UNIVERSITY OF AMSTERDAM
Executive Program in Management Studies
MSc. in Digital Business
August 31
st, 2018
Augmented reality effects on purchase intention and
customer experience
Advisor: J. Y. Guyt
Student: Marko Ivankovic
Student number:11710276
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Table of content
1. Abstract………2
2. Introduction……….……….2
3. Literature review………..………7
3.1. Customer purchase intention (DV)………...………...9
3.2. Customer experience (mediator)………...……….11
3.3. Augmented reality technology (IV)………...13
4. Research design……….15
4.1. Overall design………15
4.2. Data and method.………...16
4.3. Results…..………...…...19
5. Discussions…….………...23
6. Conclusion….………24
References….………..……….26
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1. Abstract
The world around us is changing rapidly. Available internet access, mobile technologies and social media channels are affecting all aspects of our lives. Everybody lives faster and we all want to access as many information as possible in the shortest period of time. This change of pace a customer expectation is affecting industries and companies worldwide. Companies are trying to find ways how to serve their customers and offer them what they want, when they want it. Therefore, in this paper I will try to explain how retail industry can use technologies to serve customer needs and elevate consumer experience. Furthermore, I will guide you through the customer research which I have done and provide recommendations how Augmented Reality can improve customer experience and impact customer purchase intention.
2. Introduction
Digital transformation has changed and impacted various aspects of people’s lives. From the way we communicate with friends and how we plan vacations, to how we select restaurants and how we shop. Access to information is much easier with the development of the world wide web and smart devices like smartphones, tablets and laptops. The advent of the online channel and new channels such as mobile channels and social media has changed our lives, industries, retail business models, access to information and shopping behavior (Verhoef, Kannan & Inman 2015). Development of mobile technology has affected consumer behavior and their
expectations. As John Donahoe, CEO of eBay, said: “Mobile is bringing the internet to you 24/7,
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now: They are standing in a line at Starbucks, let’s say, and they start browsing on eBay. They
see something they want, and they buy it right there” (Ignatius 2011). Following the same trend,
advent of the online channel and digital transformation, changed the retailing in the last 20years. According to Verhoef, Kannan & Inman (2015), the online channel has become dominant and can be considered a disruptive development in some retail markets. An example is the travel industry with numerous new online players, such as Booking.com and TripAdvisor, inducing a shake-out among traditional travel intermediaries. Many retailers’ business models have been fundamentally affected as the retail mix changed and their customers are having different shopping behavior. Brynjolfsson, Hu, and Rahman (2013) said: “In the past, brick-and-mortar
retail stores were unique in allowing consumers to touch and feel merchandise and provide
instant gratification; Internet retailers, meanwhile, tried to woo shoppers with wide product
selection, low prices and content such as product reviews and ratings. As the retailing industry evolves toward a seamless “omni-channel retailing” experience, the distinctions between
physical and online will vanish, turning the world into a showroom without walls”. There are
clear differences between what is offered to customers by offline retailers and internet retailers. Brick-and-mortar stores have focused on touch and feel of the products and physical experience, while internet retailers have focused on offerings, pricing, and customer feedback. Nowadays, new technologies are blurring the boundaries between traditional retailing and internet retailing, enabling retailers to interact with customers through multiple touch points and expose them to rich blend of offline sensory and online content. Retailers are already taking advantage of opportunities created by new technologies and exponential growth in smartphone users. In the USA today, more than 50% of cell phone users have smartphones, and 80% of shoppers used a mobile phone inside of a physical store to either look up product reviews, compare prices or find
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alternative store locations (eCommerce stats 2018). Retailers have also started to use
opportunities created by digital expansion. Walgreens, US drugstore giant, for example, has teamed up with Foursquare, search-and-discovery service mobile app, to offer customer electric coupons on their phones the moment they enter a Walgreen store. RedLaser, an eBay company, allows customers to scan UPC codes to determine whether specific products are available nearby and at what price. Focus of this paper will be one relatively new technology – augmented reality, abbreviated as AR. Augmented reality is the integration of digital information with the user's environment in real time. AR system creates a composite view for the user that is the
combination of the real scene viewed by the user and a virtual scene generated by the computer that augments the scene with additional information (Modi 2016). AR is becoming relevant to the retailers due to possibility to merge touch-and-feel information from offline environment with online content in the digital environment. For example, Amazon is using augmented reality in app called Amazon Flow which allows customers to point a smartphone camera at a certain product (DVD or book) to see price and customer feedback and ratings. Lacoste, French clothing company, created the LCST Lacoste AR mobile app that customers could use to virtually try on shoes. The app also created AR experiences with window displays, in-store signage, and
promotional postcards. Apparel brands have also used AR mirrors to let customers try products on more conveniently. Timberland, American manufacturer and retailer of outdoors wear, had a virtual fitting room created with Kinect technology, motion sensing devices created by Microsoft that provide full-body 3D motion capture. Then, they turned fitting room into one of the main window displays as a strategic move to drive more foot traffic.
