user to connect personally with other users of the medium (Short et al. 1976) and

to experience other users as being psychologically present (Fulk et al. 1987). Originally,

research into social presence theory focused on media characteristics and the extent to which

a medium could convey social cues (Short et al. 1976), particularly given the requirements of

particular tasks (Karahanna and Straub 1999). Here, social presence is encapsulated by the

richness, interactivity and feelings of warmth, human contact, sociability and sensitivity

afforded by a medium (Gefen and Straub 2003).

More recently social presence theory has been applied to various computer-generated

environments, including virtual worlds (Mennecke et al. 2011; Sivunen and Nordbäck 2015)

and virtual reality (Poeschl and Doering 2015) and have extended the concept of social

presence to fit these new media. Biocca et al. (2001) argue that social presence is

multidimensional and consists of co-presence (the feeling of being together with other people

in the virtual environment), psychological involvement (the impact of perceived

psychological factors from the respondent and other individuals, such as their mood), and

behavioral engagement (the impact of the actions of the respondent and other individuals).

This is further confirmed in a study by Sivunen and Nordbäck (2015), using qualitative and

quantitative data collected in the virtual world of Second Life, which has more recently been

enabled for use with the Oculus Rift. Sivunen and Nordbäck (2015) found that social presence

varied constantly in strength within groups and subgroups (e.g. between just a few members

of a group). Perceptions of social presence in a virtual world can lead to physiological and

psychological effects (Mennecke et al. 2011), including affective, cognitive and behavioral

effects. More broadly, Lim et al. (2015) found that in the context of social TV (backchannel

communication on social media during a live TV broadcast), social presence influenced brand

loyalty (in the form of recommendation and continued use), mediated by brand commitment,

characterized by attachment and belonging to a brand. Ashley and Tuten (2015) find that

social presence has a strong link to consumer engagement in their examination of brands

using social media. Lu et al. (2016) find that social presence influences trusting beliefs, which

in turn impacts purchase intentions.

In the consumer context, the concept of mere virtual presence (MVP) has been used to

describe the presence of other consumers in a virtual environment. The concept is similar to

that of co-presence. Naylor et al. (2012) found that social influence can impact presence in a

virtual brand community context, subsequently impacting brand evaluation and purchase

intention. Keng et al. (2016) further extend the MVP concept to encapsulate other consumers

with product experience: “Upon seeing that someone similar to oneself likes a certain product,

a member of a virtual brand community might involuntarily think that he/she also likes the

product, and we defined this as mere virtual presence with product experience (MVPE)” (p.

432). Keng et al. (2016) find that MVPE has a greater impact on purchase intention than MVP

and that the impact of MVPE on brand attitude varies according to the relationship with other

consumers, being greater for in- rather than out-groups.

Social interaction with those present in a virtual reality environment or with those in

the extended social network channels that are accessible will also be important in creating a

high quality VR consumer experience that manifests in positive consumer outcomes.

Customers may influence one another directly or indirectly (Bitner 1992). Verhoef et al.

(2009) explore how social environment, including social interaction between consumers, is an

important determinant of customer experience. Numerous studies have examined the positive

and negative aspects of social interactions between consumers (e.g. Wu 2007 examines the

tourism industry). Lim et al. (2015) find that communal engagement (a form of behavioral

engagement) in the form of interaction and sharing content within the social TV brand

community encouraged consumer loyalty. Hudson et al. (2016) conducted three studies and

found that social media interaction impacted on brand relationship quality and word-of-

mouth, particularly when consumers anthropomorphize a brand and avoid uncertainty.

2.5 VR Consumer Engagement Outcomes

The use of VR for marketing will typically be targeted on one or more of three key types of

consumer engagement outcome: cognitive, affective and conative change. Cognitive change

occurs through increasing awareness and knowledge regarding the product, service, and/or

brand through memorable VR content, increasing the likelihood of attention and absorption.

Affective change occurs by attempting to strike a bond with consumers and providing

pleasurable experiences, increasing their liking and preference for the product, service and/or

brand by highlighting key features or benefits. Finally, conative change involves allows VR

consumers to experience aspects of the product, service and or brand, attempting to increase

the desire to make actual purchases, which may be facilitated through the virtual world, and

other positive social outcomes such as sharing VR experiences or endorsement of brands from

VR. It is also possible that different types of consumer outcome are targeted through the same

VR marketing initiative, creating a combined hierarchy of effects (Lavidge and Steiner 1961).

