Virtual Reality…It’s Real!
1. What are the business benefits derived from the technology implementation described in the case? Also discuss benefits other than those explicitly mentioned in the case.
There are several business benefits from the use of the technology used by Kimberly-Clark. The first one is that they are able to see customers behaviors much easier in a controlled environment. In a computerized environment, it’s very easy to change color schemes, packaging, and product locations. Below is an example of what a screen view of an example of what these stores look like:
All it takes is a few clicks of the mouse and keyboard to make these changes. Having all this data computerized, allows it to be processed much more quickly. The company is able to combine this data with the data from on site locations to gleam what can be done to improve their products. This ability to deliver behavioral data and corresponding attitudinal insight has been a key importance of this information.
Another benefit is that doing these computerized tests, is that it allows for privacy from competitors seeing the tests. Although initial development of virtual testing environments adds an additional layer of expenses onto a typical consumer research project with initial setup costs range from $10,000 to $20,000, they usually are far less expensive than market tests in the end.
2. Are virtual stores like this one just an incremental innovation on the way marketing tests new product designs? Or do they have the potential to radically reinvent the way these companies work? Explain your reasons.
Within the United States virtual stores are a very unique technological innovation into the marketing world. While virtual stores have not become commonplace in everyday shopping, companies are using them today to attack marketing strategy in several different ways: price points, store displays, consumer behavior, and new product design tests. Retail giants such as Target, Wal-Mart, and Kroger Co. have turned to virtual stores to see how products fit into their store layouts and to choose the optimum setup for certain products. Brand names such as Kimberly Clark (Huggies, Kleenex) and Proctor and Gamble are using virtual stores to push their products to new heights with their client base. Kimberly Clark has taken the concept of a virtual store and made it a part of their company. In 2007, Kimberly Clark installed a virtual lab that is focus on the research of what drives the consumer intent to purchase and their focus. This has allowed them to gain a competitive advantage over other manufacturers by catering their products to the exact layouts of retailers. The virtual lab can re-create the flooring, light fixtures, and shelves of retailers which can determine if a product fits well with the store layout.
Since Kimberly Clark introduced the virtual lab an entire business has spawned from its creation. In 2008 InContext was formed to recreate virtual store environments. InContext has also had competition from several competitors in 2D and 3D environments. What sets them apart is that they are able to run their program over the internet. InContext’s program can deliver information about a new product in weeks instead of the usual months it takes to decide to launch a product. The cost is significantly less than other research methods. Huge Companies are turning to InContext for virtual market research. Bob Gillespie, founder of InContext, also has plans to license the software to other market research firms. This could mean big business for the company. Other companies besides InContext are having success with virtual market research. Decision Insight claims a 90% correlation between virtual research results and actual sales. This number is astonishing and has a high possibility of proving real world results.
Outside of the United States virtual stores are being taken to a whole new level. Homeplus (formerly known as Tesco) is a virtual store in a subway that allows customer to view products, scan the QR codes with their smartphone, and have the product delivered to their door. Although the stores are virtual, the products look the exact same as they would in an actual store. This South Korean company is revolutionizing virtual shopping and the numbers easily prove that. Their mission was to become the #1 supermarket without increasing the number of stores. The company is the number one in the online market and a very close second offline. Homeplus has completely reinvented the way people shop and could radically reinvent the market in South Korea. Busy commuters that do not have time to shop because of their schedules can now shop while waiting for the subway. With a time driven world and many people citing they need more time in the day this idea has the chance to change the way people shop all over the world.
Checkout the video to see the HomePlus virtual store in action
3. What other industries could benefit from deployments of virtual reality like the one discussed in the case? Leaving aside the cost of technology, what new products or services could you envision within those industries? Provide some examples.
While many people see virtual reality as mere science fiction, the truth is that it has been evolving over the years into an advantageous real life tool for nearly every industry. Virtual reality systems have in the past been primarily used as training devices for the military and aviation industries, but are quickly becoming embraced more in the business world, education, healthcare, etc. Businesses can use this technology in all sectors of their company including training, marketing, planning, and even direct customer interaction.
As mentioned in the case, Kimberly-Clark has taken a huge step in the utilization of virtual reality to help in developing and marketing their products, but they are not the only ones who see the benefits of this rapidly growing technology. Farm equipment maker, John Deere, is using virtual reality to test drive machines that have yet to be built, in order to help aid in product design. A variety of trucking companies are using video-game worthy virtual reality programs to help train drivers for extreme weather conditions and other highway hazards. Even oil companies have begun to invest in virtual reality systems to help design accurate topographical maps of the ocean floor, in order to find out where the oil can be found.
When it comes to selling to the customers, industries have started to design virtual showrooms and stores similar to the one used by Kimberly-Clark, in which the customers can actually purchase the virtual products. Auto companies are able to use virtual technology systems to help show customers a concept car virtually, and then change and redesign based on the customers reactions, all without having to do any physical modification. The auto companies can then use a virtual showroom to show off their current line of cars, in order to assist in the buying process.
Although the cartoon above is somewhat poking fun (pun intended) of the virtual reality concept, the idea of virtual reality in healthcare is far from comical. Not only can scientists use virtual models to better study double helix’s, but virtual reality is actually being implemented in hospitals and doctors offices. Doctors and nurses are able to use virtual reality for surgical simulation and teaching purposes. Even colonoscopies and prostate exams can now be performed virtually, which will come as a relief to the cartoon doctor and patient. Patients that are undergoing painful treatments such as those for burns can use a virtual reality program to keep their minds off the pain. Even people suffering with mental conditions such extreme phobias can benefit from virtual reality programs, which put them into a world where they can confront their fears virtually.
With all the technology that has already begun to emerge, there’s no telling how far we can go with virtual reality. In the future, instead of having to actually go anywhere, we will likely be able to simply pop on our virtual reality headgear and head over to a virtual mall or grocery store to get an up close and personal look at what we want to buy. If we’re feeling ill we could pop over to the virtual doctor and get a real life diagnosis. Of course with all the sitting around we might want to head over to the virtual gym every now and then. The possibilities are virtually endless!
Sources:
Marakas, G. M., O’Brien, J. A. (2011). Management Information Systems. New York, NY: McGraw-Hill/Irwin.
http://kelley.iu.edu/cerr/files/09ismi_virtualretailing.pdf
http://www.usatoday.com/tech/news/2007-01-13-virtualreality_x.htm
http://www.asiaone.com/Business/Tech%2BSense/Story/A1Story20110329-270700.html
http://www.fiercehealthit.com/story/virtual-reality-worth-real-money-healthcare/2011-02-14
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