Besides changing the retail landscape, digital transformation has affected customers behavior, in turn, pushing for the further changes in retailing. The connected mobile customer
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can access information and buy anything, anywhere, anytime. According toPiotrowicz and Cuthbertson (2014),the increasing role of in-store technologies creates an additional dimension. This includes technologies for customers such as interactive screens, augmented reality, and “magic mirrors,” as well as technologies for the staff, such as tablets. All such technologies are expected to interact fully with the customer, increasing customer satisfaction and improving customer experience. Times of technology sitting uselessly as “an isolated screen in a dark corner,” or in a location determined by availability of an electric plug on the wall are long behind us. Widely available technologies need to be used to increase customer satisfaction as only a satisfied customer will become a loyal customer to the brand. However, retailers are faced with one more challenge—the physical store layout is often optimized to such an extent that the addition of new in-store technologies would require fundamental store redesign. Moreover, layout is often focused on the product, product visibility and flow, making the customer experience secondary. So, even though stores have focused on products visibility and
merchandising of the products, customers are looking for additional engagement and information to find a reason to interact with the products which often isn’t there. The summation of these reasons brings the future role of the physical store in question, leaving it up to the product category and customer segment. However, the traditional store could change its role by becoming a “hub,” the focal point which would integrate all sales channels with customer experience in focal point. According to World Economic Forum (Shaping the Future of Retail for Consumer industries 2017) the key drivers of winning the customers in retail industry over the next decade, both online and offline, will be centered on building a deep understanding of and connection to the empowered consumer, introducing innovative and disruptive technologies,
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embracing transformative business models in offline and online space, and establishing key capabilities.
The current study aims to figure out whether it is possible to combine experiences of benefits of physical store, such as product touch & feel, with innovative technologies which can provide additional product information available in online environment such as product ratings and customer reviews. According to Piotrowicz and Cuthbertson (2014), customers are searching for consistent service and seamless experience, regardless of the channel they use; looking for seamless transition between channels—traditional store, online, and mobile—depending on their personal preferences, current product interest, or type of the product. However, retailers are often unable to achieve customer expectations. Therefore, purpose of this study is to research impact of new customer touchpoint, provided by AR, to analyze customer satisfaction and potential impact on customer behavior and product purchase. Study aims to find out if AR technology can positively affect customer experience and allow retailers to bring content such us customer ratings and product reviews, which have been available so far only in online, to the offline environment. This will be further analyzed by trying to provide answer to the research question: How Does Customer Experience mediate the relationship between Augmented Reality and Customer purchase intention?
Physical retail environment is lagging behind and retail brands are still primarily relying on look-and-feel of the store and store staff to drive the experience. Purpose of this paper is to examine if new technologies can positively impact customer purchase intentions showing that the investment in implementation of new technologies will offer differentiating experiences to their customers leading to improved business results. Lemon and Verhoef (2016) address the importance of experiences and the opportunities for firms to benefit from creating strong and
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enduring customer experiences. From academic perspective, currently there are no many articles researching benefits which new technologies can bring to the retail industry. Digital
transformation era is happening so fast that there was not enough time to analyze, research and provide recommendations to different stakeholders. Therefore, I am going to use this opportunity to make research about AR and I will try to provide useful insights and recommendations about effect of AR technology on customers purchase intentions mediated by customer experience.
