Does the availability of augmented reality technology over retail platforms increase customers' willingness to pay more

Keywords: Augmented Reality, cosmetic industry, mental imagery, interface, perceived interactivity, willingness to pay... The impact and influence of applying Augmented Reality technolog

As the use of technological features has been increasingly popular in digital retailing, a wide range of retailers have applied augmented reality (AR) to help consumers visualize their products easily This study examines consumers’ perceived interactivity after experiencing AR and explores the connections between perceived interactivity and mental imagery and interface as well as between perceived interactivity and willingness to pay A total of 421 online consumers in Ho Chi Minh City participated in a survey After shopping cosmetic products with the AR function, participants completed the questionnaire The findings reveal that the AR features, including mental imagery and interface influence significantly perceived interactivity, which, in turn, affects consumers' attitudes toward a product and their behavioral intentions These results provide practical insights for digital retailers in creating effective mobile shopping environments

Keywords: Augmented Reality, cosmetic industry, mental imagery, interface, perceived interactivity, willingness to pay

2.1.1 The effect of Augmented Reality on purchase intention of beauty products:

2.1.2 Effects of perceived interactivity of augmented reality on consumer

2.1.3 Discernible impact of augmented reality on retail customer's experience,

2.4.4 The impact of Trade off Price and Value on relationship between Perceived

2.4.5 The impact of Health Concern on relationship between Perceived

4.3.2 Reliability and Convergent Validity of Constructions 47

5.2.2 Practical implications 625.2.2.1 Proposal to increase connectivity and interactivity between consumers

5.2.2.2 Proposal to integrate the “health concerns1* factor into their marketing

5.2.2.3 Proposals to enhance premium experiences to create high perceived

5.2.2.4 Propose to increase brand coverage and customer interest in cosmetics

63

APPENDIX B Questionnaires of the study xxviii

LIST OF FIGURES

Figure 1 Model researched by Whang, J B et al, (2021) 14Figure 2 Model researched by Park, M., & Yoo, J (2020) 15Figure 3 Model researched by Poushineh, A., & Vasquez-Parraga, AZ (2017) 16

LIST OF TABLES

Table 5 Reliability and Convergent Validity of Constructions 44

Table 8 Results of Variance Inflation Factor Values 49

14 IT Interaction

17 PLS-SEM Partial Least Squares Structural Equation Modeling

comparing the pre-confinement period with during the lockdown (Mendonẹa & Beatriz,

2022) The exponential growth of the internet and the COVID-19 pandemic have

brought online activities to the forefront ofcontemporary life, and the cosmetics industry

is not an exception

Augmented Reality (AR) has emerged as an effective, interactive technology for

providing visual product information (Whang et al., 2021) AR technology has become

a popular trend in the beauty industry This method allows consumers to ’’try on"

products on their faces or bodies through mobile applications or AR mirrors, providing

them with a firsthand view of how the products would look on them (Ulriksen, 2019)

Instead of having to spend time and effort visiting physical stores and trying on products

in person, consumers can use AR to preview products from the comfort of their homes,saving time and energy (Wang et al., 2022) This is particularly crucial in the context ofour increasingly busy society and growing demand for beauty products Moreover AR

also helps mitigate risks for consumers, as concerns about the risk of infectious diseaseswhen trying on products in-store are a significant issue Even as the severity of the pandemic diminishes, AR remains a valuable and useful tool for consumers due to its outstanding features that align with the advancements of the digital era, Song el al., (2022)

By gaining a deeper understanding of the relationship between AR and the

willingness to pay , this study wants to provide valuable insights for beauty brands and

retailers, helping them effectively leverage AR technology to enhance customer experiences and boost purchase intention

