Virtual Reality: Changing the Way Marketers are Conducting Research

VIRTUAL REALITY CHANGING THE WAY MARKETERS ARE CONDUCTING RESEARCH Market research is moving away from studying observable shopper behavior to analyzing the reasons why customers make the decisions that they do. Virtual reality enables researchers to examine consumer behavior without wasting money in trial-and-error in physical stores or collecting opinions in isolation. Investment in market research INCREASE S10.7 BILLION 3.6% en 201 3.6% from 2012 spent on marketing/ advertising/ public opinion research services by for-profit research firms in the U.S. in 2013. 2012 2013 In 2014 Marketing budgets 10.2% 8.3% represent of company budget of company revenue Virtual Reality It is estimated that the Virtual Reality market will be worth $30 billion in revenue by 2020. Combined with Augmented Reality, it will be worth $150 billion. Companies usually pay $30,000 to more than $1 million for a virtual reality store simulation to use in market research. Examples: VISION CRITICAL: $4,500 - $300,000 for initial store setup $4,500 - $100,000 for study setup $3,000 - $30,000 for data analysis & reporting DECISION INSIGHTS: $7,500 - $20,000 for initial store setup $10,000 - $20,000/cell for study setup Growth of VR in Market Research BRIEF HISTORY Since at least the early 1990s, companies like Procter & Gamble, Intel Corp., ConAgra Foods, Frito-Lay and Goodyear Tire & Rubber have been experimenting with various methods of in-store simulation. In 1996 Professor Raymond R. Burke published findings which proved that virtual market research could "accurately predict the brand market share and consumer price sensitivity observed in the supermarket." Early VR technology includes 2007 Kimberly-Clark's Innovation Design Studio, which uses 3D store simulation technology as a marketing research and business development tool. A 2008 Shopper Marketing magazine survey found that 3.7% of companies use virtual testing to generate insights for in-store marketing. In 2008 Walmart's research department announced plans to make virtual-store simulation a key plank in its research practice. Other vendors followed suit. Major VR store simulation providers include Kimberly-Clark, Decision Insight, Vision Critical, InContext Solutions, Red Dot Square, and Fifth Dimension. Advancements in technology In the early days, virtual testing used video footage to mimic walking through the store (which required a powerful computer), while the actual data was collected via interview or paper-based surveys. This limited what could be studied. Today, virtual testing has achieved true interactivity. Participants are presented product options on a simulated, interactive shelf that mimics the same section in a real-life store. They can pick products up, turn them over, place them in the shopping cart, or return them to the shelf. Also, due to the advent of personal computers and the Internet, virtual environments are easier to create and can be deployed almost anywhere, at the participant's convenience. Importance of Virtual Reality Since shoppers make the majority of their decisions in the store, and these decisions depend on a variety of factors, it's important that market research simulate the store environment as accurately as possible. of US shoppers wait until they're in the store to decide what brand to buy 39.4% consumers make change their minds about brands in the store 10% 70% buy from categories they didn't intend to buy from 29% of brand decisions in-store leave a product they'd planned to buy on the shelf 20% A 2008 study Using VR for Market Research 11 001ה. Eye tracking software Unilever combined 3D computer simulations with eye-tracking technology to redesign Axe body wash bottle and shelf space. One retailer saw 3.5% increase in sales. 1100101 Virtual store Cadbury used Decision Insight's online virtual shopping platform to confirm in-store research, which proved that a vertical cough drop shelf set (brands and private-label arranged in vertical blocks) was much more effective than the existing checkerboard layout (private-label SKUS adjacent to branded SKUS). Sales increased. Virtual focus groups Vantedge Group uses iMeet to conduct virtual customer focus groups, which cost up to 50% less than traditional in-person focus groups. Overall Benefits 2$ %24 COST SAVINGS EFFICIENCY .................... • While the initial setup cost is high, virtual testing can cost less in the long run than a traditional market test because • Although initial setup can take a few weeks longer than traditional research methods, virtual tests are faster in the long term, especially in comparison with field tests. companies can test options in a virtual world before making a big investment in the physical world. ................... CONTROL THOROUGHNESS • Test multiple scenarios simultaneously, or easily alter test stimuli, which many consider a greater advantage than potential project-specific cost savings. • Virtual reality allows researchers to gather a large amount of data from participants, in-person and in large sample sizes. • Eliminate obstacles such as expenses, • All event-based behavioral data is collected during the exercise and in some cases subsequent survey questions can be linked to shopping behavior to further explore shopper attitudes and motivations. uncontrollable variables and retailer reticence. • Completely manipulate both the environment and respondents' interaction with it. • Free to conduct store tests in anonymity, outside of the store, and away from the eyes of competitors. Case Study Nestle used Decision Insight's virtual store to determine the proper prices and placement for 15 new SKUS of ice cream cups. Shoppers went through a virtual store environment and researchers collected the following data: Dedicated doors (except Skinny Cow) drive multiple cup purchasing and incremental variety seeking. More revenue results from Shoppers buy more cups in a transaction when priced at 10 for $10 than when the price is 99 cents per cup. grouping all of the cups behind dedicated doors (but Skinny Cow cups fared better when it remained with its brand family). The majority of Nestle retailers followed the recommendations from the test, and in those stores, sales of all cups increased by 53% and Skinny Cow sales more than doubled. Interpreting VR Data With eye-tracking software, a camera tracks each tester's eye movements, measuring how long and how often test shoppers looked at products. Researchers can then create what caught shoppers attention, in what order, and in what location. "heat map" which show Most virtual store research involves the capture of SKU- or category-level data: Product choice (add to cart) Viewing Store navigation Category dwell time time Decisions based on packaging, price, product assortment, shelf organization Depth of interaction (view or pick up) Some companies test the effectiveness of in-store marketing and merchandising concepts: whether advertisements or special displays increase purchases. A virtual shopping study can also be combined with a neurological study to better understand how shoppers subconsciously react to the aisle, signage or packages. N-Matrix 3D, developed by Neuro Focus, not only creates a virtual store simulation, but also captures consumers' responses at the subconscious level through EEG-based full-brain measurements. In virtual ethnography, shoppers in the study participate in online chats with trained moderators to understand more deeply why they made the shopping choices they did. Although virtual reality has yet to become part of mainstream market research, many large companies are turning to these simulations to gather valuable information about the path to purchase. Companies can then make informed decisions based on this data which can lead to tangible ROl and a stronger relationship with their retail partners. 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