Market research is going a step up. Instead of simply observing how consumers behave, companies want to know the reasons behind every decision. Virtual reality presents businesses with an opportunity to study their audience in greater depth than ever before in a cost-effective manner. To learn more, checkout this infographic created by Rutgers University’s Online Master in Business Administration program.
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Investment in Market Research and Virtual Reality
Businesses value market research as an integral part of their success strategy. Billions of dollars are spent every year on marketing, advertising, and public opinion research services. This represents about 10% of the average company budget. These numbers are projected to increase.
Virtual reality is estimated to generate $30 billion in revenues by 2020. Much of this is due to the increasing reliance of market research projects on this technology. A company may pay anywhere from $30,000 to over $1 million just to use VR in a store simulation. Researchers use it for initial store setup, study setup, reporting, and data analysis.
Growth of VR in Market Research
It began more than two decades ago in the early 1990s. The biggest companies of the time including Intel, P&G, ConAgra, Goodyear, and other tried to experiment with different types of store simulation. In 1996, Professor Raymond Burke provided proof that virtual market research provided an accurate prediction of brand market share as well as sensitivity to price by supermarket buyers.
Progress was slow yet steady. By 2007, Kimberly-Clack had developed a 3D store simulation system for business development and marketing research. The following year, Walmart announced plans to use similar technology as a key research tool. Others quickly followed their lead. There are now multiple players in the VR simulation sector including Vision Critical, Decision Insight, Red Dot Square, and Fifth Dimension.
Advancements in Technology
Early testing methodologies were rather crude and limited. They presented participants with videos to mimic store walkthroughs but the data was collected in separate interviews and surveys. Nowadays, VR makes the tests truly interactive as participants are presented with simulated shelves that contain the actual products they’ll see at the store.
Each of these products can be inspected, placed in a shopping cart, or returned to the shelf. Data about consumer behavior can thus be collected more accurately. The ubiquity of PC and Internet connectivity makes it easy to create and deploy these virtual environments wherever the participants might be.
Importance of Virtual Reality
It has been found that shoppers make approximately 70% of their brand decisions when they are already inside the store. Some wait until the last minute to decide. Others buy from categories they didn’t intend to purchase from. A lot of factors influence their choices. Accurate simulation is required to conduct reliable research. VR technologies can provide this accuracy.
Some utilize eye tracking software to determine what piques consumer interest. Unilever used this to redesign some of their product packaging and shelf space. Online virtual shopping platforms may be tapped to confirm in-store research. This is what Cadbury did to improve the effectiveness of their shelf layout. Companies can also conduct focus group discussions online to cut their costs in half while enhancing convenience for the participants.
The integration of VR into research projects yields excellent results. The initial setup cost may be high and preparations can take long but, once ready, the system can be rapidly deployed and used multiple times. These characteristics make it cheaper and faster in the long run. Testing in a virtual environment also minimizes risks as things can be perfected before making large investments in physical structures.
In a virtual world, multiple scenarios can be tested simultaneously. Stimuli can also be altered without difficulty. Typical obstacles can be eliminated. In fact, the entire environment can be changed in infinite ways. Companies get an unprecedented amount of control over testing. What’s more, all of these can be completed in secret so as not to alert competitors.
Interpreting VR Data
Simulations gather information on shopping behaviors like viewing time, store navigation, category dwell time, product choices, and depth of interaction. Variables like packaging, price, product assortment, and shelf organization can be tweaked to reveal decision-making patterns. Companies can figure out the best combination of these variables to increase sales.
Virtual reality has a long way to go before it can join the ranks of mainstream marketing tools but it is already inching its way closer. Some of the biggest companies in the world are already using it for data gathering, analysis, and product planning. The results have led to improved ROI and better cooperation with retail partners.