3. Literature review
In attempt to answer the research question, several factors need to be mentioned.
Augmented reality is relatively new technology which still hasn't become mainstream in practice, nor it has been heavily researched in academic literature. Also, putting it into practical use comes with challenges since AR technology still does not work perfectly in uncontrolled environment. This is a particular issue in retail environment if aimed towards 3D products as different
lightings can hinder triggering of content of AR technology. More work needs to be done on technology development to enable wider usage.
Introduction of new technology in a different setting has been discussed in literature such as Piotrowicz and Cuthbertson (2014). According to them, consumers expect that technology should solve problems, not create additional challenges; it should not be implemented just “for the sake of being,” but for a defined reason. It was also analyzed that technology can be a benefit to certain consumers but not to all of them. In-store technology should be “invisible” to
customers and well tested before implementation to minimize errors, as these can quickly reject customers by negatively impacting consumer experience. Increased implementation of new technologies such as smart mobile devices and the growing need to serve customers with in-store
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technological solutions create both new opportunities and challenges for retailers. In its current state, technology should complement but not replace the store team. Store employees should be involved as technology users, and solutions such as tablets can support them. According to Blazquez (2014), technology is part of the in-store experience and it must be used to increase customer experience and meet customer expectations. In addition, technology can create an attractive environment, making the shopping experience engaging and memorable. Technologies which created such as store-ordering hubs, offering iPads, and display screens create improved layout and make products more interesting to buy in-store. According to Drapers (2014) technology is the key to creating an integrated experience between channels. Technology redefines the store experience and store layouts through click-and-collect services or more advanced technologies such as interactive fitting rooms connected with social networks. However, it is important to note that retailers must focus on the technology that is relevant for consumers and really provides additional benefits to the consumers.
AR in academic literature has been used only as a technology of the future, and authors have been mostly focused on explaining the technology and what are the benefits and
characteristics (Carmigniani, Furht, Anisetti, Ceravolo, Damiani, & Ivkovic. 2011). There are a few articles about effects of augmented reality on customer experience but more from service point of view. Zhu, Owen, Lee & Li (2006) have provided insights in the PromoPad, system which utilities augmented reality technologies to offer more product information, but without research related to effects on customers experience and/or consideration set in actual retail environment. AR technology can provide additional product information, so the purpose of this paper is to investigate how AR can affect customer experience, consideration set and purchase intention.
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3.1.
Customer purchase intention
Due to development of the mobile channel, tablets, social media, and the integration of these new channels and devices in online and offline retailing, the landscape has continued to evolve, leading to profound changes in customer behavior (Verhoef, Kannan & Inman 2015). A growing number of customers use multiple channels during their shopping journey. These kinds of shoppers are known as omni shoppers, and they expect a seamless experience across channels. For example, an omni shopper might research the characteristics of a product using a mobile app, compare prices on several websites from their laptop, and, finally, buy the product at a physical store. This consumer 3.0 uses new technology to search for information, offer opinions, explain experiences, make purchases, and talk to the brand (Juaneda Ayensa, Mosquera, Sierra Murillo 2016). All those customers are using benefits of new technologies to get more product
information, which increases both customer experience and improves customer journeys before making a purchase. Expecation of having same experince across channels forces companies, in this case retailers, to offer same level of service across different channels.
Implementation of technologies in retail environment is a must for engaging new customers and keeping loyal ones. Every day, people form impressions of brands from various touch points such as advertisements, news reports, discussions with family and friends, and product experiences, both online and offline. If all these experiences are positive, customer is satisfied and loyal to the brand. Same is with retail environment. When customer enters the stores, it is crucial to make them feel positive in the store to engage them and increase potential of purchase action. That can be done by various aspects such us store environment, store stuff, merchandising etc. According to Sherman, Mathur and Smith (1997), the environment in the store and the emotional state of consumers in the store is important factor of purchase intention.
