The Effects of Virtual Reality (VR) on Consumers’ Reality

In this dissertation, I explore an unintended downside of Virtual Reality (VR) in marketing practice. I find that despite firms’ intention to use VR as a gateway experience to future consumption in reality, the same experience delivered in VR (vs. non-VR) mode lowers consumers’ subsequent desire for similar kinds of experiences because people satisfy their needs in VR that they otherwise would in reality. This effect is consistently observed among consumers with a strong (vs. weak) need to engage with the VR experiences, namely (1) high sensation seekers engaging with stimulating VR content and (2) highly mindful individuals engaging with calm and contemplative VR content. To document the underlying mechanism, I measure users’ physiological reactivity (i.e., Skin Conductance Response) to stimulating VR and find that high sensation seekers engage with stimulating VR content more intensely than low sensation seekers. As a result, high sensation seekers readily satisfy their need for sensation in stimulating VR, reducing their subsequent desire for stimulating consumption in reality. The negative effect is also observed among consumers with high dispositional mindfulness using calm museum VR. I further find evidence for consumers’ need satisfaction in VR by showing that the negative effect diminishes when the real-world consumption experience is dissimilar (vs. similar) to the previous VR experience. Two field studies in a South Korean VR “theme park” and the National Museum of Korea, and three controlled lab experiments consistently reveal VR’s negative effects on consumers’ cognitive, behavioral, and physiological responses. I highlight implications of using VR as a substitute for reality and demonstrate how VR experiences can dissuade, rather than induce, corresponding consumption in reality among target consumers.