The Impact of Augmented Reality on Customer Experience

(1)

The Impact of Augmented Reality on Customer Experience

Exam Type Deadline Supervisor Word Count Page Count

Master’s Thesis 15^th of March 2019 Stefan Henningsson 223.130

98 pages Philip Sebastian Merrild Archibald

113086

phar16ab@student.cbs.dk

(2)

Louis Poulsen’s Augmented Reality application as a case study. In recent years Augmented Reality has gained most traction within retail. However, there is a general lack of work in this area. The exception is a few studies that have looked at the visualization capacity of AR in retail. For these reasons it is interesting to explain the impact of AR technology on customer experience within the retail industry and its impact on multiple stakeholders. The study seeks to explore and explain the impact of Augmented Reality on customer experience through an abductive approach using a single-case study strategy. The primary data is gathered through multi-method qualitative study and secondary data on Augmented Reality and Customer

Experience Theory. Due to the abductive approach two analyses are conducted. Firstly, an deductive analyses is carried out on Louis Poulsen internally and their retailers. Findings from the deductive analysis show that Augmented Reality has the potential to positively impact customer experience hereby creating value for Louis Poulsen internally. However, Augmented Reality did not create value for the retailers as the technology did not impact their customer experience. Findings from the second analysis derived from the inductive analysis, which was based on Louis Poulsen customers. The inductive analysis arrived to the conclusion that Augmented Reality has a positive impact on customer experience due to its visualization capabilities. Based on the findings from deductive and inductive analyses it can be concluded that Augmented Reality has a positive impact on customer experience in retail.

(3)

9.1 Hypothesis 1 Test: AR Increases Enjoyment & Personalization 57 9.2 Hypothesis 2 Test: AR Increases Helpfulness & Realisticness 60 9.3 Hypothesis 3 Test: AR Simplifies Processes & Increases Accessibility 64 9.4 Hypothesis 4: AR’s Ability to Visualize & Manipulate Content can Positively Increase Customer

Engagement 67

10 Discussion 71

10.1 Customer Experience & The AR Ecosystem 71

10.2 How Does AR Create Value Internally in Louis Poulsen? 72

10.3 How Does AR Create Value for Louis Poulsen’s Retailers? 73

10.4 How Does AR Create Value for Louis Poulsen’s Customers? 74

10.5 Limitations of Study 77

11 Conclusion 78

12 References 80

12.1 Books 80

12.2 Academic Journals 80

12.3 Websites 84

12.4 Videos 88

(6)

13 Appendices 89

13.1 Appendix 1 89

13.2 Appendix 2 94

13.3 Appendix 3 102

13.4 Appendix 4 110

13.5 Appendix 5 117

13.6 Appendix 6 124

13.7 Appendix 7 125

13.8 Appendix 8 127

13.9 Appendix 9 128

13.10 Appendix 10 130

13.11 Appendix 11 136

13.12 Appendix 12 143

13.13 Appendix 13 150

13.14 Appendix 14 156

13.15 Appendix 15 162

13.16 Appendix 16 169

13.17 Appendix 17 176

13.18 Appendix 18 182

(7)

1 Introduction 1.1 Background

Customer experience within the retail industry has become one of the largest drivers for both big and small businesses (Guinn, 2018). The retail industry has traditionally had a strong focus on buying low and selling high (Baird, 2018). However, times have changed and retailers are shifting their traditional ways of doing business towards a more customer experienced focus. This shift is illustrated through a survey by Bain &

Company where 362 companies were asked to rate their delivered experience. 80% of the companies believed they delivered a “superior experience” which was quite the opposite of what the customers believed, as only 8% of them agreed with the companies rating (Ibid). Furthermore, a Gartner report shows that 36% of companies in 2010 competed solely based on customer experience, whereas recently this number has increased to 89% (Ibid). Organizations that keep embracing new technologies have a better chance of creating unique experiences for their customers, regardless whether it is physical stores or online retailers (Barret, 2018). It is not enough for the retailers to just sell their product, they need to provide positive customer experience and build relationships with their customers in order for them to become loyal. The transformation in communication due to the digital world has increased companies’ different touch-points from being just e-mail or personal contact, to an uncountable amount of ways for customers to interact with a company (Hyken, 2018). In a digital world with a continuous development of new technologies, retailers must not only think about reaching their new and existing customers, but also unravel how these

technologies might fit their brands (Barret, 2018).

Forming a great customer experience can be decisive in terms of leveraging a competitive edge to your competitors (Hyken, 2018). One of the technologies that has the ability to increase customer experience is Augmented Reality (AR). AR provides an integration of digital content in co-existence with the users’

environment in real time and visualizes this content as an overlay to the real-world revolutionizing the customer experience (Rouse, 2018). In its ability to visualize content AR has endless opportunities for brands to interact three-dimensionally with their consumers, creating customer engagement and enhancing the product of service being offered (Shaham, 2018).

The current literature tends to focus only on the technology itself or how and why the users of the technology choose to adopt it. Through research it is clear that only a minor part of the literature focuses on the impact of the technology, where the main research areas are within areas such as gaming, education and healthcare.

Impact studies of AR beyond these categories are rare and the relevant impact studies prove to be of different results much dependent on the context of an application. AR can be used in many different settings. For instance, brain surgeons use AR technology to give surgeons better insights into a procedure where AR projects content onto a human body to better perform the surgery¹. Another example of how AR can be used

(8)

is in education where kids can experience learnings in new ways by engaging students with immersive lessons². From the literature we can see that the industry where AR has gained most traction is within retail.

However, there is a general lack of work in this area. The exception is a few studies that have looked at the visualization capacity of AR in retail. For these reasons it is interesting to explain the impact of AR technology on customer experience within the retail industry and its impact on multiple stakeholders.

1.2 Objective & Motivation

The objective of our research is to explain the impact of AR on customer experience in retail using Louis Poulsen as the case example. Despite the fact that AR is not a new phenomenon, it has still not been able to secure its way into the retail industry. Through our research we aim to close this gap and provide answers to how AR can create value with a special focus on the retail industry. Furthermore, to conceptualize what business value is, theories on customer experience will be applied to demonstrate the value creation of using AR technology. Not until recently companies have started to adopt AR as a tool within their business, which forms the basis of our case and experimental inspired approach (Scholz & Smith, 2016; Liao, 2014). Hence, the novelty not only in the research subject but also the research approach will attempt to contribute to the research field.