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Their study confirms that retailers should pay attention to consumer’s in-store emotional state (positive or negative), because the emotions of consumers have significant impact on buyer behavior. Also, their research found that pleasure had a positive influence on money spent and positive emotions about the store, and excitement had a positive impact on money spent in the store, time spent in the store, and the number of items purchased in the store. Rust and Zahorik (1993) note that there might be some doubt among managers about the profitability of improved service, i.e., increased service quality. The dominating perspective within service quality
research has been to assume that service quality has a positive correlation with satisfaction, which in turn will lead to increased purchase loyalty. As we mentioned earlier in the text (Piotrowicz and Cuthbertson 2014), today’s consumers are expecting increased level of service and technology implementation in the retail environment. According to Storbacka, Strandvik and Gronroos (1994) there is a link between service quality and customer satisfaction. In some cases, paradox is visible since service quality can be judged low, but the customer is satisfied. This might be the case when the service fits the customer’s budget or is priced according to the low quality.
Therefore, aim of the research is to analyze if we can positively influence customer experience and consideration set by providing high quality service through AR technology in retail store. AR can provide smooth transition between online and offline channel, so customers will be able to interact with products in physical store but also get online product information like product ratings and reviews. Through data collection we will be able to measure the actual effects.
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3.2.
Customer experience
Creating a strong customer experience is now a leading management objective. According to a recent study by Accenture in cooperation with Forrester (2015), advancing customer experience received the most number one rankings when executives were asked about their top priorities for the next year. Multiple firms, such as Amazon and Google, now have chief customer experience officers, or similar customer experience roles responsible for creating and managing the customer experience. Pine and Gilmore (1998) specifically address the importance of experiences and the opportunities for firms to benefit from creating strong and enduring customer experiences. Homburg, Jozic, and Kuehnl (2017) view customer experience as one of its most important research challenges for the future, mostly because of the huge amount of existing and new touch points and that companies believe that creating strong, positive
experiences within the customer journey will result in improvements in revenue and company performance (i.e., higher conversion rates) and through improved customer loyalty and word of mouth.
According to Lemon and Verhoef (2015) customer experience can be conceptualized in three overall stages: pre-purchase, purchase, and post-purchase. Much of the current work in customer experience examines the entire, holistic customer journey. However, these three stages make the process slightly more manageable. Additionally, Lemon and Verhoef identified four categories of customer experience touch points: brand-owned, partner-owned, customer-owned, and social/external/independent. The customer might interact with each of these touch point categories in each stage of the experience. Depending on the product/service or the customer’s journey, the strength or importance of each touch point category may differ in each stage. When the most important attributes of customers touch points are identified, firms then need to
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determine how they will be influenced. According to Verhoef et al. (2009): “Technology-based
service delivery systems are becoming an integral part of shopping, and hence are critical to
examine in terms of their impact on customer experience. The manifestation of such
technology-mediated interactions in retailing is demonstrated by the emergence of an entirely new
technology enabled shopping mode (namely, online retailing) as well as by the introduction of
various technology-based systems within the traditional brick-and-mortar shopping environment
(e.g., self-service check-out counters)”. Lemon and Verhoef (20015) are also mentioning
external environments which can both negatively (e.g., poor weather decreasing experience of an outdoor sporting event) and positively (e.g., drinking a beer when it is very hot outside) influence customer experience. Firms such as IBM and Microsoft are starting to capitalize on this macro aspect of the customer experience, as evidenced by IBM’s acquisition of the Weather Company (www.weather.com) and its integration into IBM’s customer experience management platform, as well as Microsoft’s partnership with Accuweather. Those are the examples how new
technologies can influence customer satisfaction
Also, there is the latest example from Disney company- introduction of Magic bands, wrist bands given to customers together with entrance tickets when entering Disney’s amusement parks. Disney’s relatively closed service ecosystem has enabled the firm to embrace new
technology in innovative ways to reengineer the customer experience. By encouraging and enabling customers to preplan their experience, Disney is strengthening the touch points in the pre-purchase stage of the experience and reducing uncertainty and frustration during the purchase stage—the customer’s visit to the park. The Magic Band technology and its surrounding and supporting information systems enable Disney to deliver a seamless,
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anticipate its customers’ needs. Post-purchase and post-consumption, Disney’s approach may have interesting and potentially unintended consequences. As one of Disney’s Magic Band YouTube videos suggests, customers may expect all service providers to be as seamless as Disney and may wonder why their Magic Band does not work everywhere.
