A Study on Augmented Reality as a Marketing Tool

A study on Augmented Reality as a Marketing tool

By,

Mridul Dohutia

PGDM, First year

Sec- B, Roll No. 31

Unitedworld School of Business, Ahmedabad

2012-14

A Study on Augmented Reality as a Marketing Tool 2012

Introduction

Augmented reality is the latest form of Virtual reality. Virtual reality is the term, used to describe
a computer generated, 3D environment, which simulates physical presence in physical places in
real world and in imaginary worlds through sight, sounds and touch. Entering into a shop and got
to see a product in a computer screen with 3D system, installed with a webcam, through which
we can point to the product and it will move according our direction. What an unforgettable
experience! This type of new emerging technology has changed the world of marketing, the
scenario of advertising in the last three to four years, which is known as Augmented Reality
(AR).
Augmented Reality Experiential Marketing (AREM) is beneficial for companies and brands in
creating customer satisfaction. It also leads to increase in customer loyalty, their intention to
repetitive purchasing and positive word-of-mouth, which creates greater market share. As a
experiential marketing the use of AR is increasing simultaneously in the last few years. It is not
limited to being a promotional tool; it also became a tool for creating brand-customer
relationship. Many companies began to use AREM as their main tool for future in introducing
new products or services with creation of brand image.

The idea of virtual reality first came in the article of L. frank Brawn in 1901. After which in
1957–62, Morton Heilig, a cinematographer, creates and patents a simulator called Sensorama
with visuals, sounds, vibration and smell. In 1966 Ivan Southerland creates the window for
virtual worlds by inventing the Head mounted display. The creation of first commercial business
in virtual worlds was done by Jaron Lanier in 1989. In 1990 Tom Caudell coins the phrase
‘Augmented Reality’ while at Boeing helping workers assemble cables into aircraft.

The way in which AR has been used in marketing campaigns can be seen as a form of
experiential marketing because it focuses not only on a product/service, but also on an entire
experience created for the customers (Yuan and Wu, 2008; Schmitt, 1999). This is further
supported by Tony Effik (CSO at Publicis Modem) who argues that “AR has the potential to
provide consumers with an experience they want and they will tell their friends about”
(Benjamin, 2009, p.41).

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Here are some of the companies who are using Augmented Reality –

1. Ray-ban: - Although many items of apparel can be bought online, sunglasses are one of
those tricky products that you really need to try on to ensure you look more chic than
geek. Ray-Ban’s Virtual Mirror lets you virtually try on glasses. The software lets you
move your head around to see how the shades look from different angles. Depending on
the opacity of the glass, you can even see your eyes through some of the shades. Seeing
this app in action makes us think this could be where the real commercial future of AR
lies.
2. BMW: - BMW is also using the AR technology to marketwise their products. By
downloading AR software and with a print-out of the 3D design we can virtually drive
the BMW cars.
3. AMAZON.COM:- It's simple, using Amazon’s augmented reality and A9's "continuous
scan technology," the application allows users to buy, as well as get extra information on
products such as video games, books, toys, DVDs and CDs through simply using one's
Smartphone camera.
4. McDonalds: - McDonald's recently introduced a new dessert McFlurry in India, a global
icon for the brand. While the product launch is not the big news, the interesting thing
about McFlurry is the use of augmented reality (AR) for promoting the brand on digital
media.

With the launch of the first experiential marketing campaigns incorporating AR technology,
brands and agencies have been rushing to explore the possibilities of augmented reality in a bid
to catch the consumers’ attention (Clawson, 2009). Big international companies like Procter &
Gamble or Wal-Mart have been using this technology to promote their brands (Farhad, 2009).
And this trend is not expected to stop - according to ABI Research (2009), the total market for
AR marketing applications is projected to grow from $6 million in 2008 to more than $350
million in 2014.
This research paper aims to explore the influences of AREM in Marketing at creation of
customer satisfaction with customer experience. CISCO is the brand chosen for this research

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A St
Study on Augmented Reality as a Marketing Tool 2012

because it is one of the few compani that uses AR as an ongoing marketing process Based on
nies ess.
the aim of this research paper and on the literature review, three measures of the perc
rceived value
have been chosen - convenience, enjo
njoyment and brand attitude.