Dassart et al. (2016) provide a comprehensive scale for measuring consumer

engagement based on affective, cognitive and behavioral dimensions in the context of online

brand communities. The affective dimension is composed of enthusiasm and enjoyment,

whilst the behavioral construct includes sharing, learning and endorsing. Cognitive

dimensions include attention and absorption. Such a scale would also seem suitable in the

context of the consumption of VR experiences.

A number of features of VR marketing suggest that it could have a successful impact

on the above consumer outcomes. Villani et al. (2012) provide evidence that experienced

presence in VR might even surpass reality for some situations, depending upon social context.

The novelty of the technology is associated with greater levels of media and public interest

(assisting cognitive change). Unlike using a mobile phone, for example, VR requires donning

a headset, removing distractions and providing full immersion in marketing content and

messages. The nature of the VR experience is also more direct and powerfully emotional than

traditional media, creating messages with more impact (thereby aiding in affective change).

The results of a study by Riva et al. (2007) confirmed the value of VR as affective channel,

demonstrating that interaction with virtual environments specifically designed to invoke

certain emotions produced the corresponding affective reaction (anxiety and relaxation in this

case). Moreover, Riva et al. (2007) found an interaction between emotion and presence, with

presence being higher in emotional VR environments, while the level of presence also

impacted upon emotional state. Certain features of VR experiences, particularly those with

active elements or with events linked to locations are likely to be more memorable, having a

longer impact on the consumer (including prolonged conative change).

There is little data available on consumer demand for modern VR applications.

However, one recent study by Ericsson ConsumerLab (2015) surveyed 6,649 consumers in

the 15-69 age group about their perceptions of virtual reality services. Respondents came

from across major international cities, including Johannesburg, London, Mexico City,

Moscow, New York, Paris, San Francisco, São Paulo, Shanghai, Singapore, Sydney, Tokyo

and Istanbul. Around 80% of respondents thought that at least one of the virtual reality

services examined was a good idea. Some of the top applications were marketing oriented,

with VR retail being most popular at 64% (“see items in real size and form when I shop

online”) and customer support rated third at 57% (“Internet tech support with all angle view”).

The other most popular applications tended to relate to an improved viewer for media content,

including VR maps (62%), VR movies (57%), sports (55%), computer games (54%), and

smartphone games (52%). Around half of respondents would prefer to view VR through a

Google Cardboard-type viewer (49%).

2.6 Using the Model to Explain the Pokémon Go Phenomenon

As a test of the research model, consider its explanatory power over the global success of

Pokémon Go – which holds the record for the fastest grossing mobile game ever, earning

US$600 million in 90 days, and accounting for 45% of all time spent on Android mobile

games in October 2016 (Batchelor 2016). Pokémon Go is a game for smartphones that

includes augmented reality and features linked to a user’s location. The gamification element

occurs as individuals attempt to catch creatures (tagline: “Gotta catch ‘em all”) and use them

to fight other creatures in order to earn points and level-up their character. In order to catch

creatures, users must be in the right location and throw balls to hit them using an augmented

reality interface. Certain creatures spawn in certain locations and some are rarer than others

are. Environmental cues occur through indications (rustling leaves) of the appearance of

creatures in certain real world locations using geolocation mapping, and the use of lures at

Pokestops (real-world locations such as historic monuments) to encourage creatures to appear,

and where free items can also be collected periodically. Gyms are geolocated in places such

as schools, where users can battle in teams to gain points and coins to buy premium items. Of

course, coins can also be purchased through real money and used to buy premium items. The

game includes strong personalization elements through creating unique 3D avatars,

personalizing creatures, and the very personal aspect of gaming in one’s own environment,

including in one’s home and local community.

Social influences also play an important part in Pokémon Go. Users often play in

groups and congregate at locations to set lures and to collect creatures (Pokestops) and to

battle together in teams (Gyms). There is thus a high degree of social interaction and social

presence through the combination of the real world and virtual world. Social capital is built

through teamwork, familiarity and trust with other team members, and the use of rare,

powerful, or sought after creatures. Strong teams of players can level-up gyms and gain

prestige.

The tendency of users to engage with Pokémon Go depends on psychological drivers.

Involvement in group activities in the game will likely be influenced by self-construal. Those

that play the most are likely to be more absorbed in play and have a greater level of

imagination and immersive tendencies, leading to more time spent in the game. An external

locus of control may also contribute to the desire to play the game. Impulsive tendencies can

encourage greater game-play, as well as the purchase of coins to buy premium items in the

game.