This research article will contribute to the existing body of knowledge by

providing a comprehensive understanding of the effects of AR on the customer's

willingness to pay in the beauty industry The application of web AR in e-commerce

shops is particularly useful when a wide assortment of similar products is offered (Barta

el al., 2023) The findings will enable beauty brands and retailers to make informed

decisions regarding integrating AR technology into their marketing strategies By

leveraging AR effectively, businesses can enhance consumers' shopping experiences,

increase purchase intention, and address the concerns related to health risks associatedwith offline shopping (Qin et al., 2021) Ultimately, this research will pave the way for

a more engaging and immersive beauty retail experience, benefiting both consumers and

the industry as a whole

1.2 REASONS FOR CHOOSING THE TOPIC

Nowadays, various factors lead people to use more online shopping methods and

gradually abandon traditional shopping, including the geographical distance between consumers and stores and the epidemic situation Augmented reality (AR) mirrors arerapidly evolving, driven by technological advances that produce hyper-realistic visualizations, further solidifying AR's visionary role in marketing (Wedel et al., 2020;

Rauschnabel, 2021) This technology concept allows users to view virtualizationsettings in the real world AR is often used with mobile devices such as smartphones or

tablets (Javornik, 2016) AR is an evolution of 3D technology that enables a 360-degree

view of virtual products However, the key difference between 3D and AR is that AR integrates virtual products into the consumer's physical environment (Olsson el al.,

2013) Augmented reality is a cutting-edge technology that places virtual objects(images, text, and music) on top of the user's actual environment (Kowalczuk et al.,2021) In addition to providing a platform to realistically demonstrate how products such

as makeup or eyewear look on a person's face without actually wearing them (Javornik,

2016), they offer a new format that can deliver captivating sensory experiences on smartdevices or in retail (Petit et al., 2019; Roggeveen et al., 2020) Using augmented reality

to offer products across e-commerce channels can increase consumer value while adding

a unique feel to the buying experience According to Vonkeman et al (2017), ascontextual information continues to grow in importance, AR makes it easier for consumers to visually inspect products in their own physical space

Previous AR research has highlighted its positive impact in many areas such as

education (Liou et al., 2017), gaming (Kogan et al., 2017; Morschheuser et al., 2017),

and tourism (Jung et al., 2015) Recently, the effects of AR on Internet and mobile

commerce have been studied Marketing researchers have mostly studied the effects of

AR at the product and brand level (Heller et al., 2019; Rauschnabel el al., 2019)

Despite the ever-increasing popularity and importance of AR, few studies have paid attention to its hidden mechanisms For instance, why do online mobile shoppers

exposed to AR experiences show higher purchase intent or satisfaction? Consumers

increasingly pay attention to health Concerns about infectious diseases transmitted through the skin and saliva through the use of trial cosmetics are always what makes them hesitate AR was born to solve that problem Instead of trying lipstick directly on

their lips, consumers can use an AR app to preview different lipstick colors on theirfaces This helps users save time and avoid spreading diseases when trying on lipstick

at the store Will concern about the safety of using trial products at stores that can easilyspread infection from person to person increase interest in using AR technology? Or

what is it like to get an enjoyable experience from AR in mobile shopping? What

circumstances is the AR experience more or less effective? What is the impact of AR

on beauty product consumption behavior?

Based on the above reasons, the author group chose to research the topic: “Does

the availability of Augmented Reality technology over retail platforms increase customers' willingness to pay more? A quantitative study in cosmetic industry” The

results of this research project will have significant implications for cosmetic

companies, helping them to better understand the impact of AR on consumer behavior,

which they can use to shape their business strategies suitable for the full use of this

technology In addition, this research topic is also important for researchers, helping them to better understand the impact of AR on consumer behavior in the cosmetics

industry, based on which they can make recommendations for future research directions

1.3 RESEARCH GAP

Thanks to the advancement of science and technology, the application of

innovative breakthroughs has been increasingly popular in digital retailing A large number of brands have adopted augmented reality (AR) solutions to help theirconsumers visualize and browse their products and services In addition to this, the research on AR is a relatively recent phenomenon in both academia and the real world

In terms of academic aspects, according to the available literature and newempirical investigations, there are a few missing issues that require further research