SWOT analysis of Augmented Reality
ted

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Literature review
Because of a scarcity of academic literature and research studies on AR experiential marketing,
this literature review will start by focusing on the little research and small number of papers
concerned with experiential marketing in general which build the rationale and the components
of this research study.
Economists posit that the contemporary world finds itself in the “experience economy” (Yuan
and Wu, 2008; Pine and Gilmore, 1998) where customers do not always focus on products but on
experiential consumption “where functional utility is either taken for granted or seen as
irrelevant”. At this stage, experiential marketing comes in, treating consumption as a holistic
experience and recognizing both the emotional and rational drivers of consumption (Schmitt,
1999). The importance of experiential marketing is recognized as a means of creating value for
the end consumer (Pine and Gilmore, 1998) which would be the future competitive edge for
companies (Prahalad and Ramaswamy, 2000) and will motivate customers to make faster and
more positive purchasing decisions (Williams, 2006).
However, although this new marketing orientation is widely agreed to represent the future of
marketing, (Williams, 2006; Schmitt, 1999), it is still not fully comprehended and, as such,
requires a more diverse range of research methods and research studies to better understand
consumers (Williams, 2000).
The creation of experiential value referring to customers’ perceptions of products/services
through direct use or indirect observation has been recently demonstrated by two quantitative
studies (Chou, 2009; Yuan and Wu, 2008) focused on American brands and their customers’
perceptions in the Taiwanese market. Furthermore, these studies have shown that the experiential
value created can induce customer satisfaction (Chou, 2009; Yuan and Wu, 2008).
However, more research is needed to replicate their findings on other cultures and to further
investigate the connections discovered, through qualitative studies. The relationship between
values and customer satisfaction is additionally supported by different research findings who
suggest that experiential marketing should deliver experiential value - emotional and functional
value, and positive customer satisfaction.

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Despite a clear widely agreement on the direct relation between value and customer satisfaction,
there is no consensus regarding the elements which create the customers’ perceived value, each
of the previously-mentioned studies being based on a different model of customer satisfaction
index.
Conversely, many scholars believe that customer satisfaction has a crucial role in the success of
any business and it is essential in increasing the overall profitability (Yuan and Wu, 2008;
Kotler, 1991). If the consumers are satisfied with a certain product, generally they “will buy the
product again, be inclined to promote the product to other people, ignore competing brands’
advertisements, and refrain from purchasing from competitors” (Yuan and Wu, 2008, p.2).
However, customer satisfaction should not be taken for granted but reinforced and reassured
continuously and a good way of doing this would be through valuable experiences provided by
experiential marketing.
Customer satisfaction is often seen from two different perspectives: transaction-specific and
cumulative aspects. If the transaction-specific refers to the perceived value customers obtain
after they finish one specific transaction (Yuan and Wu, 2008), the cumulative aspect comprises
the customers’ overall measurement of all their experiences with a company’s products at all
stages of the purchase process. Consequently, although the cumulative aspect of customer
satisfaction is considered a complete state only after purchase, a perceived value occurs at
various stages of the purchase process, including the pre-purchase stage.
For this research, AR experiential marketing will be considered to mainly affect the pre-purchase
Stage due to the fact that, by its current nature, AR has the most impact at the pre-purchase stage.
At this step, according to the buying decision-making process (Fill, 2009) the consumer is
evaluating their choices before taking the purchase decision (Fill, 2009) and AR has the power to
“put the product in the hand of the users” (Woodsa, 2009, p.37) giving them the opportunity to
test the product as they would already own it, enticing the prospect to commit more time or even
trigger a purchase (Owyang, 2010).
Therefore, this research study will focus on exploring the ways in which AR experiential
marketing determines a perceived experiential value during the pre-purchase stage of the buying
process, thus contributing to the development of customer satisfaction.