Together these three groups of factors contribute towards creating the consumer’s

Pokémon Go experience. The consumer’s experience is immersive and active – or Escapist

(Pine and Gilmore 1998). It further follows guidelines for strong experiences in that it is

themed, includes memorabilia (many individuals have nostalgic connections with Pokémon)

and engages a number of senses through audiovisual content and vibration feedback on the

phone (and more recently a wristband that is available to purchase). The AR and geolocation

interfaces, in combination with the real world, contribute to creating a strong feeling of

presence. Further, players encounter many social cues within the Pokémon Go social game

world that contribute to the feeling of socialness, determined by the design of the gaming

environment, social influences (mentioned above, including social presence and interactions),

and the psychological tendencies of each individual (particularly self-construal, empathy and

ethopoeia).

The outcomes of the Pokémon Go experience are affective, cognitive and conative.

Playing the game stirs emotions and generates enthusiasm, fun and enjoyment for users. The

game also attracts cognitive attention and absorption, particularly among those with the right

predilections. Consumer are encouraged to spend more time in the game to reaching further

goals, often spending money in the process. Consumers also learn and share their experiences

with each other in the real world and via social media (and there are numerous blogs, websites

and social media pages on Pokémon Go).

3. Examples of Virtual Reality Applications in Marketing

The applications of virtual reality to marketing and marketing-related functions are diverse.

Table 1 provides some examples of applications in functional areas. A key area of application

is brand management. VR can provide a means of brand engagement, educating the consumer

about a brand, reinforcing brand values and building affinity and customer loyalty (such as the

Patron Spirits example). More broadly, VR can be used for creating brand awareness and

relationship building. One example where VR has been used for relationship building is that

of Boursin Cheese’s ‘Sensorium’, which allows customers in shopping centers to see inside

the contents of a fridge (McLaren 2016). There appear to be many examples of car brands that

have VR offerings. Nissan used Oculus VR at the Tokyo motor show to enable consumers to

design their own Nissan car. Volvo have the XC90 app to explore a futuristic vehicle on a

Google Cardboard. Honda have an app to experience driving the ultra-fast Honda-powered,

Dallara car, set to coincide with the 100th running of the Indianapolis 500 on May 29, 2016.

Going forward, relationship building is likely to occur via the creation of content that is

valued by consumers and the delivery of content to apps on a smartphone. Such content may

be free, or possibly even paid for (if considered of sufficient value), with pushed content

updates.

*** INSERT TABLE 1 ABOUT HERE ***

Virtual reality provides a valuable new platform for market research, enabling low

cost solutions to examining consumer decision-making in a realistic but controllable, and

flexible environment, such as that of Tesco Pélé. This is particularly important since

consumers make 70% of brand decisions in-store (Rutgers Online 2014). The cost of virtual

reality store simulations for market research starts at approximately $30,000 rising to more

than $1 million. VR is used by companies such as Nestle, Unilever and Cadbury, and has

enabled better shelf layout, pricing, and increased sales (Rutgers Online 2014). In-world

interactions can be captured through such features as viewing time, store navigation, and

product interaction to obtain customer feedback on store layouts or products. VR can provide

more realistic, accurate, holistic feedback on navigation, layout, color, and product range.

Other potential applications of VR in market research include new product concept testing,

customer experience model testing and menu optimization pricing (Brooks 2015).

Within research and development, 3D modeling is already commonplace. Virtual

reality is also increasing in its industrial application, particularly in the manufacturing

industry, as the example in Table 1 shows. However, in the consumer segment VR also

enables customers and representatives to design their own customized products. For example,

the Lowe in-store Holoroom application allows consumers to design a kitchen or bathroom,

explore it in VR, and share it on YouTube (Morris 2016) to create a more social experience.

VR has the potential to provide a richer, more engaging and entertaining retail

environment. IT can more fully emulate a retail experience, such as a visit to London’s Bond

Street, from the comfort of a consumer’s home. The technology is likely to be particularly

useful for certain types of items, particularly complex, high-value and/or customized products

that are hard to visualize remotely, including fashion, real-estate, tourism experiences, cars

and luxury furniture. VR allows a much greater degree of consumer trial and product

experience before purchase. The SapientNitro example in Table 1 shows a beautifully

furnished apartment and allows consumers to carefully examine and then query price and

other information on luxury items of furniture placed in a realistic setting. A number of

automotive manufacturers have also developed applications for test-driving their vehicles,

including Audi and Lexus; test drives are still considered the best tool in selling a new car. In

some showrooms, such as city centre locations, test drives are not possible, and there are

typically challenges finding cars with the right configuration. VR test drives potentially

enable personalised product experiences anytime, anywhere. Several apparel retailers,

including Topshop and Tommy Hilfiger have used VR to create virtual catwalk experiences

for fashion shows. Software developers Marxent have demonstrated the vRetail platform,

enabling VR to recreate and customize real-world stores, shelving and merchandising. Some

analysts believe that VR will drive more consumers to buy online, reducing the overall

amount of time spent on shopping (Morris 2016).