The reason for conducting this research was the opportunity to work with a fairly novel area of research where we could draw interesting conclusions and attempt to contribute with new knowledge. The technology on its own might not be that novel but the usage in relation to retail is a very limited researched area.

Furthermore, the possibility to not only contribute to the literature but also to our case company to whom the findings of our research is important and applicable to their business.

1.3 Research Question

Based on the introduction of the topic and research objective the following research question has been constructed:

How does AR impact the customer experience in retail?

In order to draw logical conclusions and sufficiently explain how AR impacts customer experience hereby creating value, we intend to examine value creation amongst three main stakeholders that affect Louis Poulsen (LP). These are, LP internally, their retailers and customers. These three main stakeholders are relevant to examine. Firstly, because LP wish to use AR as a sales tool towards their retailers. Secondly, retailers are a huge part of the business, since they are responsible for selling products to customers. Lastly,

2 https://www.youtube.com/watch?v=-DYqlaMWTVg

(9)

customers are relevant to look at since they are the ones ultimately purchasing products. Examining these stakeholders which have great importance for LP, holistically contributes in identifying AR’s impact on customer experience in retail.

The following three question are found relevant to sufficiently answer the research question and gives a thorough examination of how AR technology creates value for LP.

• How does AR create value internally in Louis Poulsen?

• How does AR create value for Louis Poulsen’s retailers?

• How does AR create value for Louis Poulsen’s customers?

Figure 1

(10)

1.4 Scope

In order to gain an extensive understanding about how AR can impact customer experience hereby answering the sub- and main research question the project will be organized as illustrated in figure 2.

1.5 Delimitation

The next section contains boundaries that are set for the project. We intend to explain why we have delimited ourselves within certain areas that otherwise would have been relevant for the research area and could have affected our results and conclusions.

1.5.1 Approach, Case & Market

The projects focus and objective is to explain how current AR technology can impact customer experience hereby creating value through the usage of LP’s AR application as a business case. Therefore, we do not attempt to propose suggestions as to how the application can be redesigned in terms of features in order to improve it. Furthermore, general design ideas and underlining architecture will not be a focus area although briefly touched upon to sufficiently answer the research question. A focus within the design domain is a whole study in itself and out of the scope of this project. However, relevant to research upon and would definitely affect the conclusions. Additionally, this project will answer the research question using a single case study research strategy which has been chosen purposely for this specific research. We define it as a unique case, since few have considered this phenomenon before (Saunders et al. 2016). However, the IKEA Place AR application case is quite similar to LP and would also have been relevant to examine. Although, we did not wish to produce replication in our findings, but rather focus extensively on one single case using qualitative data. This is why the LP case has been selected. The reason for choosing LP is our relation to an AR expert who we interviewed in regards to an earlier project of ours. He gave us the opportunity to work in close contact with LP who are also highly interested in gaining empirical information about their investments in AR technology. Moreover, we have delimited ourselves geographically, since we only focus on the Danish market thus interviewing retailers and consumers from Greater Copenhagen.

Figure 2

(11)

1.5.2 Customer Experience

Customer experience is a very complex and extensive topic that many researchers have researched upon.

There exist several definitions in the literature - broad as well as specific (Lemon and Verhoef, 2016). As mentioned above, customer experience will be used to show how value is created through AR technology, which is why only the relevant parts of the theory will be selected for this dissertation. The specific constructs that is used to answer the research question is identified through the data collection and is presented later in the dissertation. A further definition of customer experience is presented in the following section. Additionally, as the main focus of this project lies within the AR technology, we only briefly touch upon other LP touch-points in the customer journey to give a general explanation of the effect of touch- points at different purchase stages. But we do not attempt to paint a precis picture of the whole customer journey in LP.

1.6 Definitions

1.6.1 Augmented Reality

AR is a branch within the virtual environment technologies and often wrongly exchanged with Virtual Reality (VR). Both concepts are a part of Mixed Reality (MR) where real and virtual worlds merge supported by real or virtual objects (Rouse, 2018). AR differs from other technologies in its ability to augment the real world whilst still being physically present. On the contrary, users experiencing VR are closed in a virtual world (Independent, 2017). To simplify the concepts of AR the researchers adopt the definition by Margaret Rouse (2018) “Augmented reality is the integration of digital information with the user's environment in real time”.

1.6.2 Customer Experience

Defining the concept of customer experience is somewhat conflicted in the literature, however there is a broad consensus that whatever the service or good a customer purchases or receives they will have an experience (Johnston & King, 2011; Jain, 2017). Meaning that all services comes with an experience and an opportunity for emotional engagement regardless of the product or service provided (Ibid). The definition of customer experience that the researchers adopts is: “An experience occurs when a customer has any

sensation or acquires knowledge from some level of interaction with the elements of a context created by a service provider” (Kranzbühler et al., 2018).

(12)

2 Methodology

In order to structurally formulate a research strategy, Saunders Research Onion is applied as it explains the different stages in a research that must be covered when developing a research strategy. The benefits of using Saunders Research Onion lies in its manageable structure and in its ability to define the philosophy,

approach, strategy etc. The researchers recognize that there are other methodology authors that could have a different view on how to develop a research design. The structure and simplicity in ‘peeling’ the onion as you progress throughout the research, was the approach that made most sense for this thesis and is one amongst many recommended and accepted methodology approaches. Lastly, Saunders Research Method for Students is the method book used in teaching at our institute and therefore, a logical choice to follow.

Figure 3 below is an overview of the different methodological paths chosen and is illustrated using Saunders Onion where the methodological choices are highlighted (Saunders et al. 2016).

2.1 Theoretical Underpinnings

The paradigmatic assumptions of this research use the social science paradigms written by Burrell and Morgan (1982) and is presented in Saunders et al. (2009) book Research Methods for Business Students. The purpose of a paradigmatic assumption is to offer a useful way of understanding the research approach of this thesis (Saunders et al., 2009). The paradigmatic assumption this research adopts is the functionalist

paradigm. The functionalist paradigm contains both an objectivism and regulatory dimension (Ibid). The objectivism dimensions represent the position that social phenomenon and meanings are independent from

Figure 3

(13)

external social actors (Ibid). The regulatory dimension of the functionalist paradigm deals with the concern of why a phenomenon is occurring and trying to rationally explain this phenomenon (Ibid). The problem- oriented approach to this paradigm is the reason for adopting it. Questions like How and Why are asked throughout the research and consequently explain how AR can impact customer experience hereby create value for companies within the retail industry.

