Editor’s Note: It has always baffled me why virtual environments had not become a more mainstream market research technique. I know that companies like Advanced Simulations and others have done well within this niche space and continue to explore new ways to refine their offerings, but it has always seemed to me that MR has heretofore missed an opportunity to take the technologies behind virtual simulations and combine it with elements of gamification and social gaming to create whole new models of virtual ethnography. Certainly folks like Jon Puleston and Betty Adamou are clearly heading in that direction, as are many start-ups from outside of the research space. It will be interesting to see what happens when those trailblazers intersect with people like Andrew Reid, Steve Needel, and today’s newest GreenBook Blog contributor Ed Franczek.
Ed does a great job of showing how a technique that seemed to have been usurped by other “buzz” methods has been working in the background to gain credibility and market share while delivering real ROI to brands. I for one am glad to get caught up on the advances in the virtual store market, and I think you will find it intriguing and thought provoking as well.
By Ed Franczek
When people visit FarmVille, the wildly popular social network farming simulation game, they plant and harvest crops, earning “farm coins” or “farm cash” which they then can invest in livestock, buildings, trees, etc. Over time, players learn about virtual farming and, as their crops grow, points and rewards are earned. Unfortunately, success in FarmVille doesn’t result in success in the real agricultural world.
On the other hand, virtual store environments in the retail industry are being used to learn about shopper behavior and that knowledge can translate into increased sales in the real world.
Virtual store research isn’t new. Procter & Gamble opened “The Cave” in the U.K., which allowed consumers to walk through three-dimensional store simulations for Tesco, Sainsbury and other British retailers. Kimberly-Clark’s use of 3D store-simulation technology as a market research and business development tool was documented by the Wall Street Journal in 2007. In 2008, Walmart announced plans to include virtual store environments as a component of its marketing research efforts.
Current State of the Art
Today, marketers who partner with virtual store research suppliers, such as Decision Insight, InContext Solutions and Vision Critical, have access to increasingly sophisticated capabilities and are able to create realistic environments that provide the in-store context that is essential to understanding shopper behavior.
“Not too long ago, digital walk-throughs were considered too exotic for use outside the behavioral science lab,” said James Tenser, retail industry analyst and executive director of the In-Store Implementation Network. “Those simulations required high-end workstations and custom coding and images, but now platforms may be configured much more rapidly, populated with images from digital libraries and visualized on standard personal computers.”
A virtual store test often takes a consumer panelist from the parking lot into the store. The shopper “walks” down the aisle, looks left and right, views displays, stops at a category, picks up a product, rotates it to read the label, the ingredients and nutritional information and decides to buy or not buy the item. This “purchase decision,” coupled with follow-up questions, allows marketers and retailers to test new products, packaging, pricing, displays and category resets as well as product assortment and location and overall store layout.
The advantages of virtual store testing are many. In addition to providing a realistic in-store competitive context, virtual store tests are less costly, provide greater control and are much faster to implement than more traditional research methodologies such as controlled store market tests. Moreover, physical products or displays aren’t necessary, assuring competitive confidentiality as well as removing myriad logistical and production issues.
“When using virtual shopping, we observe shopper behavior rather than asking what they would do,” said Fran Derin, senior manager customer & shopper insights, Kraft Foods Snacks & Confectionery. “Testing retail strategies in the context of a virtual store allows us to see or measure differences in behavior because what people say is not always what they do. That makes this methodology much more valid and a better predictive tool, in addition to being much less expensive than an in-market test.”
While market research is a primary application of virtual store technology, some forward-thinking marketers are showcasing new programs and concepts for their retail partners in virtual re-creations of the retailers’ own stores.
Considerations for Success
The efficacy of a virtual store test depends heavily on the accurate representation of the test item as well as all of the competitive products in the category and, perhaps, the adjacent categories as well. Unless the shopper is able to view and examine the test product and competitive products as they actually appear on the store shelf, the test results will be meaningless. In some instances, private label and strong regional brands must be included accurately and not shown simply as a “generic” item alongside a national brand.
Similarly, the virtual environment must be appropriate for the test. For example, testing a flanker brand of analgesic might require virtual Walmart, Walgreens, Target and Kroger stores.
Historically, virtual stores have been used by the consumer packaged goods industry and focused on grocery, drug and mass merchandiser environments. However, marketers across a broad range of retail segments, including hardware, wireless, electronics and automobiles, are turning to virtual stores to address a variety of sales and research needs. As the 3D virtual technology evolves and marketing imaginations percolate, other industries will follow suit. Perhaps one day real farmers will be using virtual environments to find ways to gain more U.S. coins and cold, hard cash.
Sidebar: Growing the Ice Cream Cups Category with Virtual Store Testing
When Nestlé was getting ready to launch an expanded line of 15 new ice cream cups SKUs under the Edy’s/Dreyer’s, Haagen-Dazs and Skinny Cow names, the company was undecided about the best merchandising location. Should the cups be shelved together in their own dedicated area or placed next to their parent brands? The traditional answer would have been to test each configuration in a handful of stores. Time constraints ruled that out.
“At first, I had a healthy skepticism around virtual shopping,” said Russ Onish, former director of category leadership & shopper insights for Nestlé’s Dreyer’s Grand Ice Cream unit. “In this situation, we didn’t have the offering or the time to do in-store work so we decided to give virtual a try.”
Nestlé chose to work with research firm Decision Insight and tested the alternative configurations in virtual Safeway and Kroger environments, using twenty freezer doors. Images of over 400 SKUs were obtained from the Gladson Image Database and other sources. Category shoppers were recruited online and asked to shop the category as they normally would, buy whatever product they wished in whatever quantity or walk away without purchasing anything.
The results indicated that the strongest strategy was to place all of ice cream cups together, except for the Skinny Cow items which should be displayed with the brand family due to the brand’s loyal customer base which is committed to weight loss. These findings were presented to key retailers and now nearly 90 percent of stores stock cups together and in-market sales showed that cup revenue grew 53 percent in those stores.
Author Ed Franczek is senior vice president at Gladson, which provides product information and related services to consumer packaged goods manufacturers, retailers, wholesalers and brokers.