In the tourism sector, Marriott Hotels use VR to market honeymoon experiences in

Hawaii: VR enables the virtual visitor to walk around accommodation, look at views and

become part of some of the likely experiences, supported by sensory additions of mist and

warm air. Ultimate Jet Vacations use VR to help hotels market their hotels, while Anchor

Associates use VR to sell real estate in New York. Tourism attractions could also make use of

the technology. Alton Towers have a VR roller coaster. Qantas provide VR experiences of the

Great Barrier Reef on some of their flights. Thomas Cook is piloting Samsung Gear VR

headsets in stores in the UK, Germany and Belgium with experiences of a helicopter ride

above Manhattan and sitting on the balcony of a Santorini hotel (Mandelbaum 2015).

Reportedly, the company made a 40% return on investment (Rumsey 2016). Thomas Cook is

expected to mail 5000 brochures and Google Cardboards to potential customers to link to

hotel and holiday content during 2016. More generally, VR has the potential to provide

immersive, emotional experiences in tourism and heritage, that are lived and visitor-

controlled, including guided tours of cities and buildings, landscapes, histories of particular

destinations, museum objects, and so on.

Promotion is predicted to be one of the most significant growth areas of VR

marketing. This is likely to be driven by the entertainment industry. Indeed, by the end of

2016, it is predicted that promotional 360-degree video trailers will be available alongside all

new film releases (Rumsey 2016). Facebook and YouTube’s 360-degree video networks have

provided a significant impetus to this trend. The Disney Steam VR app provides a hub for

promotional material from key franchises, including most recently, Star Wars: The Force

Awakens and The Jungle Book. Another example is the immersive Game of Thrones VR

experience promoting series 4 in 2014. This enabled users to experience ascending The Wall

with additional sensory feedback, including wind machine and rumble packs. Some analysts

suggest that VR could provide a potential means of invigorating a channel that is waning in

effectiveness – email marketing. Mobile is now a primary email marketing channel – 46.7%

of all email clicks according to Yesmail (Warnock 2016). Promotional email content and apps

could be pushed to consumers, although arguably other push channels might be more

effective. Another possible means of promotion is to include pre-roll ads in VR content.

A number of examples of VR have emerged from public relations. These have

included the New York Times film “Displaced” focusing upon the lives of three children who

are war refugees, Amnesty International’s “VR Aleppo” to raise awareness of barrel bombing

in Syria, and UNICEF’s “Clouds over Sidra” which draws attention to the Syrian refugee

crisis. These applications focus on building empathy with the audience. Alaimo (2016)

suggests that VR may transform public relations, particularly through revolutionizing the way

stories are told via immersive experiences, putting audiences in “other people’s shoes”,

delivering captive and receptive audiences, without distraction, and providing a new medium

for effectively pitching to journalists.

There are few current examples of VR used for customer and after sales service.

However, in the future this is likely to be a popular area that will enable organizations to

improve support at lower cost. Examples include step-by-step instructions delivered through

VR (possibly more useful in mixed reality) as a replacement for difficult to understand PDF

files, and individual customer support delivered through a 360-video interface (Mowad 2015).

The Stihl example in Table 1 gives a fairly low-key example of practical tasks achieved using

the company’s tools filmed in VR video.

VR also poses opportunities for event management, through providing relevant

immersive experiences at a physical event. Red Bull are experienced in this space and already

provide VR experiences at many of their events including cliff diving and air racing. More

broadly, VR combined with broadband provides the opportunity for any paying consumer to

obtain the best seat at any event, at any theatre or stadium at any time, either to watch sports,

interactive theatre performances or a concert. VR could become an important new platform

for paid-for streaming content.

Figure 2 examines some of the examples above through the lens of Pine and Gilmore’s

(1998, 1999) Four Realms of Experience Framework. Pine and Gilmore (1998) characterize

four different types of consumer experience using a framework that examines two

dimensions: customer participation and environmental relationship. Customer participation

refers to the degree to which partakers in an experience can influence the overall performance.

This varies from passive (e.g. an audience member in a classical music concert) to active (e.g.

playing football as part of a team). The environmental relationship describes the type of

connection between the customer and the performance and refers to how information is

processed in relation to one’s surroundings. This varies from absorption (e.g. listening to a

marketing lecture) to immersion (e.g. abseiling down a building).