2.2 Research Philosophy

The first layer of Saunders Research Onion concerns the research philosophy chosen by the researchers. The research philosophy interpretivism will be reflected throughout the thesis. The interpretivist view allows the researchers to interpret insights gathered from research, and since the world is seen as a complex place it is difficult to make law-like generalisations (Saunders et al., 2009). Furthermore, research is done amongst human beings rather than objects and these human beings are seen as having different opinions and understandings of the same “reality” (Ibid). In addition, interpretivism is often looked upon as highly relevant for business and management issues such as marketing. In order to examine the impact of AR technology on customer experience, insights gathered from primary and secondary data will be interpreted explain the impact (Ibid). Lastly, interpretivism emphasises on qualitative data rather than quantitative data.

2.3 Research Approach

As we make our way through the research onion, the research approach needs to be determined to clarify how we have reached our conclusions. According to Saunders et al. (2016), there are three main approaches that researchers can undertake; deductive approach, inductive approach and abductive approach (Saunders et al., 2016). Using the deductive approach, the researcher would form a theory and hypotheses and then design a research strategy to test the hypotheses related to an existing theory (Ibid). Alternatively, the inductive approach allows the researchers to explore a phenomenon and identify patterns and themes creating a conceptual framework and generating a theory (Ibid). Lastly, the abductive approach, which is used in this thesis is somewhat a combination of the two. Essentially, you move back and forth from theory to data (Ibid).

The abductive approach is found the most relevant in order to answer the research question sufficiently and will be reflected throughout the project. It allows the researchers to explore a phenomenon through the collection of data where themes are identified and patterns explained in order to generate a new or modify an existing theory (Ibid). This new or modified theory is then tested through additional data collection (Ibid).

Based on this approach our analysis will be divided in two parts. The first will reflect our initial data collection consisting of primary and secondary data where the phenomenon is explored. The findings from

(14)

the literature regarding AR as well as interviews with LP retailers and personal is related to the theory. Based on the themes identified and explanation of patterns, hypotheses will be formulated and tested through additional data collection in part two, which consists of an experiment-inspired semi structured interview with customers of LP. This leads to a discussion and finally the conclusion where the research question is answered.

2.4 Research Purpose & Strategy

The purpose of this dissertation is both an exploratory and descripto-explanatory study. The research is divided into two sections. The first section is of an exploratory nature as both literature and interviews are collected to provide an overview of the topic. It is used to clarify the scope of the topic, thus creating insights into AR technologies in correlation to the retail industry. The exploratory research is to clarify the

researchers understanding of the problems that might be and organize the relevant issues (Saunders et al., 2009). Firstly, literature is researched as well as interviews with experts are conducted to get an

understanding of the problem at hand. Secondly, the exploratory study leads to a descripto-explanatory study where the researchers will research how it looks and why this is (Ibid). The descriptive part works as an means to an end as rather than an end itself. It acts as an antecedent for the explanatory study that seeks to establish relationships between the discovered variables found in the exploratory and descriptive part in order to provide answers to why this is as it is (Ibid). In relation to the research approach and the abductive method, hypotheses will be formed based on the explored content of the first section. These hypotheses are then tested to be confirmed or denied. Hence, providing explanatory answers to the research question.

Additionally, a single case study research strategy is used to explain the impact of AR technology on customer experience using a real-life setting from extensive and in-depth research (Saunders et al. 2016).

This strategy has been chosen, firstly since there are a limited amount of case studies conducted within this topic and the researchers aims to enrich the literature in this way. Secondly, a case study allows the

researchers to generate extensive insights and empirically describe the nature of this phenomenon along with the development of theory (Ibid). A case study research can be used in a wide range of research purposes whilst using different approaches, hence matching our research objective (Ibid). To some extent the authors aim at generalising their findings through an extensive qualitative research using a multi-method approach.

However, we are aware of the critique from especially the positivist about the case studies ability to produce generalisable contributions to the literature (Ibid).

(15)

2.4.1 Case Selection

The Danish design company LP was chosen as case company for three main reasons. Firstly, the start of the thesis correlated with LP implementing an AR application. Secondly, contacts in LP enabled accessibility to an AR application hereby the provision of information about retailers and internally in LP. This allows us to explain the impact of AR on customer experience at three different stakeholder levels. Lastly, to the best of the researcher’s knowledge the LP application is the only AR application within the retail industry in Denmark besides the IKEA Place application³ and the Danish Design application⁴. The case company enables us to build knowledge about AR and its value in retail industry.

2.5 Methodological Choice

A multi-method qualitative study technique has been used for data collection alongside the associated qualitative analysis techniques. The multi-method research enables researchers to tackle the topic at hand from different qualitative angles compared to a mono-method (Saunders et al., 2009). We are aware of the fact that our choice is somewhat blurred in terms of whether or not it is mono- or multi-method. Due to the differences in the interview structure between internal/retailer and customer interviews we have chosen to separate these. Hereinafter, the researchers adopt a multi-method approach. The different qualitative methods that is used in this research includes; in-depth semi-structured interviews with LP personal and retailers.

Furthermore, experiment-inspired semi-structured interviews are conducted with customers for the purpose of testing AR technology’s impact on customer experience. The overall objective of the multi-method qualitative study is to enable an analysis of the meanings and opinions of the participants that consequently will answer the research question (Ibid).

2.6 Time Horizon

The time horizon reflected in this thesis will be cross-sectional, since in its nature a thesis has to be produced over a limited time period. Additionally, our project seeks to assess a particular phenomenon at a given time as referred to in Saunders et al. (2009).

2.7 Data Sources

To answer the research question sufficiently the thesis will use both primary and secondary data. Saunders et al. (2009) define secondary data as data that has already been collected by other researchers and primary data as the collection of new data for a specific research. The secondary data collected for this research purpose is documentary as it is written material and consists of both raw and compiled data (Ibid).