Prior research indicates that augmented reality (AR) technology enhances consumers' inclination to make purchases by enabling them to interact visually with products through their smartphones (Dacko, 2017; Flavian et al., 2019) However, little research has shed light on the underlying mechanisms of how AR enhances consumer interactivity, behaviors, and attitudes toward not only products but also brands and businesses in the online/mobile shopping context The findings of our study will reveal which AR features combined with which organisms influence outcomes or meaningful involvement in the context Furthermore, there were hardly any existing AR studies about the mediating effect of health concerns on consumers’ decision-making processes and behaviors After the COVID-19 pandemic, Vietnamese consumers have depicted certain significant changes in their lifestyles, proactively paying attention to their health more than before.

Research published by NielsenlQ, (2023) shows that about 80% of Vietnamese respondents are more concerned about overall health, 81 % are more concerned about mental health and 79% are more concerned about physical well-being Whilst online shopping has provided consumers with a way to maintain social distancing and avoid infectious diseases when they test free beauty product samples at brick-and-mortar stores This study aims to understand the impact of public health problems and consumers’ health concerns on behavioral intentions of using AR technology on their shopping journey Besides, the quality of the beauty products was almost never considered in the previous studies, while product quality may be an important moderator

of the effects of AR experiences, Whang et al., (2021) AR technology may help consumers visualize clearly how the products fit them well before making purchase decisions but it cannot showcase the quality of those products Therefore, our study findings will indicate the moderating effect of the price and value of products when applying AR to enhance consumers’ interactivity and behavioral intentions

In practical terms, using cutting-edge innovations has become more and more common in digital retailing by enabling customers to browse and visualize their goods and services Many businesses have embraced augmented reality (AR) technologies in numerous fields, including apparel products, furniture, and tourism to engage consumers

in marketing campaigns as well as increase interaction with the business’s product to promote sales, acting as a precursor to the increase in brand love and brand salience

Many businesses have applied AR technology to their websites and E-commerce platforms to attract as many target and potential consumers as possible Hence, having

a comprehensive understanding of factors leading to the increase in brand awareness and product involvement is ofparamount importance Therefore, this study is conducted

to deeply investigate how this technological breakthrough impacts brand awareness and product involvement, the driving factors in the fiercely competitive market

To extend the S-O-R Model with two moderating variables (Trade-off price and value and Health Concerns) and determine the influence of these two variables on customers' willingness to pay for additional applications of AR technology in the cosmetic industry

To investigate the impact of control variables (Brand Awareness and Product Involvement) on customers' behavior

From the research results, evaluate the importance of AR applications on customers’ Willingness to pay, and propose recommendations for businesses to clearly define suitable strategies to attract customers to purchase their products

1.5 SCOPE AND SUBJECT OF THE RESEARCH

1.5.1 Research scope

Respondents: The research focuses on people living, studying, and working in

Ho Chi Minh City who have known about shopping through Augmented Reality technology, especially in cosmetics

Research lime: The investigation, survey, and data collection were conducted from December 2023 to January 2024

Research location: The study was earned out in Ho Chi Minh City, Vietnam

1.5.2 Research subject

The impact and influence of applying Augmented Reality technology in the cosmetics industry on consumer behavior, especially willingness to pay.

In practical terms, this paper provides valuable managerial insights for beauty products enterprises and marketers regarding the significance of AR applications, so that they can propose effective marketing plans or strategies to expand their customer reach, thereby improving business performance not only in Vietnam but also in other Asian nations (Minh el al., 2023) Furthermore, they can utilize the findings from research results to reach more customers who are interested in beauty products

As such, it broadens the knowledge and application of the SOR model to comprehend the collective influences of Mental Imagery and Interface of ARapplications on Perceived Interactivity and how they drive subsequent behavioral responses such as Willingness to pay in AR contexts

Chapter 2: Literature Review And Hypothesis Development

In this chapter, a comprehensive review of previous literature related to the research topic is presented The chapter also includes the development of hypotheses based on the gaps identified in the literature, guiding the empirical investigation.