One of the goals of this thesis is to see how AR can affect pre-purchase and/or purchase stages and through brand-owned touchpoints see the effects on customers experience. Brand-owned touchpoints will be provided through augmented reality technology to deliver online and offline content at the same time to the customer, creating a new touchpoint where the brand and customer connect in order to elevate customer experience.
3.3.
Augmented reality technology
AR term was created back in 1990, and one of the first commercial uses were in television and in military. With the raise of world wide web and smartphones, AR revolved its second wave and nowadays is technology which is mostly related to interactive concept. 3D models are directly projected onto physical things or fused together in real-time,
various augmented reality apps impact our habits, social life and entertainment industry. AR technology adds digital elements to a live view often by using camera on a smartphone or tablet. AR apps typically connect digital animation to a special ‘marker’, or with the help of GPS in phones pinpoint the location. Augmentation is happening in real time and within context of the environment. Examples of augmented reality experiences include Snapchat lenses and the game Pokemon Go. These augmentations can provide knowledge and understanding of what is
happening around but also enable receiving of various additional information through augmented reality device (Yuen, Yaoyuneyong & Johnson. 2011). AR allows digital content to be
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seamlessly overlaid and mixed into our perceptions of the real world. The most common usage is by mobile, tablet or AV/VR glasses. In addition to the 2D and 3D objects, digital assets such as audio and video files, textual information, and even olfactory or tactile information can be incorporated into users’ perceptions of the real world. From social media filters, to surgical procedures, AR is rapidly growing in popularity because it brings elements of the virtual world, into our real world, thus enhancing the things we see, hear, and feel. When compared to other reality technologies, augmented reality lies in the middle of the mixed reality spectrum; between the real world and the virtual world.
Several categories of augmented reality technology exist, each with varying differences in their objectives and applicational use cases: Marker based Augmented reality, Marker less Augmented reality, Projection based Augmented reality and Superimposition based Augmented reality (source RealityTechnologies.com). For my work, I used Superimposition Based
Augmented reality type. Superimposition based AR partially or fully replaces the original view of the object, which was in my case Nike performance shoes, with newly augmented view of the same object. In my project, customers were scan the shoe and over the shoe they saw augmented view which consisted tech sheets, product information and customer reviews. Strong example of this AR type is Ikea AR catalogue users can place virtual furniture wherever they want with the help of AR technology. Ikea is not an only example of AR usage, since some other companies have also moved closer to the customers and they are offering completely new customer experiences. Most of these companies are digitally driven, such as Facebook, Amazon, eBay, Alibaba and have millions of customers.
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4. Research design
4.1.
Overall design
The actual design of this study can be captured as following:
Customer purchase intention is the dependent variable which can be positively or negatively influenced by introduction of AR technology in retail environment. Customer experience is the mediator which can strengthen (or weaken) the relationship between new technology as AR, and customer purchase intention.
H1: Introduction of Augmented reality to the consumers to offer additional product information,
will positively affect customer purchase intention. By introducing AR technology and offering it
to the customers to get more product information and product specification we are going to analyze if AR will positively influence customer intention to buy certain Nike products which will be used in the survey. Since sport leisure consumers (name of sporting goods industry consumers) are very open to introduction of new technologies and omnichannel experience (Deloitte 2015) it will be interesting to see if that will be proven in this research.