3 https://www.ikea.com/ms/da_DK/kataloger_brochurer_apps/apps.html

(16)

Furthermore, the secondary data is collected through Libsearch (a CBS database) and through Google Scholar. Using data created by other authors provides an insight into the field of research and gives

knowledge about the related work done in this field, which is why a literature review is conducted based on this data.Secondly, primary data has been collected from interviews with LP personal, LP retailers and LP customers. The primary data is used together with the secondary data to explain how AR technology can impact customer experience and ultimately answering the research question.

2.8 Data Collection Method

The data collection method section consists of the different types of methodological considerations that has been applied in order to collect the data needed to sufficiently answer the research objective. Thus,

containing methodological considerations about choice of interview with LP personal, retailers and customers. For the purpose of this thesis, different questions and interviews have been developed and conducted. These are dependent on the required outcome and stakeholders, needed as referred to in the research strategy section. The following section will elaborate upon the different data methods depending on the stakeholders. The data used in the Internal & Retailer analysis will be found through deduction using semi-structured interviews with LP personal and retailers. However, the data used in the Customer analysis will be found through induction using experimental-inspired semi-structured interviews with customers.

Ultimately, the former and latter are used to answer the three sub questions listed in section 1.3.

2.8.1 Semi-structured Interview with LP Personal & Retailers

As mentioned in the research strategy, this project acts as an exploratory and descripto-explanatory study, hence all interviews with experts were conducted using semi-structured interviews. These type of interview enables the researchers to capture rich and descriptive data about the participants feelings, perceptions, attitudes and opinions. Furthermore, it allows us to ‘probe’ the interviewee for additional answers (Saunders et al., 2009). Additionally, it aligns with the research question and objective. The semi-structured interviews allow the researchers to identify general patterns, which is used in the first part of the project (Ibid). It is important to note that these “general patterns” in itself are subjective, since it is qualitative data.

Furthermore, they help understand the relationships between variables that are found in the first part, which are explained in the second part. In order to perform these interviews, the researchers have conducted a predetermined set of questions where themes from these questions could be used throughout all the interviews with LP personal and retailers. The order of questions varied a lot depending on conversational flow and which stakeholder that was interviewed. Thus, adding additional questions to get the required information. Lastly, given the nature of the research it is important for the researchers to establish personal contact. The non-standardized approach to the interviews links with the overall case study strategy as non-

(17)

standardized questions not only reveal the ‘what’ and ‘how’ aspect of the research but also ‘why’ aspect (Ibid).

The semi-structured interviews are conducted using the face-to-face method where the researchers interview the participants face-to-face. The benefits of this type of interview is the presence of the interviewers as the participants can easily clarify their answers or ask for questions to be elaborated (Lavrakas, 2008).

Additionally, the face-to-face interview type allows for the researchers to probe answers that are particularly interesting. The disadvantages of using face-to-face interviewing in relation to this research is the availability of the participants. Additionally, the ‘on-the-spot’ answers might not tell the whole truth or the participants could have forgotten details relevant to the research (Ibid). The availability issues were circumvented by scheduling meetings early in the process. Lastly, all participants were given our contact information in case they thought of something that might be relevant for the research and vice versa if there were any follow up questions by the researchers that need clarification by the participants.

2.8.1.1 Questioning

The line of questions chosen are defined as ‘open questions’ as it encourages the participants to provide extensive answers they can go into depths with. This line of questioning provides an unlimited variety of answers and reveals what the participants think about the topic up for discussion (Saunders et al., 2009;

Questions for David Rosenqvist, Appendix 6; Questions for Finn Jensen, Appendix 7; Questions for

retailers, Appendix 8, Questions for customers, Appendix 9). However, with open questions you risk that the participants respond in directions that are not relevant to the project. This is why probing questions are an extremely important tool when using semi-structured interviews with open questions. The purpose of

probing questions is to explore responses from the participants that are important to the study and what we as researchers would like to hear more about. Secondly, probing questions can lead the interview in the right direction, should the participant get too far off topic (Ibid).

2.8.2 Interviews

For the semi-structured interviews three different interest groups are interviewed. The different interview groups can provide different perspectives on how AR can impact customer experience. The three interviews groups align with the overall research objective where we seek explain different stakeholders’ opinion on how AR can impact customer experience. These different stakeholders are LP personal, retailers and customers. The table below visualizes the different stakeholders interviewed.

(18)

Interviewee Date Duration Role Transcribed Key topics David

Rosenqvist

07/09/2018 15 min. & 33 sec.

Internal Yes, appendix 1

Target Audiance, AR Implementation, Customer Experience, Objective and Purpose Finn Jensen 16/01/2019 31 min. & 09

sec. Internal Yes, appendix

2 Simplifying Processes, Customer Experience and AR Usage Anja

Rouchmann

17/12/2018 21 min. & 19 sec.

Retailer Yes, appendix 3

Customer Experience, AR Usage and

Customers Patrick Olsen 19/12/2018 13 min. & 38

sec.

Retailer Yes, appendix 4

Customer Experience, AR Usage and

Customers Jacob

Vestergaard

17/12/2018 19 min. & 58 sec.

Retailer Yes, appendix 5

Customer Experience and AR Usage, Customers Camilla Blicher 25/02/2019 20 min. & 29

sec.

Customer Yes, appendix 10

Customer satisfaction, Brand Experience, Convenience and Customer engagement Frederik

Mitchell 25/02/2019 19 min. & 46

sec. Customer Yes, appendix

11 Customer satisfaction, Brand Experience, Convenience and Customer engagement Ida Rønlund 26/02/2019 19 min. & 20

sec.

Customer Yes, appendix 12

Customer satisfaction, Brand Experience, Convenience and Customer engagement Peter Mitchell 26/02/2019 18 min. & 51

sec.

Customer Yes, appendix 13

Customer satisfaction, Brand Experience, Convenience and Customer engagement Thomas Lohse 27/02/2019 14 min. & 42

sec.

Customer Yes, appendix 14

Customer satisfaction, Brand Experience, Convenience and Customer engagement Joan Archibald 27/02/2019 18 min. & 41

sec.

Customer Yes, appendix 15

Customer satisfaction,

Brand Experience,

Convenience and

Customer engagement

(19)

John Archibald 27/02/2019 29 min. & 14 sec

Customer Yes, appendix 16

Customer satisfaction, Brand Experience, Convenience and Customer engagement Maja Øllgaard 27/02/2019 12 min. & 53

sec.