*** INSERT FIGURE 2 ABOUT HERE ***

Applying Pine and Gilmore’s (1999) framework to the examples in Table 1, we find VR

experiences in each of the four quadrants. There are numerous applications being developed

that are immersive and that involve active participation. The Redbull Air Race, Tesco Pélé

and Disney VR Steam App examples can all be considered Escapist, providing fully

interactive VR consumer experiences, whether for gaming or shopping. At the other end of

the spectrum, many 360-degree VR videos that are being developed provide passive,

absorptive experiences, including the UN’s Clouds over Sidra and Stihl’s YouTube videos.

These can be considered Entertainment within the framework. In between, we find Gabler’s

IC.IDO VR application, which although interactive, does not provide full immersion (see

Table 1), and can be considered Educational. The VR experiences provides by Patrón Spirits

and SapientNitro, although immersive, do not allow much in the way of interaction. The

Patrón example, although aimed at the Occulus Rift, is scripted. The Apartment VR

experience is largely aimed at providing context for products and informational content.

4. A Framework for VR Consumer Engagement

Now that we have established the mechanisms by which VR creates value, and have provided

examples in some key functional marketing areas, we turn our attention to understanding how

businesses can utilize VR for consumer engagement. In particular, we consider whether

consumer engagement should be delivered through: passive VR (360-degree video, but where

the consumer follows a linear path) or interactive VR (full VR providing high-levels of

vividness, interactivity and socialness); or through in-store VR (provided via an event, store,

mall or street environment) or remotely provided VR app content (typically from the comfort

of the consumer’s home or another social environment) – as shown Figure 3. In terms of Pine

and Gilmore’s (1998) framework, passive VR can be considered as a platform for delivering

passive participation, particularly esthetic and entertainment experiences, while interactive

VR is capable of active participation, and hence a suitable medium for educational and

escapist experiences.

*** INSERT FIGURE 3 ABOUT HERE ***

A key element in decisions regarding consumer engagement in VR is understanding

the benefits and limitations of the technology, what it can and cannot do. For example, VR

can effectively replicate a music concert, such as TomorrowWorld, one of the world’s largest

dance music festivals, or Absolut Vodka, with high definition video and audio (Mandelbaum

2015). Such a concert is a realistic experience. However, the same experience of a

honeymoon vacation in Hawaii may not be quite so realistic by virtue of the lack of feel of the

sand, bed, sensations, and so on. VR cannot fully replicate certain senses. You would not be

so convinced of an “actual” honeymoon visit to Hawaii, such as that provided by Marriott.

However, combined with the store and the salesperson, active VR such as that provided by

Marriott provides a new level of complex product experience that simply cannot be provided

in any other way. In this case, VR is not a substitute for the salesperson, but it is a valuable

complementary aid for product experience. For example, North Face have in in-store

application where they provide the VR experience of hiking, rock climbing and base-jumping

– and then facilitate the consumer to buy gear in store. Thus, VR technologies can be used to

provide educational experiences for consumers.

At the other end of the spectrum, consumer engagement can be provided remotely to

consumers through ubiquitous brand promotion via VR video content, primarily aimed at

entertainment or esthetics. One major player in this market is the automotive industry. Indeed,

driving games have been core to the games industry for many years. However, although “VR

can replicate the feel of speed and motion, it cannot replicate the essential Porsche-nesses of

the feel of the road, the wind or the inertia thrust from the powerful engine” (Levine 2016).

Thus, in marketing automotive brands, VR promotion efforts need to look beyond product

capability. Indeed, Mercedes-Benz takes a different approach in its VR marketing focusing on

the organic experience of the vehicle user, including as a passenger of a Smart ForTwo Cabrio

travelling through Miami with street dancers and other experiences, and inside and outside the

2017 GLS SUV travelling through the mountains with Loki the wolfdog (Gaudiosi 2016).

In between these two, extremes, we find blended relationship building and ubiquitous

brand engagement. An example of blended relationship building is the Boursin Sensorium in-

store exhibit, which toured stores in the UK. This uses 360-degree video to give consumers a

virtual ‘ride’ and build a relationship with the brand in an immersive and entertaining way,

supported by a physical promotion team. On the other hand, ubiquitous brand engagement

provides the opportunity for consumers to engage fully with the brand in an interactive VR

experience from their own home. An example is the Disney Steam VR app mentioned above.

This enables the consumer to interact with characters in vivid, social, natural environments

via key branded virtual worlds, including Disney, Marvel, and Lucasfilm. This is an example

of an escapist experience.