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The lack of any research studies on AR experiential marketing, the inadvertences, ambiguities
and the predisposition towards quantitative methods in the aforementioned experiential
marketing research related to customer satisfaction are only a few of the rationales behind this
research project. Moreover, controversies and the problem of limited knowledge arise with the
question of “what are the long-term effects of AR experiential marketing on our business?” even
for marketing practitioners.
If some of them see AR only as a promotional tool, not an enduring marketing opportunity
(Grimes, 2009 cited in Woodsb, 2009), the PR buzz being everything that some brands want
(Clawson, 2009), others believe that it contributes to the development of a positive customer-
brand relationship and influences purchasing decisions (Owyang, 2010; Murray, 2009 cited in
Clawson, 2009). Because, as previously-discussed, the AR market is expected to grow
exponentially in the next four years, and because “so far we have seen only 5 to 10 percent of
what AR can be used for”, companies need to know what directions they should follow in order
to ensure a positive outcome from their AR experiential marketing.

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Framework

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Implications:

According to the issues discussed in the Literature review the main objective of this study is to
look at the ways of AR experiential marketing in creation of customer satisfaction. The AR
experiential marketing is a tool used in pre-purchase stage. The use of this tool in an organization
leads to the creation of customer satisfaction along with brand attitude.

Augmented Reality is the latest and updated version of virtual reality. Second Life’s website is a
widely used virtual reality business community page. Increasingly Second Life (SL) is becoming
a place where businesses naturally want to extend their operations to, or entrepreneurs decide to
try out one of their latest ideas (Harris, 2007). According to the japaninc.com currently 80% of
the internet users are the members of SL’s virtual community. Therefore we can say that SL is
the one of the most important marketing tool.

Here are some overall benefits that an organization can achieve through Augmented Reality
Applications-

1. The novelty factor of such applications will obviously wear off as more and more are
created and used, but for the meantime, the onus is on brands to make the most of this
exciting technology and extend it from infancy. The possibilities of augmented reality are
only just being explored, and any new developments are likely to achieve further
exposure.
2. The concept of uploading your own media, such as the image in the above examples,
helps to create a highly personalized piece of media for the user. It relates specifically to
them, which is likely to be far more engaging than a standard video or image.
3. The novelty factor mentioned above will surely enhance users’ desire to share their
creation with their extended networks, and the fact that the content is personalized will
only add to this.

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4. It’s likely that the vast majority of users wouldn’t possess the ability or expertise to create
a complex video like the ones indicated in the examples above; augmented reality apps
allow users to create a quality piece of content that they wouldn’t otherwise be able to
create themselves.
5. As well as being high quality, the content created by augmented reality applications is
highly entertaining and in many cases fun. The element of surprise that is achieved when
sharing such content makes for very entertaining viewing by other users, stimulating
them to create their own version and share it once again, and completing the viral loop.

Cisco StyleMe™ is a proof-of-concept project created by the Cisco Internet Business Solutions
Group (IBSG), Cisco Global Marketing and Corporate Communications (GMCC), partners
AITec and CinStore, and Cisco customers. Cisco StyleMe is designed to offer shoppers a virtual
fashion mirror for trying on products using the latest augmented reality, mobile, and network
technologies. Shoppers can use gesture-based navigation to choose from the retailer’s complete
inventory, build outfits, and try on their selections virtually. They can also capture images to
share over social media and email, receive recommendations, and purchase products, with or
without assistance.

By applying this application to Cisco’s retail stores, they will be able perform the following
benefits. These benefits will lead Cisco in creation of customer satisfaction and brand attitude.