Customer Yes, appendix 17

Customer satisfaction, Brand Experience, Convenience and Customer engagement Andreas

Kornbek 27/02/2019 17 min. & 48

sec. Customer Yes, appendix

18 Customer satisfaction, Brand Experience, Convenience and Customer engagement

Table 1

2.8.3 Louis Poulsen Personal

The interviews conducted with employees from LP is done to provide an overview of how AR technology can create value internally. We therefore, interviewed the person who implemented the application and their Visual Concept and Merchandising Manager. Their different perspectives on how AR can create value internally is of great importance to our research as it answers the questions of whether or not AR can create value for LP internally.

2.8.3.1 David Rosenqvist, Director of Brand and Communications

We had a face-to-face interview with David who has been employed at LP for 7 years. The interview with David lasted 16 min. David is our contact person within LP and he was the primus motor behind

implementing the AR application. The interview with David provided us with the background knowledge to why they chose to invest in AR technology, the goals and objectives of the investment and what the future has in store for AR at LP. These information’s are vital for us as we need this kind of information in order to build a case and test our theory on how AR can create internal value.

2.8.3.2

Finn Jensen, Visual Concept and Merchandising Manager

We have learned from the literature that one of the areas where AR can enrich customer experience, is its ability to visualize graphical content and display it in a variety of ways. Based on this notion we chose to interview Finn, who is the Visual Concept and Merchandising Manager at LP. We wanted to learn more about how he can work with this technology and where in his work processes AR can support him to create a

(20)

better customer experience. The information provided by Finn can help us learn how AR creates value for LP internally. The interview with Finn was done face-to-face and lasted approximately 31 minutes.

2.8.4 Retailers

In relation to the retailers there are some common criteria to why these exact retailers are interviewed.

Firstly, they must sell LP products in their stores. Secondly, LP is a premium brand within the lighting industry which means not all lighting retailers have their products, hence narrowing the options for retailers that can be interviewed. Further, there is a geographical limitation to which retailers can be interviewed.

Lastly, there is only a limited number of retailers who fulfils the aforementioned criteria. Within this segment a relatively large amount of the retailers where not interested in participating in an interview.

2.8.4.1 Jacob Vestergaard, Owner at Vestergaard Møbler

We had a face-to-face interview with Jacob Vestergaard who is 2^nd generation of furniture and lighting dealer.

He became owner of the store one and a half years ago. The interview with Jacob lasted 20 minutes. We chose to interview Jacob due to his expertise within the area of furniture and lights retailing, where he came highly recommended by LP. Secondly, Vestergaard Møbler is one of the largest single stores that sell lighting products in the Greater Copenhagen area with a high number of customers visiting every day.

Hence, when Vestergaard Møbler services a large number of customers a day their knowledge on customer experience and how this application by LP can be used is usable for the research.

2.8.4.2 Anja Rouchmann, Head of Lighting Department

Another retailer we had a face-to-face interview with was Anja Rouchmann who works at Illums Bolighus in Copenhagen. Anja has been in charge of the lighting department for more than 10 years. The interview with Anja lasted 22 minutes. One of the most important reasons for interviewing Anja is the fact that Illums Bolighus is the number one store in Denmark who sells most LP products pr. square meter. Anja’s expertise combined with the fact that they have the highest conversion rate, gives insights into how AR can be used to increase customer experience. It is fair to assume that Illums Bolighus have a good idea about how to sell LP products and it is therefore interesting for our research to examine where in their processes AR can used.

2.8.4.3 Patrick Olsen, Head of the Lights Department

The last retailer we interviewed was Patrick Olsen who is in charge of the lighting department at Johannes Fog in Lyngby. Patrick has been working for Johannes Fog for many years and has been in charge of the lighting department for four years. The interview with Patrick lasted 20 minutes. Patrick and Johannes Fog is interesting to interview as their store is a bit different from the ‘usual’ LP retailers because they sell items

(21)

from down to 10 DKK up to 50.000 DKK. This means they do not have the same exclusive aura as other retailers have. This produces some challenges as to how Patrick can advertise LP products because there are some brand-restrictions due to LP not wanting to be associated with low-end brands.

2.8.5 Semi-structured Interview with Customers

Having identified the general patterns through interviews with retailers and internally at LP, enables the research to move from an exploratory study towards a descripto-explanatory study. The objective of the semi-structured interviews with customers therefore varies from the interviews with LP personal and retailers, as they seek to describe and explain how the patterns can affect the customers. In order to examine whether or not the AR technology can create value for customers, the semi-structured interview approach adopts some elements of an experiment. The interviews with the customers are conducted with individual participants, where their attitude towards patterns determined by the researchers are discussed broadly. Next, the participants were exposed to the AR application by LP, where they got a chance to play around with the application in their natural surroundings. It is important to note, that each customer is interviewed in their own home in order to better measure the effect of AR as the intent of the application is to be used by customers within their own home. Lastly, the participants are asked the same line of questioning enabling a comparison of the first answers in order to measure the effect of AR on the customer (Questions for customer interviews, Appendix 9).

The reason for claiming that this is only ‘experimental-inspired’ and not a complete experiment lies within the deviations from what is defined as an experiment. The basic definition of an experiment is a study between two links, where if a change in a independent variable (AR) creates a change in a dependent

variable (customer experience) (Saunders et al., 2009). In a classic experiment two groups are established, an experimental group and a control group where the participants are assigned at random to one of the two groups (Ibid). The experimental group is exposed to a planned intervention. Saunders et al., (2009) provides the example of a intervention where the experimental group is exposed to a ‘buy two, get one free’

promotion. Whereas, the control group is not exposed to the planned intervention, enabling a measurement of the dependent variable before and after exposure. Making it possible to perform a before and after comparison of the two groups and the differences between the two groups is caused by the intervention (Ibid).

Firstly, the individual person interviewed is not assigned to either the experimental nor the control group but acts as both “groups” within the interview. They are asked the before and after intervention questions in order to establish comparison opportunities to measure whether or not the intervention has caused a change.

Additionally, the participants are chosen by the researchers for the specific task of participating in our

(22)

interview. The requirements for participating in the interview is clarified in the sample part of the methodology, which is described in the next section.