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H2: Augmented reality introduction will positively affect customer purchase intention through
increased level of Customer experience. Since customers are exposed to increasing number of
touchpoints in which they communicate with the brand, in this research I will analyze if AR can positively affect Customer experience. Impact of AR on Customer experience will positively affect customer purchase intention through ranking shoes higher on the scale of how likely they would like to buy a product.
4.2.
Data and method
As already acknowledged in the introduction section, the purpose of this paper is to examine the research question: how does customer experience mediate the relationship between augmented reality and customer purchase intention through impact on consideration set?
Customer behavior, purchase intention, customer experience and usage of IT technologies in retail environment – mostly AR, have been reviewed in depth using various sources, including academic literature, recent online publications, journals and conducted researches on the latest industry dynamics from renowned organizations.
Approach to estimate and measure direct, indirect, and total effects in statistical mediation analysis with a multicategorical independent variable was used from analysis from Hayes & Preacher (2013). The simple mediation model, used in this paper, is diagrammed above. The model reproduces effect in which AR (IV) affects customer purchase intention (DV)
indirectly through customer experience (mediator). According to the model, AR can affect purchase intention in the direct effect without influence of customer experience on purchase intention. In my paper, focus is on indirect effect where IV is assumed to affect M, and this
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effect then spreads to Y. Since my model contains multicategorical IV, my research was done based on Hayes & Preacher (2013) analysis and recommendations of the concepts of relative indirect, direct, and total effect. Since Y (DV) occurred for four times, due to 4 different shoes in my research, analysis was done separately for every shoe, one after another. Results were
conducted and analyzed for purpose of answering research question and confirming the hypothesis.
The data collection used to test hypotheses was of quantitative nature. The data was collected through the conducting a survey among the customers divided in three customer groups. The purpose of the survey was to collect the data on consumer purchase preferences, compare it between the customer groups, analyze results and write conclusions. According to the time of span involved, survey was done in period cross-sectional, recording responses in a single period from July 25th – August 15th, 2018. Taking into consideration the hypothesis formulated based on the chosen research in the previous chapter, the results of the conducted survey will be presented accordingly. In order to answer the research question, survey was filled in by all together 120 participants divided in three groups. Every consumer group consisted of 40
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Table 1. Participants demographic information
Participants were split in three groups as following.
Customer group 1 – received survey in which they provided answers to above explained questions without receiving any additional piece of information except seeing the shoes.
Customer group 2 – received additional product information on iPad. Participants in this survey had possibility to check product reviews, product ratings, and other available information from web pages Nike.com and Sneakernews.com. iPad provided them new source of product
information available online.
Customer group 3 – received product information through AR technology. Customers used iPad and they were able to scan all products and through AR technology, they got additional product information. AR provided them additional product information available in online environment such as product ratings and reviews.
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The survey for consumer group 1 was distributed via WhatsApp and Social Media to a random group of people. The survey for group 2 and group 3 was filled via link which I provided to the participants from my iPad after the experiment. All consumer groups received the same survey with certain differences to be able to get results. On top of the pictures, consumer group 2 was provided with additional product information available on nike.com to get more product
information. Consumer group 3 was offered an iPad where consumers scanned the shoe and AR content about the shoe popped up on their screen.
Nike shoes which were include in the survey were: 1. Ultrafast Flyknit Trainer
2. Nike React Trainer 3. Nike Lunar Racer 4. Nike Air Alpha
4.3. Results
In the paper we analyze impact of technology on customer intention to buy the Nike products. Also, we focus here on the customer experience (as a mediator) which is very important aspect of research in academic and business literature. Lemon and Verhoef (2015)
specifically address the importance of experiences and the opportunities for firms to benefit from creating strong and enduring customer experiences.
