As recession-weary consumers learn to make do with less in this, the real world, there is one area where they’re still willing to spend freely: in online, "virtual" ones. A Florida State University researcher is studying the growing market for virtual products, particularly in Internet virtual worlds, and has identified several factors that appear to increase the likelihood that people will make these types of purchases.
Rob Hooker completed his doctorate in business administration from Florida State’s College of Business this past April. Both in his dissertation and in independent research conducted for an international producer of virtual world environments, he has studied virtual worlds and concluded that they might hold important lessons for companies seeking to market real-world products and services.
"Essentially, the more immersive the role-playing experience a virtual world provides, the more likely it is that participants will have positive attitudes toward specific product brands featured in the activity — and the more willing they will be to spend money," Hooker said.
In studying a control group of 348 participants on Planet Calypso, a state-of-the-art role-playing environment set on an alien planet, Hooker and Robin Teigland, a researcher from the Stockholm School of Economics, documented how the psychological states of the participants affected the likelihood that they would purchase virtual products such as clothing to adorn their avatars. (Avatars are digital characters, typically created and designed by the participants themselves, that represent them as they take part in a competition or participate in an adventure.)
"There is a cognitive state known as ‘flow’ that Planet Calypso participants would enter when they became immersed in the experience," Hooker said. "This virtual world became so real to them that they would completely lose themselves in the activity. They would have no sense of the passage of time; hours might pass by without their realizing it. The outside world would simply melt away, and they would in effect ‘become’ their avatar during their time online."
Previous research has shown that the state of flow is intrinsically pleasurable for people experiencing it, he said. They become less self-conscious, less aware of the world around them, and generally feel more relaxed. And — perhaps most significantly for sellers of products, both real and virtual — this psychological state appears to be associated with the formation of positive attitudes toward specific brands, as well as an increased desire to purchase those brands.
"This has enormous significance for companies looking for ways to increase their profit margins," Hooker said. "It strongly suggests that if you can create the sorts of immersive, pleasurable experiences that enable consumers to reach a state of flow, you’ll have a greater likelihood of selling them your products."
While Hooker’s research has focused more on virtual marketing, he sees a potential upside for more traditional product makers as well.
"If I’m a major retailer such as Nike or Adidas, then I want to make sure my products are available in role-playing activities like Planet Calypso," he said. "I want the participants to feel so good about my brand that they’re willing to spend a buck, say, to outfit their avatar with one of my hats or T-shirts. And then I want that positive brand association to carry over into their daily lives as well, so that when they’re done playing they’ll go to the mall and buy my products in the real world."
Sales of virtual products are one of the few bright spots in an otherwise struggling economy. The market for such products reached about $1 billion in 2009 and is forecast to grow to around $1.6 billion this year. It’s a trend that is likely to increase in popularity as people become more comfortable with online environments, said Molly Wasko, formerly an associate professor in FSU’s Department of Management, who worked with Hooker on much of his research involving Internet-based virtual environments. (Wasko recently accepted a position at the University of Alabama-Birmingham as chair of the Department of Management, Information Systems & Quantitative Methods.)
"The virtual economy is only going to get bigger with time," Wasko said. "Rob’s research is innovative in that it offers new insights into the mind of the consumer and suggests ways that retailers can utilize this emerging technology to market themselves more effectively. Both retailers and consumers would do well to take note."
Other faculty members in the College of Business who worked with Hooker on this research include his major professor and dissertation co-chair, David Paradice, the Sprint Professor of Business Administration in the Department of Management; Professor Charlie Hofacker of the Department of Marketing; and Associate Professor Deb Armstrong of the Department of Management.