Chapter 3: Research Methodology

This chapter details the research methodology used to gather and analyze data Il discusses the research design, data collection methods, sampling techniques, and data analysis procedures A clear explanation of the chosen methodology is provided to guarantee the dependability and rigour of the results

Chapter 4: Research Results

This chapter presents the findings obtained from the empirical research conducted The results are analyzed and interpreted in relation to the research questions and hypotheses Tables and other visual aids may be utilized to enhance the presentation

of results

Chapter 5: Conclusion And Recommendation

The final chapter serves to conclude the study by summarizing key findings and their implications It also provides recommendations for future research and practical implications based on the research outcomes This section offers closure to the study and highlights avenues for further exploration in the field

CHAPTER II: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT

2.1 RELEVANT RESEARCH

Table 1 Related research articles

No Author Article

intention of beauty

products:

The roles of Consumers’

control

1) Determine potential mediators in the relationship between AR experiences and patronage behaviors among customers

2) Explore the ARexperience's border condition

Using one of the lop six ARbeauty apps globally, the study experimentally tests the approach ("6 Augmented Reality Beauly Apps Making Cosmetics Shopping Way Easier”, 2018)

Using AR in online or mobile purchases enhances customers’ ability to evaluate product performance, leading to increased purchase intent Cognitive control, a crucial mediator supported by AR features, is identified through Hayes' analysis Positive peer feedback lessens the impact of

AR on purchase intent, offering marketers and mobile service providers insights on leveraging

AR effectively in online commerce

2 Do el al.,

(2020)

Effects of mobile

augmented reality apps

on impulse buying

behavior: An investigation

This research aims to create a comprehensive model for understanding Tourist Impulse Buying (TIB) in Mobile AR applications Combining Bow theory, SOR framework, and Technology Acceptance Model (TAM), the study systematically explores the

Enhancing Mobile AR app interactivity positively influences user satisfaction and enjoyment, crucial for triggering tourist impulse buying A well- designed app with elevated interactivity, ease of use, and usefulness prompts impulse buying behavior, emphasizing

tourism field impact of mobile augmented

reality apps on tourist impulse buying behavior Using Partial-Least-Squares

Structural Equation Modeling (PLS-SEM), the study constructs a detailed model to provide nuanced insights into the complex dynamics of tourist impulse buying influenced by mobile AR applications

the need for developers to prioritize design improvements Users are more receptive to purchase suggestions when the experience is enjoyable, offering practical insights for tourism marketers and extending the Technology Acceptance Model (TAM) with Perceived Interactivity

for onlineretail: factors

in consumer

behaviour

This study explores the influence of 3D product visualization on online shopping behavior, specifically evaluating the effectiveness of a 3D virtual catalog as a consumer outlet and its potential impact on shopping behavior Using a web-based interface for product display, the research assesses whether the level of presence experienced affects consumer motivation to shop

The study suggests that a 3D virtual catalog holds promise as a beneficial shopping application Design considerations, including realism, ease of use, and interaction, are crucial for optimizing user reactions These findings can guide the creation of virtual catalog settings to ensure the best shopping experience for users

4 Park and

Yoo,

(2020)

Effects of perceived

interactivity of

This study explores perceived interactivity in AR shopping, examining its connections with mental imagery and other

The study shows that perceived interactivity’s controllability and playfulness affect mental imagery, shaping consumer

augmented reality on consumer

responses: Amental

imagery perspective

consumer responses in mobile shopping By evaluating AR- derived perceived interactivity, the study aims to shed light on how interactivity influences mobile shopping behaviors through mental imagery

Additionally, it investigates how individual characteristics, like product involvement, shape consumer responses to

AR technology

attitudes and intentions in mobile shopping The relationship varies based on individual involvement levels, offering concise guidance for digital retailers to enhance mobile shopping experiences The findings provide valuable insights for scholars and retailers

on how perceived interactivity influences mental imagery and behavioral intentions

5 Yim et

al.,

(2017)

Is augmented reality

technology

an effective tool for e­

commerce?