However, in order to claim that it is experimental-inspired there needs to be some similarities to what is defined as a classic experiment. The similarities to an experimental study occur when dependent variables are tested based on manipulation of independent variables. In this research it occurs when the participants have answered questions broadly about the defined dependent variables being; Enjoyment, Personalization, Helpfulness, Realisticness, Simplifying processes, Accessibility, Visualization and Manipulation (Questions for customers, Appendix 9). Having answered questions about the dependent variables, the independent variable is introduced in the shape of LP AR application. The participants are asked to play around with the application and become familiar with its functionalities. After having tested the application the participants are then asked similar questions to investigate if the manipulation can have affected the customers

experience.

2.8.6 Customer Sample

Choosing the technique for selecting samples, researchers must identify if the sampling will be a probability sampling or non-probability sampling (Saunders et al., 2009). For choosing the customer samples for this research a non-probability technique is chosen, because the sample is not chosen statistically at random which is the case with probability sampling (Ibid). Unlike the probability sampling, the non-probability sampling technique derived from the logical relationship between research objective and sampling technique.

The sampling technique to determine the participants for the experiment-inspired semi-structured interview is the typical case sampling (Ibid). The typical case sampling is defined as what enables the researchers to develop a framework for what is average for a specific phenomenon (Ibid). Based on this assumption the first step for the researcher is to define what normal is. Through the interviews with LP personal and retailers the most typical buyer of LP products has been identified for us to include in our study. The typical LP segment is in the late thirties, well educated, from wealthy households and with a fifty-fifty gender distribution. Additionally, David Rosenqvist deepens the age group based on internal research at LP to be between 45 and 65 years old. (David Rosenqvist, Appendix 1; Finn Jensen, Appendix 2; Anja Rouchmann, Appendix 3; Patrick Olsen, Appendix 4; Jakob Vestergaard, Appendix 5). Secondly, to provide the analysis with some depth and applicability the samples must have purchased or considers to purchase a LP product.

Having identified what a typical LP customer is enables us to find participants that fits these criteria.

Therefore, sample one contains three customer interviews with participants that meets the sampling requirements of late thirties and above, well-educated and from wealthy households (Customer interviews, Appendix 14, 15 and 16). Additionally, there is a strong desire within LP to create an interest with a lower aged audience, which makes it interesting for us as researchers to address this audience in order to make the

(23)

research more applicable (David Rosenqvist, Appendix 1). Hence, sample two contains six customer interviews that is a lower age group than the typical LP segment, but still has to be in the processes of considering to buy a LP product (Customer interviews, Appendix 10, 11, 12, 13, 17 and 18).

2.8.7 Bias

The typical case sampling does not come without limitations as this specific sampling type a subject to very close control on the researcher’s behalf, as the element of randomness is removed. In the ideal setting every participant would be selected at random within what is defined as the typical customer. Additionally, there is also a degree of convenience sampling associated with the research conducted. With the convenience

sampling a degree of bias is induced to the experiment-inspired semi-structured interview. The bias is induced as friends and family are interviewed for the research. However, even though they match the demographic sample criteria a degree of bias cannot be avoided. Friends and family would have a hard time being objective in their response, as they want what is best for us and they might answer the questions in a way they think we want them to answer it. It is important to note that in attempt to reduce bias we as interviewers have instructed the participants to answer honestly and without regards to the researchers.

However, they can never be hundred percent objective in their own subjective view.

Secondly, a degree of systematic errors occurs with the type of questioning planned by the researchers as they are mostly targeted customers who either had purchased or considered to purchase a LP product.

Despite the fact that the participants meet parts of the sampling requirements not all the participants had purchased or was considering to purchase a LP product. As a consequence of this, some of the questions for the participants were asked a ‘incorrect’ way and in hindsight had to be phrased differently. However, it is still the researcher’s belief that the answers are usable and to some extent the same answers they would have provided if they had matched the sampling requirements fully.

2.9 Reliability, Validity and Generalisability

Qualitative research is a subject to interpretation and subjectivism causing the findings to be - more often than not - a subject of deep inquiring and questioning. The following section will therefore, contain our evaluation and assessment of the credibility of our research findings. Meaning, topics as reliability, validity and generalizability is assessed.

2.9.1 Reliability

When assessing reliability, we as researchers must consider if there is consistency in the data collected. By this we mean would other researchers reach the same results if they set out to conduct the same interviews as we did (Saunders et al., 2016). Securing high reliability when using interviews as research method is difficult

(24)

as you can perceive each interview as unique. The uniqueness occurs in the variation of the interviews in terms of questions asked and the way we as researchers interpret the responses. Due to the interactivity and the very nature of face-to-face interviews our research is faced with some reliability issues. However, it is important that it is not seen as an attempt to distort the process of research. As our primary data collection mainly is based on face-to-face interviews we experience some reliability issues as it is not certain that other researchers would reach the same findings as we do. However, using semi-structured interview face-to-face with a prepared interview guide as well as possible probing questions the reliability of the research increases.

Further, issues concerning ‘observer error’ can decrease the reliability (Ibid). Observer error occurs because we are two interviewers that have different approaches to questioning and elicit participant answers. This was attempted to overcome by having a main interviewer who asked most of the questions. It goes without saying that the more unstructured the interview is the less reliability you are able to achieve.

2.9.2 Validity

Validity refers to how well the research conducted actually measures the objective of the research and if it actually reflects the reality it presents (Saunders et al., 2009). In order to secure validity of this research

‘Criterion-Related Validity’ approach has been applied (Saunders et al., 2016). The Criterion-Related Validity involves comparison of different test results with the outcome. This is shown in our research where the different results from literature and research are assessed with the outcome of customer interviews.

Further, this triangulation approach where value is assessed from three perspectives (internal, retailers and customers) supports the criterion-related validity as the results of the different perspectives are and compared. However, there are some validity concerns to the research as the interviews are relatively short varying from 12-31 minutes. In depth answers could have ensured that all the constructs we wanted to measure on was more adequately answered.

2.9.3 Generalisability

Generalisability is in other contexts referred to as external validity and concerns the degree to which our research is applicable to other similar cases (Saunders et al., 2016). In contrast to the validity described in the previous sections where it is the conclusion for this research that is the focal point, generalisability concern whether or not conclusions can be drawn to similar cases. The results of this study can be applied to similar case studies as we seek to explain how AR technology can impact customer experience hereby, creating value at a general level. However, it is hard to generalise results of qualitative research due to the degree of interpretation involved.