5. Discussion and Conclusions

VR provides the potential conduit for delivering experience marketing to the masses. As we

have seen from the examples above, there is clear potential for the future and many business

opportunities are emerging. The immersive value of the medium surpasses that of traditional

2D screens and some evidence suggests that experienced presence might even surpass reality

for some situations. The socially-connected nature of mobile devices (and other computing

devices) means that instead of providing VR in stores, companies are increasingly likely to

develop downloadable apps for consumers. Experiential marketing content can be convincing,

immersive, and also potentially social and participatory, creating a potential for virality. This

technology-fueled marketing innovation could potentially transform marketing, combining

the emotional impact of experiential marketing with the viral scalability of Web campaigns

(Elgan 2015).

There are some questions over whether VR adoption will be successful in the future,

particularly given potential issues of cost and limited appeal to audiences. Undoubtedly, the

earliest adopters of VR may be mobile and console gaming fans and of limited interest to

many brands. There are 1.2 billion gamers worldwide, including 1 billion mobile gamers

(Danova 2015). However, video content is also likely to be a key driver of adoption, and

recent trends appear to suggest a fertile environment for VR adoption. YouTube has made all

of its videos VR compatible (Mbryonic 2016). It is also predicted that by the end of 2016,

360-degree video trailers will accompany all major new film releases, particularly via

YouTube and FaceBook’s 360-degree video networks (Rumsey 2016).

The cost of VR is declining and it is becoming more accessible. VR headsets are a low

cost product, which will boost adoption, although they typically require another computing

device such as a computer or a smartphone. Further, there is a possibility that headsets may

even be given away with mobile phone contracts (Neff 2015). Cheaper versions such as the

Samsung VR Gear and Google Cardboard are helping to create a mass market. The latter are

particularly useful for quickly creating an active VR consumer base. The New York Times

issued more than 1 million free Google Cardboard headsets to its readers. Similarly,

McDonalds in Sweden created a Happy Meal box that converted into a VR headset called

Happy Goggles. Such campaigns are likely to accelerate in the future.

Not surprisingly, VR technology is developing very quickly and there are a mixture of

technological platforms and standards. To further add to the complexity, mixed reality

technology is yet to become available to consumers, and will provide yet another dimension

to an already powerful new medium. The first consumer experience is likely to be Microsoft’s

Hololens, predicted to be available at the end of 2016. By wearing goggles, MR creates the

illusion of 3D, animated virtual objects in front of the consumer. Volvo are developing an app

to be able to look in and around the new S90 sedan, turn it around, examine components, e.g.

the engine, and, in the future, to sit in the car and use the dashboard controls (see Figure 4).

*** INSERT FIGURE 4 ABOUT HERE ***

Alongside the many positive aspects of VR, there are also a number of problems that

are currently presented. One of these problems is that of motion sickness, which can be

experienced by some consumers after viewing content, suggesting that they will be much less

forgiving of poor VR content than they are of low quality content on other mediums. In

particular, if the VR experience is not well shot or designed, this can affect an individual’s

sense of balance and inertia, creating nausea and reducing telepresence (Cassidy 2015).

Another big challenge in the VR industry is the lack of technical expertise, and this would be

particularly so in VR marketing which is much less developed than the media and games

sector. It will take some time for this sector to be recognized and for marketing departments to

gain the requisite skills. More generally, the ‘hard’ skills sector of marketing, involving

quantitative and computing skills, already appears to be playing catch-up. Finally, a key issue

is the currently under-developed infrastructure and standards for supporting VR. There are

many competing platforms, including Facebook, HTC and Sony. There are different standards

for operating systems, different smartphones, varying screen standards, and a multitude of

manufacturers. To add to this, although there are some standards for video content, there are

not clear standards for providing full VR applications or software development guidelines.

This is likely to providing a continuing fragmentation in the VR market and a barrier to

growth, at least until standards are formed or one standard becomes ‘dominant’.

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Table 1.

Examples of VR in Marketing and Marketing-Related Functions

Function

Example

Screenshot

Brand

Management

Patron Spirits

. VR of Hacienda

tequila distillery in Jalisco, Mexico

(May 2015). Education about brand

to add substance to perception of

being cool, increasing brand

awareness, brand affinity and loyalty

(around 70% of ultra-premium

tequila market) (Quenqua 2016).

Market

Research

Tesco “Pélé” virtual supermarket

(March 2014). Strategize store and

shelf layouts; improve marketing and

advertising for Tesco brand. Shelf

planning software saves time and

money in planning store layout.

Potential future retail environment

(Corriea 2014).

Research and

Development

Gabler’s IC.IDO VR System

(January

2015). Enabled the reduction of

product development times by 15%.

