Key points for using VR/AR to influence consumer psychology and brand image:

• While both augmented and virtual reality hold advantages over traditional media, each influences consumer psychology differently.

• Augmented reality appears to be better suited than Virtual reality for driving purchase intentions.

• Virtual reality holds the advantage of improving brand image since it's superior at generating fluent mental imagery.

Virtual and augmented reality are technologies most often associated with gaming. But more recently, they've been used in the realm of marketing to transform the consumer experience in new and profound ways. From IKEA using AR to transpose furniture into your actual living room to organizing branded experiences in the metaverse using VR, the potential for these technologies is significant. 

Amidst all of the excitement and hype, there isn't a clear understanding of how these technologies impact consumer behavior. How should brands harness augmented and virtual reality? How does each technology shape the experience, and can the two be used in tandem? Research led by Tim Hilken of Maastricht University in The Netherlands aimed to find out. 

Methodology: The Influence of Augmented Reality and Virtual Reality on Consumer Decision-Making

Study 1 300 participants were recruited online to view and interact with a website of a new cafe. They were divided into three groups. The VR group viewed the virtual tour of the cafe, while the AR group viewed it through holograms. The control group viewed the website as any ordinary consumer would. All groups were able to interact with these products via a mouse and touchpad. Participants were asked about their purchase intentions and the development of their mental imagery during the experience.

The results suggest that both AR and VR increased customers' purchase intentions compared to the control group. Consistent with the researchers' hypothesis, when compared head to head, AR was more effective in stimulating purchases than VR by generating more fluent mental imagery of the products. 

Study 2 360 participants were recruited to participate in this study, which employed a similar setup as the first: an AR group, a VR group, and a control group. However, this time, participants weren't asked about their purchase intentions but rather about their brand attitudes. Like study 1, participants were also probed about their mental imagery. 

The results found that both VR and AR were more effective than the conventional setup in creating positive brand attitudes. Interestingly, when compared head to head, VR was, in fact, more effective than AR. This was mediated because it created more fluent mental imagery about the overall retailscape, which is crucial for building brand representations. 

Study 3 In the final study, the researchers sought out whether there may be an optimal combination for AR and VR during the same consumer experience. 353 participants were enlisted in the experiment. There were two phases: one in which participants browsed the items on the menu either with AR or VR, and then one in which they explored the cafe - again, either with a VR headset or with AR technology. 

The results suggest an optimal sequence. Consumers using AR to decide what to buy demonstrated an increased purchase intention, while utilizing VR to explore the retail space positively impacted the brand image.

Results and Implications of Virtual and Augmented Reality on Experiential Marketing

While there's much excitement about the application of VR and AR to experiential marketing, few studies to date explored the unique benefits of each and how they may be optimally applied in tandem during the same consumer experience. Both appear to drive consumer psychology in different ways. 

Overall, the results of this investigation suggest a very nuanced account of these technologies: While AR is best suited for driving purchase intentions during the browsing experience, AR is much better at positively influencing the brand image. The results also suggest that utilizing both technologies in a specific sequence (AR first, followed by VR) can boost both marketing objectives, providing the best of both worlds. 

Photo by Jonathan Borba on Unsplash

References for How Augmented and Virtual Reality Impact Consumer Behavior

Hilken, T., Chylinski, M., Keeling, D. I., Heller, J., Ruyter, K., & Mahr, D. (2021). How to strategically choose or combine augmented and virtual reality for improved online experiential retailing. Psychology & Marketing, 1– 13. https://doi.org/10.1002/mar.21600