(25)

3 Literature Review

The literature review provides the foundation of which the research conducted for this thesis is presented.

The overall purpose of the literature review is to organize the findings and ideas of other researchers within the field of interest, thus providing the researchers with an awareness of the current state of knowledge (Saunders et al. 2009). Each piece of literature is critically assessed in order to determine its value and show how previous work relates to the research objective at hand. Based on the assessment of the literature different concepts discovered are developed and gathered in a concept matrix which can be seen in section 3.2. The literature review is divided into two parts. The first deals with AR and the second contain relevant literature about Customer Experience Theory.

3.1 The Implementation of AR and its Position in The Retail Industry

When researching on the implementation of AR in retail, not much literature and research has been

conducted. Today, AR is widely implemented across a variety of different industries. With the possibility to interact between the real-world and insert digital overlays, industries like education, gaming, tourism &

travelling industry, manufacturing and healthcare quickly adopted the technology (Furht, 2011; Morgen, 2017). In education “AR has a strong potential to provide both powerful contextual, on-site learning experience and serendipitous exploration and discovery of the connected nature of information” (Lee, 2012). The simplest form of AR usage in education is how it supports textbook materials in classroom-based learning setting (Blum, 2018; Lee, 2012). In the healthcare industry AR has been applied in very different ways from medical learning, medical training to retrieving patient information. With the possibility to assist doctors with patients in intensive care, aid medical students’ study through AR applications that visualize the body and information gathering with visualization possibilities eases the work of doctors (Alkhamisi &

Monowar, 2013). The gaming industry is leveraging AR’s ability to create deeper relations between the characters of for instance a game and the users of it. The best example of successfully using AR technology within the gaming industry is the application Pokémon Go that had 800 million downloads and despite being a free to download application, the creators Nintendo saw their stock prices increase with 23% after the launch (Paine, 2018; Lainer, 2018). In the manufacturing industry, AR technology is used as a tool for simulating manufacturing where workers at an assembly line easier can organize otherwise complex task.

AR is for instance used to locate and store packages by workers at warehouse. Further, AR can be used to detect malfunctions when manufacturing cars (Nee et al., 2012; Bottani & Vignali, 2018; Blum, 2018).

These are just some of the many examples of where AR is used across different industries. From the

literature we can see that the industry where AR technology recently has gained most traction is within retail.

Despite an increased traction there still lacks academical evidence of AR’s impact on the retail industry.

Some retail giants have implemented AR, however they all share the same common characteristics where the implementation is meant as a cool gadget and a fun add-on to already existing strategies. Large retail stores

(26)

and brands like Lacoste, American Apparel and Timberland uses AR to increase their in-store experience where their users can try on shoes and clothes (Sheehan, 2018). Another retail giant who implemented an AR application is IKEA with their IKEA Place application. Unlike the other cases there has been done actual research and academic papers have been written about IKEA Place. They research how AR can affect customer purchase intention and shape their making process (Richter & Razska, 2017). The study found that AR could positively affect customer purchase intention and found that AR can be more than just a cool gadget but an actual business tool (Ibid).

3.1.1 Perceived Value

Haenlein and Kaplan (2009) researched if corporate presence within the immersive technology world influences consumer attitude towards a brand and purchase intention. The researchers approached the study using a survey strategy where they received 580 usable respondents. The research concludes that exposure to a virtual world positively affects consumers attitude towards a brand and purchase intention in the real- world. Another notable finding Haenlein and Kaplan discovered is that the user’s purchase experience and satisfaction from the use of the purchased product affects brand attitude and purchase intention (Haenlein and Kaplan 2009). The study relates to the research objective of this thesis as the empirical evidence

provided by Haenlein and Kaplan (2009) demonstrates the effects of immersive technology and impact it has on purchase intention, thus creating potential business value. Another study that focuses on how immersive technologies can impact the purchase intention of consumers is done by Chen et al. (2011). In their paper Applying Augmented Reality to Consumer Garment Try-On Experience, Chen et al. investigates how the traditional user experience, when trying on clothes can be enhanced through the use of AR technology. The research method chosen was an experiment where the user’s based on their learnings with the applications filled a questionnaire. An interesting finding that is directly applicable to the research objective of this thesis, is that AR applications can shorten the distance between user’s and company. The company provides users with more information and the purchase conversion ratio increases. Alimamy et al. (2017) studied how the possibilities of AR can create value for both businesses and consumers. Alimamy et al. researched different perceived risk consumers have when purchasing a product, and how Augmented Reality can be used to overcome these risks. The risks found in the research where AR can reduce the risk includes, Time Risk, Performance Risk, Psychological Risk, Financial Risk and Social Risk (Alimamy et al., 2017). The research is done at a theoretical level meaning the evidence presented is not backed up by empirical evidence.

However, the theoretical findings are still of interest as it presents some of the factors companies can use to influence their consumers purchase intention.

Goel and Prokopec (2009) investigated in the early stages of virtual environments, the difference between virtual environments, traditional virtual channels and how marketers could leverage this ‘new’ technology.

(27)

The study was conducted using a mixed-method approach, where the qualitative approach had an exploratory approach. The quantitative approach was used to test the hypothesis made by the researchers (Goel and Prokopec, 2009). The research found that variables such as trust, product diagnosticity, informativeness and product descriptions significantly differed between virtual environments and virtual channels. Amongst the findings where that websites have higher informativeness and product description than virtual worlds. Additionally, virtual environments lacked legitimacy in the eyes of the consumers compared to website, leading to low trust amongst the consumers (Ibid). The last notable finding was that marketers who seeks to leverage virtual environments should make a distinct strategy and not equate them to websites. At the time being of the research conducted the potential of immersive technologies had just begun to unfold. However, we have learned that immersive technologies have been more commonly accepted as shown in Yusoff et al. (2011) article Evaluation of user acceptance of mixed reality technology. The research investigated the acceptance of Mixed Reality amongst students and found that the students who tested a Mixed Reality system for educational purposes found that it was easy to use and perceived as useful.

Immersive technologies have the ability to change and alter the way consumers perceive a company.

