A guide to using VR and AR technology in foreign markets

Global businesses embrace augmented reality (AR) and virtual reality (VR) to connect with consumers around the world. This technology offers a new way to feel the product before you buy. This is essentially trying out lipstick shades, exploring the world of the brand with Roblox, and seeing what a new sofa will look like in your living room.

But getting it right in a virtual world doesn’t mean the same in all global markets, and finds PK Kannan, a marketing professor at the Robert H. Smith School of Business at the University of Maryland.

Culture influences how people use these innovative augmented reality (XR) technologies, so the way consumers interact with technology changes across countries. This makes it difficult for multinationals to have an XR approach that works well everywhere, Kannan says.

A new study published in the Journal of International Business Studies will explore high-tech-savvy Korean XR marketing strategies with Kannan and his co-authors (Hyoryung Nam from Syracuse University and Yiling Li and Jeonghye Choi from Yonsei University) . “They are on the cutting edge of these applications in retail,” says Kannan. “They have a lot of local and foreign companies registered in the market.”

“If you’re a company that’s coming into the local market, you may not really understand the cultural nuances and may not be able to clearly communicate your value proposition like local cultures. You are responsible for being a foreigner or the way you present may not suit what they expect.

These challenges are what is known as foreign responsibility (LOF), Kannan says. This is an established concept that explains why multinationals often face difficulties and disadvantages against local companies in foreign markets. But do these drawbacks still exist in a world where immersive technology is breaking down traditional barriers? Kannan and his co-authors break new ground in order to find answers.

They worked with market research firms to investigate 257 beauty brands in Korea over three years from 2019 to 2022. Kannan says he has considered how XR innovations will affect brand engagement, particularly comparing foreign brands with local brands.

They focus on “brand topics.” It is the frequency with which a brand is mentioned on social media, an important indicator of brand engagement. “If XR doesn’t actually resonate with consumers, it doesn’t create much brand engagement,” says Kannan. “We then tried to figure out whether XR innovations in foreign brands were less effective in improving brand engagement compared to local brands.”

Kannan and his co-authors confirm that LOF exists in a virtual world of foreign companies.

why? “It has to do with the cultural discrepancies in the way people process information,” Kannan says.

The problem is especially clear when an XR application produces a very interactive, unrealistic, and very vivid experience. For example, compared to applications that try out makeup shades and fashion accessories using people’s own images, the risk of cultural discrepancies in a completely fictional virtual world that does not closely reflect real life. It’s going to be higher.

But if you’re a very new brand or you’re introducing a new product, you’re less likely to face LOF, says Kannan. “Uncertainty about new things takes over and people focus on the experience of new brands and products rather than realizing cultural inconsistencies.”

He says the researchers also found that companies can avoid the issue of cultural inconsistency by leveraging marketing investments in local markets. Brands with their own platforms that allow for direct connections with local customers are much less likely to experience LOF.

All brand platforms help reduce LOF, but some do better than others. A communication-based platform that shares brand news, tips and inspiration and builds your own community will do a better job of overcoming LOF than a transaction-based platform that focuses primarily on sales and promotions.

Kannan has recommendations for businesses that want to use XR to connect with customers in foreign markets.

I know the culture. “Before entering a new market, understand the cultural norms and nuances of the new market. Adjust your XR strategy to match your local culture and feel relevant and attractive to local consumers. ” Choose XR technology wisely. “Some XR technologies are more difficult for foreign companies. Very interactive and imaginative XRs, which often use more advanced technologies, can increase the risk of cultural inconsistencies. Simpler Starting with XR features, we will gradually introduce more advanced features. “Learn newness: “For multinational companies, there are unique benefits when you’re a new brand or when introducing new products. When people are focused on experiencing new things. Building a community. It will help you in the long run to reduce the impact of foreign-related responsibility.”

In general, having an XR is better than not having it, Kannan says. However, adopting it involves risks. If you come up with the wrong technology and the wrong approach, it can hurt your brand.

“Companies that use XR generally perform better than companies that do not use these technologies. However, if used in the wrong way, they can be harmful to the brand,” Kannan said. Masu.

“Essentially, what we’re saying is to not only take XR developed for one market, but assume it will work the same way in another market soon.”