Marketing is an exciting place to be right now and Augmented Reality (AR) is just one of the latest game-changing technologies set to change the face of the industry forever.
Although various AR headsets have been in development for a while, it is only in the relatively recent past that business owners and marketing teams have begun to see the potential value there is to be leveraged from this innovative technology. From delivering highly immersive experiences to connecting with consumers at the right times to deliver relevant information on-demand, AR can also provide solutions to the challenges that asymmetric information poses.
What is Asymmetric Information?
Consumers are frequently presented with products the worth of which is hard to judge before purchasing. So, a television might possess the aesthetic qualities you are looking for, however, there is no telling how long it will ultimately continue to work and therefore how much value for money your investment will deliver.
In a 1970 paper “The Market for Lemons”, George Akerlof questioned what would happen if buyers could not easily differentiate between “good” and “bad” used cars. It is reasonable to suppose that buyers would pay more for a “good” car than they would for a “bad” car but if they cannot tell the difference, buyers might split the difference and purchase a car that they view as having a 50% chance of being either “good” or “bad”.
Dealers selling a “good” car, however, would reject that offer and only dealers who know they need to offload their “bad” cars would be prepared to accept such an offer. Smart buyers will become wise to these tactics but this level of information asymmetry could also result in no “good” cars being purchased at all.
Similar modes of thinking can be applied to a variety of industries. Take the fashion industry, for example. Although the retailer knows precisely where their clothes are made, how much each garment costs to manufacture and the price at which they need to sell it in order to secure a profit, consumers often don’t. As such, they remain uncertain with regard to what exactly equates to a fair price. In some cases, this can lead to customers refusing to pay the sellers’ price.
AR and Asymmetric Information
When used in the right way by marketers, AR technology can provide both transparency and real-time information to ensure that consumers feel as though they have every piece of relevant information they need to make a genuinely informed purchasing decision.
Let’s return to the used car analogy from earlier. In looking at a car, consumers could be provided with information, including maintenance history and mileage, via an AR headset. Anything that makes consumers feel more confident in their purchasing decisions will lead to additional sales and conversions. So, if you can use technology to ensure that your brand is synonymous with transparency, this should drive success in both the short and long term.
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