Pantano and Servidio (2012) investigates the relevance of immersive technologies in the point of sales process, to see if it can influence consumer perception. The study found that perceived enjoyment and consumer’s satisfaction is the first step towards integrating immersive technologies. Further, the study found that traditional stores needed to renew their strategies due to the importance of enjoyment in the point of sales. New interactive and enjoying tools can catch the attention of the consumer’s with immersive technologies (Ibid). The possibilities of immersive technologies to affect user’s perception through customized service, innovation through an interactive and enjoyable user interface, can pave the way for immersive technologies in the retail industry. The article by Pantano and Servidio (2012) relates to our research as core elements of immersive technologies are being discussed as well as providing some interesting thoughts about the endless possibilities of immersive technologies.

Furthermore, Yim et al. (2017) paper, Is Augmented Reality Technology an Effective Tool for E-commerce?

An Interactivity and Vividness Perspective examines the effectiveness of AR as an e-commerce tool by focusing on interactivity and vividness. Their paper is divided into two studies. The first, explores how effective AR is by comparing it to a conventional website. In order to explore the effectiveness an experiment was conducted, where one group was exposed to AR and the other a website. The products evaluated in the experiment was sunglasses and watches. The results of the first study showed that AR when compared to a traditional website had a positive effect on media novelty, immersion, enjoyment, usefulness, attitude towards medium and purchase intention (Yim et al., 2017). Study two examines which effect AR- based and web-based product presentations has on consumer evaluation. In order to answer this question

(28)

Yim et al., (2017) asked participants about their opinion on AR (ibid). The results showed that AR has a positive effect on consumer evaluation and benefits from interactivity and vividness. The positive effect is found most significant when consumers try AR for the first time. When AR loses its novelty the

effectiveness also decreases (Ibid). Yim et al. (2017) paper is consistent with our research topic by examining the effect of AR within retail and also has some interesting findings that are applicable to this thesis.

Papagiannidis et al. (2013) studied the impacts of a virtual environment simulation of a retail store experience in order to examine user engagement and user experience, to see how this affects purchase intention. The results of the experiment lead the researchers to conclude that engagement and enjoyment leads to an increased satisfaction, which ultimately can affect consumer purchase intention. The study was conducted using an experimental setup where the researchers designed their own virtual retail experience, which made it possible for the researcher to control all experimental parameters (Papagiannidis et al., 2013).

The research conducted by Papagiannidis is directly applicable to the research this thesis is interested in as it determines variables that are important for immersive technologies in order to secure a good user experience.

However, the experiment is only tested on one type of product and in one virtual environment, which means their findings might have been different if the experiment had been conducted at a larger scale with different types of products.

Scholz and Smith (2016), studies in their article Augmented reality: Designing immersive experiences that maximize consumers engagement, the passive and active aspects of AR that marketers need to implement in their applications. They need to implement it in order to secure immersive brand experience, consumer engagement and interactive advertising. Consumer engagement has become a strategic tool for securing a competitive advantage for companies especially in the mobile marketing field where the potential of consumer engagement is high. AR can with its ability to entangle a brand with a consumer's social and physical environment play an important role for marketers to sustain a competitive advantage (Scholz and Smith, 2016). The research conducted by Scholz and Smith (2016) is based on extensive literature and knowledge of the authors. However, there is no research method in the shape of experiments, questionnaires or interviews, which is commonly used is this type of research. The conclusion serves as a mere checklist for companies that wish to leverage the potential of AR and implement it as a part of their marketing camping.

The findings emphasized by Scholz and Smith (2016) suggest that marketers who seeks to leverage AR, needs to consider their target audience characteristics, communications objective, content management strategies, triggers and social-physical context (Scholz and Smith, 2016). All of these different elements need to be taken into consideration in order to develop an AR application that engages users and creates

interactive content. The research at first glance might seem irrelevant as it is as much a design project and a

(29)

‘how-to-guide’ as a factual research. However, the research has valid meaning for the purpose of our thesis, as we are examining a newly developed application by LP. The findings from Scholz and Smith (2016) is therefore be applicable to the case we are studying.

Collin-Lachaud and Vanheems (2016) paper focuses on consumers shopping experience when navigating between real and virtual shopping spaces. The authors used a qualitative approach conducting long, face-to- face interviews with 35 consumers. These were asked about their experience within cross-channel (physical and virtual) shopping experiences (Collin-Lachaud and Vanheems, 2016). Through an extensive analysis of their interviews, they identified five dimensions of experience; hedonic-sensory, praxeological, rhetorical, temporal and social dimensions (Ibid). Their results show that consumer experiences it not fragmented even though the real and virtual channels are not integrated. When a experience takes places in the real and virtual world it brings out an intensification of the five dimensions mentioned above (Ibid). Even though the authors made use of extensive interviews and analysed them thoroughly, a quantitative approach that supported the qualitative might have enriched their findings.

3.1.2 Brand Attitude

A study that examines how brand attitudes can change using immersive technologies is conducted by Dobrowolski et al. (2014). The study compared participants attitude towards two different car brands (Ford and Honda) before and after exposure of a virtual experience. The results show an increase in attitude from the respondent after exposure of immersive technologies (Dobrowolski et al. 2014). However, the

modifications of difficulty manipulation conducted by the researchers is reflected in the results, were a hard

‘virtual-test-drive’ difficulty resulted in decrease of attitude and vice versa. The reliability of the findings is somewhat low, as the manipulation factor plays an important role in the end result and the test persons brand perception might be different depending on the level of test driving.

Yaoyuneyong et al. (2015) studied consumer preferences and attitudes towards different types of print ads.

The study clarified which type of print media ads that consumers responded the most positively towards. The different print ads consist of traditional print ads, QR Code and AR. Through an extensive literature review the researchers found eight variables to measure attitudes towards the different print media ads. The

variables found were: attitude towards the ad, informativeness, entertainment, novelty, irritation, advertising value, time-effort and ad effectiveness (Yaoyuneyong et al., 2015). The study adopted a mixed method in order to compare the differences between the types of print ads. Of notable results the study showed that AR ads were preferred with the highest perceptions of informativeness, novelty and effectiveness (Ibid). The research done by Yaoyuneyong et al., (2015) is important as it discovered new variables such as novelty and

The Impact of Augmented Reality on Customer Experience