Indiana University      Research & Creative Activity      September 1999 Volume XXII Number 2

Virtual Shopping Adventures

by Lucianne Englert

How do you feel about grocery shopping? For most people, it ranks right up there with housekeeping and visiting the dentist--they don't enjoy it at all! But research shows that each week, consumers in the United States spend about 1.5 hours grocery shopping, making 2.5 trips to the store. And each week, shoppers must walk up and down the same store aisles to search for the same products. About 85 percent of the groceries we purchase simply replenish what we've bought and consumed the week before.

Burke
Raymond Burke, E. W. Kelley Chair of Business Administration, Kelley School of Business, Indiana University Bloomington, in the Customer Interface Labratory, demonstrates a 3-D grocery shopping simulation, iShop, which he co-developed with Intel Corporation. It allows shoppers to "walk" down the aisles of the store and pick up, rotate, and purchase products. Shoppers can also "filter" shelf displays based on their requirements, shop from a list or from recipes, and watch video clips demonstrating product uses. The simulation can be viewed through a hand-held, stereo display to create a totally immersive shopping experience. --credit

So instead of going to the store, how would you like to check off the items you need from an electronic shopping list and have them automatically delivered to your door? Or, perhaps you're a person who enjoys grocery shopping. Then why not use the computer to quickly order the basics, like milk, bread, soft drinks, and paper towels, so you can spend more time investigating exotic new items, selecting ingredients for an interesting recipe, or comparing nutritional labels to improve your diet?

Raymond Burke, E. W. Kelley Chair of Business Administration at Indiana University Bloomington, conducts cutting-edge research in electronic commerce, market research, and technology in retailing. Chances are, whatever is on your wish list to improve the shopping experience, Burke is working to develop it. "For the past thirty years, people have predicted that technology will transform the shopping experience," Burke says. "And for thrity years, we have been disappointed. The limitations of personal computers and communication technologies made shopping at home harder than shopping in the physical store--the systems were too slow, too unreliable, and too hard to use. Now the technology has evolved to the point where it can deliver significant benefits to consumers."

Burke's research uses advanced 3-D graphics to simulate the experience of shopping in a retail store. Realistic images of products and store aisles can be displayed on desktop monitors, a large-screen flat-plasma display, or a one-of-a-kind head-mounted display that creates a totally immersive environment. The experience of "virtual shopping" is uncannily similar to the experience of physically moving through a grocery store.

The virtual shopping simulations are used for two main applications: marketing research and electronic commerce. The goal of the marketing research application is to accurately simulate the physical store and test customers' reactions to new products, product assortments, prices, packaging, and merchandising. To illustrate the advantages of computer-simulated test markets, consider the two most common types of laboratory research in marketing. The first is focus groups, in which eight to twelve individuals are interviewed collectively to gauge their reactions to a new product or other marketing idea. The second is concept tests, in which participants are shown a written description of a product and asked about their purchase intent. Burke explains an important drawback of both techniques: "Each of these traditional methods forces the consumer to look at your new marketing idea, whether it's a new product, promotion, or advertising. This sidesteps the process in the store of needing to attract the consumer's attention. There is no measure of how your idea performs in a cluttered, competitive environment."

Tracker
To better understand consumer shopping habits, Burke uses an infrared tracking system to monitor how customers move through the retail store. The tracking information is linked to product sales data collected with UPC barcode scanners. In this screen shot, the numbered boxes indicate the current positions of shoppers, the pink regions highlight the store locations where consumers have spent the most time, and the scrolling list of products shows what is being purchased. This information is used by retailers to help lay out their stores and position product displays. --credit

In contrast, "virtual shopping simulations allow us to capture the realism and complexity of the physical store," Burke says. As opposed to traditional field research methods, the new model allows much greater control over the study, and much greater speed in designing and conducting the experiment, while it collects more detailed information on the shopping process and costs significantly less. "Additionally, the research can be completely confidential, avoiding the issues that can occur when a competitor becomes aware of your plans." Burke explains that if a competitor discovers a new product in test market, it may rush a similar product to market or attempt to disrupt the test by running promotions to interfere with the accuracy of the results.

Burke's virtual shopping technology has been used by research firms throughout the world and by several leading producers of consumer goods, including Frito-Lay, General Mills, Goodyear, and Johnson & Johnson. At the end of last year, more than 130 commercial research projects had been completed.

The second focus of Burke's research is on how technology will change the way manufacturers and retailers interact with customers in the future. "For electronic commerce to succeed, it must leverage the multimedia power of the PC to create rich graphical shopping environments, as opposed to using the computer simply as a dumb terminal for the Internet," Burke says. "Today's children have experience using sophisticated 3-D graphics and animations in their video games. As adults, they will expect the same sophistication in the next generation of online shopping interfaces. "

Burke doesn't rule out using text-based and other non-graphical shopping interfaces for some applications. "It's easy to look at what I do and conclude, 'Ray thinks 3-D shopping is great for everything.' But that's not true. I look at a variety of techniques to interface with the customer and try to be open minded about which will work best in a particular situation," he says. "The point is, there are lots of technologies available, lots of ways to connect with the customer. It's difficult to come up with one approach that suits all customers in all segments of the market."

He continues, "Three-dimensional displays work best when they leverage the knowledge that consumers already have about how to shop in the physical store. Think about a grocery store: a typical supermarket carries over 30,000 different items. Consumers know a tremendous amount of information about shopping there, related to the store layout, package appearance, where to find things," Burke says. "By creating an electronic model of the physical store, customers can use their knowledge to easily transition from the physical store to online shopping."

