Consumers’ perception of AR technology as potential sales channel

This post aims to share the main insights derived from a research article recently published in the Journal of Consumer Behaviour with the title “Value-based adoption of augmented reality: A study on the influence of online purchase intention in retail”. The research explores the different value drivers that determine the consumers’ attitude to realize purchases through disruptive service technologies such as augmented reality smart glasses (ARSG). A structural equation model based on consumers’ value assessment is set up and estimated based on survey data from students’ experience with this technology at the Lab ESIC Tech.  

Since the discussion of the “metaverse” as the next promising computing platform and the Covid-19 pandemic with the demand for touchless interactions, digital technologies that use virtual interactions of consumers with the firm have caught increasing attention by Marketers. Marketing technologies such as Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality (MR) provide new opportunities for Marketing in creating new touchpoints or enhance consumer experience and are considered potential game changers. Augmented Reality (AR), with its potential of visualization, annotation and storytelling, has been suggested to overcome barriers of impersonal e-commerce and perceived risk of online purchase. First evidence of AR applications in retail suggest a 94% higher conversion rate and at the market level, the World Economic Forum predicts that AR will be the biggest boost to technology driven GDP. 

Whether firms should invest in a particular AR technology depends on their expectations of consumers to adopt it as well as on consumers’ evaluation of this technology which determines their willingness to pay for this service and consequently the possible return on the investment. 

Hence, in line with the trend of value-based pricing of digital products and services, we identify traditional and AR specific factors that determine the consumers’ choice to adopt AR glasses for purchase online.  

We find that AR-specific value dimensions have a significant impact on consumers’ intention of using this new technology for purchase. The main findings are summarized in the following: 

• The perceived value of AR smart glasses has a positive impact on consumers’ purchase intention through this technology.  

• Providing an immersive experience as well as the social norm on the expected adoption  have a strong impact on consumers’ assessment of the technology and their intention to use it to realize purchases online 

• The technical complexity, determined by a combination of hardware and software components, has an ambiguous effect. On the one hand, in terms of technical disruption, complexity has an attractive appeal. On the other hand, the associated difficulties in the adoption reduce consumers’ net benefit. These opposite effects matter for consumers’ value assessment but turn out to be roughly equilibrated in the considered ARSG solutions and hence the overall effect on purchase intention cancels out.  

• In the light of the strong influence of the AR-dimensions on consumers’ value based purchase intention, the classical determinants of a cost benefit analysis (such as usefulness and difficulty) become insignificant.  

• Consumers who are more technical innovative are more likely to adopt smart AR glasses for purchase, independent of the considered value drivers.  

With purchase intention being an antecedent of actual purchase, translating the identified value drivers into manageable digital objectives, allows to leverage AR values for business growth. Concretely, regular experiments in the virtual store environment focused on the evaluation of the identified value dimensions are recommended. Additionally, with social pressure being one of the main drivers, tracking the social opinion on the concrete AR technology is recommended. Furthermore, the satisfaction beyond the basic e-commerce, especially the immersive experience, should be highlighted in the value proposition of the firm. 

Last but not least, the relative importance of the identified intangible dimensions as value drivers for purchase through ARSG, allow to derive implications for pricing of this type of digital retail services and should be aligned with the external value communication of the firm. 

We conclude that consumers’ perceived value of AR technology is crucial for consumers’ purchase intention and hence, additional to the evaluation of technology adoption and readiness, a value approach is recommended to evaluate the implementation of this technology. In particular, for the digital marketing strategy using ARSG, the design of an immersive experience and the social opinion is expected to have a direct impact on the firm’s business results and are recommended to be leveraged together with the creation of an appealing user friendly technological interface. 

All authors are part of the research group “Companies, Institutions and Consumers in the environment of Digital Marketing and Technology” (CICDMT-ESIC-1-M-2020) and Fellows of the HEA. Anett Erdmann holds a PhD in Economics and a Master in Economic Analysis from Universidad Carlos III de Madrid and her research interest is the strategic firm behaviour within the digital economy, especially pricing and marketing (inter-)actions. José Manuel Mas holds a PhD in Media Research from Universidad Carlos III de Madrid and a Master in Marketing Management from Universidad Rey Juan Carlos of Madrid and is specialized in the field of digital marketing and social networks. Ramón Arilla holds a PhD in “Education, Communication and Society” from Universidad de Alcalá and a Master in Commercial Management from ESIC and is specialized in the digital transformation of business and education.