Allows operators to assess

production operations as if real (e.g.

install part with a tool). Can use

human mannequin to assess safety

of operations (Wasserman 2015).

Promotion

and

Advertising

Disney VR Steam App

(May 2016).

Visit themed worlds, including

Disney, Marvel, and Lucasfilm, and

interact with characters in their

natural environments. Includes 360-

degree video and full VR.

Sales/Retail

The Apartment

(June 2015).

Developed by SapientNitro for The

Line, this is a VR recreation of

brand’s Manhattan store. The viewer

can explore the apartment, listen to

audio, and if an item is of interest it

can be selected to find out more

information and to add it to the

shopping cart (Graham 2015).

Public Relations

Clouds Over Sidra

(Milk

15). A

United Nations VR film following a

twelve-year-old girl as she goes to

school in the Za’atari camp of 84,000

Syrian refugees in Jordan. Focuses

on empathy, community and

vulnerability of those displaced by

war.

Customer and

after sales

service

Stihl VR videos

(available on

YouTube). Although effectively these

are sponsored competitions, the

time-lapse VR shows a how-to and

best practice for a variety of practical

activities utilising the company’s

products.

Events

Management

Redbull Air Race.

Redbull provide VR

simulators at the Air Race and other

events to enable visitors to

experience more fully what it is like

to be a competitor. A new free VR

simulator will be a platform for

advertising partner brands (Al-Obaidi

2016).

Image sources: https://www.youtube.com/watch?v=cr3V4xt2710, http://www.polygon.com/2014/3/26/5549890/supermarket-giant-

tesco-looking-into-oculus-rift-to-change-consumer, http://www.engineering.com/PLMERP/ArticleID/9484/Can-Virtual-Reality-Help-

Optimize-Product-Engineering-Manufacturing-and-Operations.aspx, http://www.theverge.com/2016/3/15/11234272/star-wars-trials-on-

tatooine-virtual-reality-ilm-ilmxlab-lucasfilm, http://www.cnet.com/news/will-virtual-reality-make-you-want-to-shop-more-retailers-are-

betting-on-it/, http://vrse.com/watch/clouds-over-sidra/, https://www.youtube.com/watch?v=E3jpO8Q4vDw,

https://www.vrfocus.com/2016/04/project-cars-devs-to-make-free-vr-red-bull-air-race/

Figure 1: Framework for Understanding the VR Consumer

Figure 2: VR Applications Positioned within Pine and Gilmore’s Framework

Figure 3: Framework for VR Consumer Engagement

Figure 4: The Volvo S90 through Microsoft Hololens (Microsoft Hololens 2015)

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The use of virtual and immersion technologies has expanded considerably due to their impact on user experience, economy, knowledge, and sustainable conservation of cultural heritage according to studies conducted in various parts of the world in different disciplines (architecture, economy, entertainment, health, tourism, etc.), including on tourism in Mexico. These technologies are used in some archaeological sites, but development and implementation are scarce due to the lack of economic strategies, infrastructure, and human capital, which are preventing the sustainable exploitation of those sites, although some of these sites have met the basic requirements for providing a better experience to visitors. However, these sites should be studied to propose integral solutions not only to improve the tourist experience, but also to assist in their protection, conservation, and sustainable development. Here, we used knowledge from the soft systems methodology and the hologram generation system to generate proposals to solve the problem described. The result is a sustainable historical-cultural model based on the systemic approach, whose objective is to positively impact the visitor experience while maintaining harmony with the environment.

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Article

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Jan 2015

Virtual reality exposure therapy (VRET) applications use high levels of fidelity in order to produce high levels of presence and thereby elicit an emotional response for the user (like fear for phobia treatment). State of research shows mixed results for the correlation between anxiety and presence in virtual reality exposure, with differing results depending on specific anxiety disorders. A positive correlation for anxiety and presence for social anxiety disorder is not proven up to now. One reason might be that plausibility of the simulation, namely including key triggers for social anxiety (for example verbal and non-verbal behavior of virtual agents that reflects potentially negative human evaluation) might not be acknowledged in current presence questionnaires. A German scale for measuring co-presence and social presence for virtual reality (VR) fear of public speaking scenarios was developed based on a translation and adaption of existing co-presence and social presence questionnaires. A sample of N = 151 students rated co-presence and social presence after using a fear of public speaking application. Four correlated factors were derived by item- and principle axis factor analysis (Promax rotation), representing the presenter's reaction to virtual agents, the reactions of the virtual agents as perceived by the presenter, impression of interaction possibilities, and (co-)presence of other people in the virtual environment. The scale developed can be used as a starting point for future research and test construction for VR applications with a social context.