Burke points out that customers won't have the same level of shopping knowledge for stores they visit less frequently, and so a 3-D shopping interface may not be appropriate. "Take a computer store, for example. In this case, having a catalog-based system where consumers can search by category may be a better way to organize electronic information," he says.

cartoon
Using virtual reality simulations, Burke can create and test new products, packaging, merchandising, and promotions without incurring the cost of physical production. He has found, through a series of validation studies, that consumers' shopping patterns in the simulation can accurately predict their behavior in the physical store. --credit

The key is seeking out the best ways to interface with customers for a given product or product line. "That's the purpose of the Customer Interface Laboratory we've developed in the Kelley School of Business," Burke says. "We use state-of-the-art computer workstations to simulate the shopping experience as it exists in the physical stores of today and may exist in the virtual stores of tomorrow." As part of IU's Center for Education and Research in Retailing, the Customer Interface Laboratory "reflects the concerns of real world retailers and affiliated companies in our research and teaching," he says. Sponsors of the center include such leading retailers as Sears, Kohl's, Office Depot, Target/Dayton's/Hudson's, Rich's/Lazarus/Goldsmith's, and Kroger.

Using the laboratory as a foundation, Burke has launched a campuswide initiative called the Customer Interface Group. "It seemed to me that many people throughout IU were looking at different aspects of the same problem," Burke says. "In the business school, we were evaluating market opportunities for new technologies, how to create value for manufacturers and retailers as well as consumers. My colleagues in computer sciences and telecommunications were creating the next generation of technical innovations and exploring potential applications. In cognitive sciences, library and information sciences, and the new School of Informatics, people were interested in how technology can affect human behavior," he continues. "It just seemed natural to pull together a group of these faculty and students, not just to study e-commerce, but to look at new ways in which technology can facilitate business, to prototype new technologies and test them with consumers." Burke points out that his goal for the Customer Interface Group is to "have an impact on business practices, and to do this, you need to understand technology, human behavior, and business opportunities."

Continuous Learning Project

Raymond Burke, E. W. Kelley Chair of Business Administration at Indiana University Bloomington, looks ahead to the bigger picture in marketing research and technology. He's also spearheading what he calls the Continuous Learning Project, which uses online resources to enable IU alumni to continue learning and reviewing topics taught here long after they've graduated. "Let's say you took my class in marketing research several years ago, but you never had the opportunity to use the information until now. Where do you look to refresh your knowledge? Do you dig out your old textbooks and hope they're still accurate? Why not visit the Web to find the current assignments, lectures, and course notes from my class? Faculty members have to continuously update their materials anyway, so it costs almost nothing to provide this information to graduates." Burke's project follows IU's marketing tagline of "Quality Education. Lifetime Opportunities" and offers the university a means of evolving from a product-based organization to a service-based organization.

Scott Corey, a second-year M.B.A. student from Annapolis, Maryland, who is studying marketing and finance, took one of Burke's marketing classes last fall and found the Continuous Learning Web site "extremely valuable." Burke not only included the syllabus from the class, but he also posted all the materials he used in class on the Web. Corey says, "Now it's out there, and when I graduate next year, I'll be able to go back to the site to brush up on the skills I learned in his class. Beyond that, I'll be able to keep an eye on the evolution of ideas in marketing, as the syllabus and support materials change from year to year." Corey continues, "I wish more of our instructors would do this, because it would be a great resource after we graduate."

--credit
 

Likening today's burgeoning technology to the early days of radio, Burke tells the story of David Sarnoff, the first chief executive officer of RCA. "In the 1920s, there were many people building AM radios, and most of these were complex devices, with lots of controls that only a true enthusiast could operate. Sarnoff had a vision that would revolutionize the communications market. First, his company would create a 'radio music box' that would bring news and entertainment into homes across the country. And second, the technology would be designed to be so easy to use that anyone could operate it. It would have only two knobs, for volume and tuning. The radio went on to become a huge success, and now has a higher household penetration than running water." Burke emphasizes the importance of making technology easy to use for the average person when evaluating its market potential.

Burke points out that there's much more to look at than e-commerce. "It's so easy to focus on e-commerce because of all the news stories, but that's only one aspect of technology's role in retailing. Most people look at the Internet as something separate and different from store-based retailing," he says. "But it's just another way to talk to the customer. Conventional retailers now are looking at how they can leverage technology both online and in their physical stores. Next year we'll see major retailers offering new and different ways to interact online, to help make shopping more convenient from home, and using technology in their physical stores to deliver benefits that can't be matched by purely online services."

"Retailers will seek out ways to create value for their customers," Burke says. "What makes the shopping experience easier? What information do consumers want? What will help them make better decisions?" He says, "With the computer, we can easily prototype and test new marketing ideas, from advertising campaigns to new packaging to new products and promotions. We can design new ways to interface with customers. Electronic shelf labels and in-store tracking systems, hand-held shopping assistants, video cameras that recognize the faces of frequent shoppers and offer customized signage, all kinds of possibilities," he continues.

"Technology can help us to conduct business in new ways, but we need to be patient with it," says Burke. "When something new comes along, people can get very excited and generate lots of hype. Then, when the technology fails to meet expectations, they are disappointed, write it off as a failure, and move on to something else. Yet the technology continues to evolve, performance improves, and costs decline. Think about voice recognition, artificial intelligence, kiosks, and virtual reality: today there are many successful applications of these technologies after long periods of development, testing and refinement."

For more information on the Web:

Return to the Table of Contents