Customer Benefits:

1. The customers at Cisco, will be able to browse and select among the broad range of
products at the pre-purchase stage including the products that may be in out of stock.
They can choose among different colors eliminating their guesswork to select their
choices.
2. Inspiration, advice, and social recommendations are instantly available.
3. Customers can order selections in the store for home delivery.

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Retailer’s Benefits:

1. Retailers can increase basket size by offering an extended range of products and
accessories in one place, and by offering expert recommendations.
2. Expert and social recommendations can boost sales conversions. In addition, the abilities
to try on more styles, instantly buy online, and ship products to home increase shopper
convenience.
3. Retailers gain insight into shoppers’ choices, such as their “likes,” the products they try
on, and data from products purchased.

Conclusions:
This study is not without limitations. The researcher has collected data from some previous
research papers and articles. Basically this is a study based upon secondary data. This study does
not include whole things relates to the topic and experiences of the customer as it relates to their
satisfaction. Future research can replicate this study using an experimental methodology to
compare and contrast the findings explained therein. Despite the initial thoughts, the research
proved to be more complicated and time-consuming, raising different challenges for the
researcher. Although the subject was not difficult to choose because of researcher’s interest in
technology, especially in AR, finding the relevant literature and relating it to different marketing
theories was the most complicated stage, due to the lack of research in this area. Unforeseen
events can happen due to inexperience of the researcher. Researcher hopes that this study will
help the future researcher in doing research on this area.


References:
1. Bulearca, M., Tamarjan, D., Augmented Reality: A Sustainable Marketing Tool?.
Availble from: www.ebscohost.com [Accessed: 21 September 2012]
2. Benjamin, K., 2009. Augmented Reality – Battle of the Brands, Revolution Magazine.
December, 41-43.
3. Chou, H.J., 2009. The effect of experiential and relationship marketing on customer
value: A case study of international American casual dining chains in Taiwan, Social
Behaviour and Personality, 37(7), 993-1008. Available from: www.ebscohost.com
[Accessed: 24 September 2012].
4. CISCO StyleMe: An Immersive digital shopping platform, 2011,
https://docs.google.com/viewer?a=vq=cache:ZmOE01R8LL0J:www.cisco.com/web/le
arning/le21/le34/downloads/689/nrf/cisco_styleme_at_a_glance.pdf+hl=enpid=blsr
cid=ADGEESjB1rY40EZxAJDOwsNcUy_PVpoaDCXJy0k2hJ8JQBBK_JleVhKlsLbrK
sO9A9UZ1SlfQ_jC7n829872x9U83clsR3yG6jrLXggO7SUSkRRjdoowIxa9Lo1ZHXcb
CpAqt-LhgTEIsig=AHIEtbQsI9Old9Y8vh1FzWGMd1VdaE3SgQ. [Accessed: 26th
October, 2012]
5. Clawson, T., 2009. Augmented Reality – Don’t Believe The Hype, Revolution Magazine.
December, 44-46.
6. Farhad, M., 2009. Augmented Reality Swoops In, Fast Company, 140. Available from
Business Source Complete. Available from: www.ebscohost.com [Accessed: 23
September 2012].
7. Fill, C., 2009. Marketing Communications: Interactivity, Communities and Content. 5th
ed. Harlow: Prentice Hall.
8. Harris, P., 2007. Inside out: The reality of virtual Business. www.japaninc.com,
November/December 2007.
9. http://blogs.cisco.com/tag/augmented-reality/[Accessed: 28th October 2012]
10. http://www.youtube.com/watch?v=Ag7H4YScqZsfeature=player_embedded.
11. Kotler, P., Armstrong, G., 2000. Marketing: An introduction. New Jersey: Prentice Hall.
12. Owyang, J., 2010, Disruptive Technology – The New Reality Will be Augmented,
Customer Relationship Management Magazine, 32(2), 32-33. Available from:
www.ebscohost.com [Accessed: 24 September 2012].

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