Welcome to the experience economy

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Mar 2016
J ADVERTISING

Despite recent industry attention, questions remain about how native advertising is perceived and processed by consumers. Two experiments examined effects of language and positioning in native advertising disclosures on recognition of the content as advertising, effects of recognition on brand and publisher evaluations, and whether disclosure position affects visual attention. Findings show that middle or bottom positioning and wording using “advertising” or “sponsored” increased advertising recognition compared to other conditions, and ad recognition generally led to more negative evaluations. Visual attention mediated the relationship between disclosure position and advertising recognition. Theoretical, practical, and regulatory implications for disclosures in native advertising are discussed. See link below (in comments) to read full publication!

The Market Maven: A Diffuser of Marketplace Information

Article

Jan 1987
J MARKETING

The research focus is individuals who have information about many kinds of products, places to shop, and other facets of the market, and initiate discussions with and respond to information requests from other consumers. Specifically, the authors develop a Likert-type scale to measure consumers’ propensity to provide general shopping and marketplace information. Consumers scoring high on this scale are referred to as “market mavens.” Based on a national sample of 1531 households, the findings indicate that market mavens exist and that other consumers recognize them. Consumers believe market mavens are influential in their purchasing decisions. The authors document the distinctness of market mavens from other influencers. They test several propositions about the market attitudes and behaviors of market mavens, but find no clear socioeconomic and demographic profile of these influencers. The results have implications for marketing managers and suggest a reexamination of the approach to information diffusion.

A Model for Predictive Measurements of Advertising Effectiveness

Article

Oct 1961
J MARKETING

The development and selection of research designs too often reflects thinking which is technique-oriented. This article looks at advertising research from another viewpoint.

Servicescapes: The impact of physical surroundings on customer and employees

Article

Jan 1992
J MARKETING

M.J. Bitner

A Tale of Two Sources in Native Advertising: Examining the Effects of Source Credibility and Priming on Content,Organizations, and Media Evaluations

Article

Jul 2016
AM BEHAV SCI

In the strategic communication field, native advertising has been hailed as the next big trend. However, this type of marketing technique may negatively affect the perceptions of brands as well as media outlets that provide such content due to its obscurity of persuasive intent and ambiguity of the content source. The current study examined these issues by conducting a 2 (priming: presence vs. absence) × 2 (media credibility: high vs. low) × 2 (corporate credibility: high vs. low) factorial between-subjects experiment. A total of 500 participants recruited from Amazon Mechanical Turk completed the online experiment. Findings suggested that priming of native advertising information would significantly improve users’ ad recognition and change their content perception. In addition, a series of three-way interaction effects suggested that the interaction between the two types of source credibility (media and corporate) tend to work as a function of priming of native advertising information, which could completely change individuals’ perception of the ad content and evaluation of the media source in the future, but not their future corporate evaluation. Important theoretical as well as practical implications have also been discussed in this article.

Mere Virtual Presence with Product Experience Affects Brand Attitude and Purchase Intention

Article

Apr 2016
SOC BEHAV PERSONAL

We investigated whether or not different contexts (mere virtual presence and mere virtual presence with product experience) led to different brand attitude and purchase intention. Participants were 193 users of an online brand community, and we employed a 2 (selfconstrual) × 2 (type of group) × 2 (mere virtual presence and mere virtual presence with product experience) factorial experimental design. The results partly supported our predictions that in the context of mere virtual presence with product experience, consumers gained a more favorable brand attitude (nonsignificant) and stronger purchase intention (significant). In addition, self-construal and type of group moderated the relationship between brand attitude and purchase intention of mere virtual presence with product experience, which supports our hypotheses. Thus the 2 contexts of brand community satisfy consumers’ different levels of demand in regard to fan traits and others’ experience in using a product.

10 consumer trends for 2013

Article

Feb 2013

C. Le Roux

Capturing consumer engagement: duality, dimensionality and measurement

Article

Jan 2016
J Market Manag

This study advances the conceptualisation and operationalisation of consumer engagement in the context of online brand communities (OBCs). Past scholarship has only partially addressed the dimensionality of engagement and the different engagement foci, and these oversights have important theoretical and empirical consequences. This study contributes to the nascent stream of research that aims to theoretically refine and operationalise engagement by espousing the duality of engagement with two engagement foci (brand and community) and seven sub-dimensions of consumer engagement. Using qualitative data from consumers and experts, three survey data sets based on English and French samples, and two pools of mirrored items (one for each engagement focus), the study develops and validates a dual-focus 22-item scale of consumer engagement that can be used to operationalise engagement with various consumer engagement objects.