Global businesses are increasingly using augmented reality (AR) and virtual reality (VR) to engage with consumers worldwide. However, a new study by marketing professor P.K. Kannan at the University of Maryland’s Robert H. Smith School of Business, along with researchers from Syracuse University and Yonsei University, reveals that cultural differences greatly impact the success of these technologies in different markets.
The researchers focused on the tech-savvy South Korean market and found that foreign brands face a liability of foreignness (LOF) when using XR technologies. This means that foreign brands struggle to connect with local consumers due to cultural mismatches in how information is processed.
The study looked at 257 beauty brands over a three-year period and found that foreign brands using XR innovations had less brand engagement compared to local brands. The researchers suggest that understanding the local culture, choosing XR technology wisely, leveraging newness, and building a community can help foreign companies overcome the LOF challenges.
Overall, the research highlights the importance of tailoring XR strategies to fit local cultures to ensure relevance and engagement with consumers. While using XR technologies can enhance brand performance, it is crucial for companies to approach it carefully to avoid harming their brand reputation. By following the recommendations outlined in the study, multinational companies can successfully navigate the challenges of using XR technologies in foreign markets.
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