One hundred twenty participants were included in this experiment. Participants in consumer group 1 did not receive any product information (n = 40) about the shoes and they
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filled in the survey after they looked at the products. This group was used as a control group. Participants in consumer group 2 (n = 40), received additional product information available on online web portals through iPad and they filled in the survey after they got additional piece of information. This group was named the information group. Participants assigned to consumer group 3 (n = 40), called AR group, filled in the survey after they were exposed to AR technology through which they received additional product information instantly by scanning the shoes via iPad. All participants in the survey (n = 120) filled in the same questionnaire. After collecting the data, their willingness to buy four Nike shoes was assessed (with higher scores reflecting more positive attitude in purchase intention).
Of interest in this section are the indirect effects of three customer groups (X) quantified as the product of a and b, and effects of the direct effect, quantified as c’ variable. The direct
effect of X quantifies how much different customer groups effect purchase intention. The indirect
effect, a*b, measures impact of customer experience on relationship of X (IV) on Y (DV). Since
in this paper, X is multicategorical, there is no single a or c’ to measure the effect of X on mediator (M) or Y. Therefore, I needed to run the analysis PROCESS macro in SPSS by selecting multicategorical option and using Model 4. Since my research included four different Y’s (for four Nike shoes) I run the analysis for four times, once for every shoe. Mediation analysis of four Nike performance shoes find in Table 2.
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Table 2. Mediation analysis with a multicategorical IV
Outcome Ultra Fast Flyknit
Direct Effect of X on Y** Indirect Effect of X on Y** Total Effect of X on Y1**
C'-path a*b C' + a*b
Constant 2.7750 0 2.7750 Information Group (G2) 1.7088 0.0162 1.7250 AR Group (G3) 2.8932 0.0527 2.9459 Outcome Nike React Tr Direct Effect of X on Y** Indirect Effect of X on Y** Total Effect of X on Y**
C'-path a*b C' + a*b
Constant 3.4750 0 3.4750 Information Group (G2) 0.5704 0.0296 0.6000 AR Group (G3) 1.9612 0.0521 2.0134 Outcome Nike Lunar Racer
Direct Effect of X on Y** Indirect Effect of X on Y** Total Effect of X on Y**
C'-path a*b C' + a*b
Constant 4.8750 0 4.8750 Information Group (G2) -0.2643 0.0143 -0.2500 AR Group (CG3) 0.9855 0.0465 1.0320 Outcome Nike Air Alpha
Direct Effect of X on Y** Indirect Effect of X on Y** Total Effect of X on Y**
C'-path a*b C' + a*b
Constant 3.1000 0 3.1000 Information Group (G2) 0.7872 0.0128 0.8000 AR Group (G3) 2.2747 0.0207 2.2953 *=p<0.05 **=p<0.01
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The total effect of customer groups (X) on customer purchase intention (Y) is the sum of total X effects, both direct and indirect on Y, which is visible from simple formula c = c’ + a*b. The indirect effect acts for differences of control group between two other analyzed groups on Y that results effects from X’s influence on mediator (CE) which affects Y. From data we can see that effect is positive in three out of four shoes, only in example of Lunar Racer information group had negative result in comparison with control group but again positive in relation with AR group. Thus, Ultra Fast Flyknit shoe was rated as 1.725 units more likely to buy in
information group versus control group, what shows us that product information positively affected customer purchase intention. Even stronger connection is visible in AR group as a result of 2.9459 units more likely to buy the shoe than in control group (on a 7-point scale) and 1.22 units more than information group. Thus, effect of AR technology is visible between both groups, control group and information group. Comparative to the control group, information group had higher purchase intention toward the shoe a*b = 0.0162 units more likely to buy the shoe because of positive effect of customer experience on a purchase intention. Similarly, AR group had higher purchase intention that were a*b = 0.0527 units more likely to buy the shoe as a result of positive effect of customer experience on a purchase intention. Nike Air Alpha was rated 0.8 units more likely to buy in information group versus control and 2.2953 units more in AR group than in control group. In AR group there is effect of 1.1453 units more than in information group. The same effect is noticeable in Nike React shoe and effect are showing similar results and having same direction as Ultra Fast Flyknit and Nike Air Alpha. Only shoe where we see slightly different direction is in Lunar Racer. Lunar Racer shoe was rated 1.0320 units more likely to buy in AR versus control group, but -0.25 less likely to buy in information group versus control group. Saying that, in this example we see negative effect in information
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group between control group and we can stated that here product information did not have positive effect on product information. Regarding customer experience as a mediator, there is noticeable positive effect. Comparative to the control group, information group decreased the difference in purchase intention as a*b = 0.0143 units more likely to buy the shoe because of positive effect of customer experience on a purchase intention. AR group had higher purchase intention that were a*b = 0.0465 units more likely to buy the shoe because of positive effect of customer experience on a purchase intention. The effect seems to be both direct as well as indirect in all four shoes, although the direct effect is much larger and maximum 0.05 of effect is coming from customer experience, thus indirect.
5. Discussions
By analyzing the data from Constant versus Information group we realized that average results in information group are higher, except in Lunar Racer example mentioned above. By compering data from AR group with Constant and Information group, we proved that AR technology will positively influence customer intention to buy Nike performance shoes. Also, research proved that much higher effect has product information and AR then Customer
Experience. In addition, having higher customer experience would increase total effect of X on Y, in other words increase of customer experience would positively affect customers intention to buy certain products. The total, direct, and indirect effects calculated in the research are all ascended as mean differences in a metric of customer purchase intention (Y). Dividing all these effects was mandatory to be able to interpret and read the data through mediation analysis with multicategorical IV. This example showed positive effect of AR technology on customer
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purchase intention mediated by effect of customer experience which was not high but again it is statistically significant and present. According to Haynes & Preacher (2013) if at least one relative indirect effect is different from zero confirms that M (customer experience) mediates effect of X on Y2. Saying all of that, I can confirm that both H1 and H2 hypothesis can be accepted. The research and analyzed data proved that.
The paper aimed to carry out extensive analysis of impact of AR technology through the lenses of the most important part of every company – end consumers. Due to accessibility constraints, one of challenges was getting access to observe the results of previous studies on the impact of AR technology, instead of analyzing the general impact of technologies on the
consumers. By having more studies, my work would have been more accurate and impactful. Finally, downside is that in the survey were included Nike performance shoes, so this
disadvantage needs to be taken into consideration.
6. Conclusion
Despite the abovementioned limitations, there is a meaningful conclusion that can be taken from this research. Many retailer’s business models have been fundamentally affected as both the retail landscape and customers shopping behavior shifted. Retailer companies are progressively delivering innovations and technologies to the retail stores with the main purpose to be used by in store customers rather than store staff. Many of the developed retailers believe
2the analysis done in SPSS using process macro – model 4, if 95% confidence interval for a*b does not include zero,
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their customers want to involve delivering customer facing technology to the store. Online content is also coming into the store. IPads and kiosks are starting to pop up in stores as a way of staff being able to assist customers to track down what they want, and customers doing this for themselves.
This paper proved this is right direction to the retailers since there are ways how to get on track with the constant and speedy changes. Implementation of technologies, in my example AR technology, and improved customer experience can lead to the increase of customer purchase intention. Although it would take time & money investment as well as joint effort of multiple stakeholders, this paper proved sufficient evidence that would justify these investments. Being closer to the customer, taking advantages of mobile technologies, offering additional product information by providing online content in offline environment can positively change the retail industry. Implementing AR and thus creating an innovative, fast, frictionless and engaging retail environment would positively affect business results through increased purchase intention. AR technology can be a convenient problem solver in delivering digital experiences and combining it with benefits of physical stores. That will make an impact in reconnecting empowered
customers with brick and mortar stores. If this technology can be implemented, retail companies will surely see increase in customer experience and better business results, and this was proven in this paper.
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Apendicies
Appendix 1. Pictures of the shoes used for a research
1. Ultra Fast Flyknit Trainer
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3. Nike Lunar Racer
4. Nike Air Alpha