An interactivity and

vividness perspective

This study evaluates the effectiveness of augmented reality (AR) as an e-commerce tool using two goods - watches and sunglasses Study 1 examines the efficacy of augmented reality by contrasting it with a traditional webpage Study 2 compares the method by which regular online elements effect consumer ratings with AR to determine how media qualities (such interactivity andvividness) influence consumer evaluations

The results show that AR provides effective communication benefits by generating greater novelty, immersion, enjoyment, and usefulness, resulting in positive attitudes toward medium and purchase intention, compared to the web-based product presentations In contrast to the web condition, where no significant paths between interactivity and immersion or between prior media experience and media novelty are found, it is revealed that immersion mediates the relationship between interactivity/vividness

and two outcome variables —

usefulness and enjoyment in the

product industry and consumer

purchase intention

This study examines the effects of mobile augmented reality services on consumers' brand awareness and purchase behaviour in the beauty industry and identifies the different effects of the relationship among flow experience (concentration, playfulness, and exploratory behavior), decision comfort, and purchase intention moderated by different levels

of consumer characteristics (individualism and fashion innovativeness)

First, customers find the perception of vividness, reality, and aesthetics more relevant in the fashion and beauty makeup industries than the capacity to edit or modify virtual information In addition to its entertaining nature, augmented reality technology has the potential to stimulate consumers' exploration behaviour, so influencing their purchase intention Lastly, customers with varying degrees of individualism

or fashion innovation will see their purpose to purchase differently when utilising mobile augmented reality technology

customer's experience, satisfaction and

The goal of this research is to investigate how augmented reality (AR) affects retail user experience, which in turn affects customer happiness and purchase intent Five conjectures are investigated in

a laboratory experiment

The findings demonstrate how

AR greatly affects user experience by affecting many aspects of product quality, and how user experience, in turn, affects user happiness and purchase intent Four aspects of the user experience—pragmatic quality, aesthetic quality,

Source: Research group

willingness

to buy

hedonic quality by stimulation, and hedonic quality by identification—combine togenerate the third-order formative construct known as ux

2.1.1 The effect of Augmented Reality on purchase intention of beauty products: The roles of Consumers’ control

This research delves into the exploration of potential mediators and boundary

conditions for Augmented Reality (AR) experiences A pivotal aspect examined here is

the impact of customer control on the association between AR experiences and consumer purchase intention The study unfolds in two main dimensions: firstly, to

identify potential mediators influencing the connection between AR experiences and

customer patronage behaviors, and secondly, to investigate the boundary conditions of

AR experiences Leveraging one of the globally recognized top six AR beauty apps, ashighlighted in the article “6 Augmented Reality Beauty Apps Making Cosmetics

Shopping Way Easier” (2018), the study conducts experimental tests

The paper initiates by presenting the theoretical framework and hypotheses

Subsequently, it delves into the analysis findings, constructing a case for conclusions

and their implications, along with addressing limitations and offering suggestions for

future studies The research affirms that incorporating augmented reality (AR) into

online or mobile purchases amplifies customers' capacity to observe and anticipate a

product's performance, consequently heightening purchase intention

Employing Hayes' mediation analysis, cognitive control emerges as a pivotalmediator in this relationship, bolstered by AR features such as vividness and interactivity Interestingly, positive peer feedback is found to diminish the impact of AR experiences on purchase intention These findings furnish valuable insights formarketers and mobile service providers on adeptly harnessing augmented realitytechnologies Ultimately, the study significantly contributes to the knowledge base, offering actionable insights for marketers and service providers to effectively deploy

AR in the realm of online and mobile commerce

Figure 1 Model researched by Whang et al., (2021)

Source: Whang et al., (202Ì).

2.1.2 Effects of perceived interactivity of augmented reality on consumer responses: A mental imagery perspective

This study examines the dimensions of perceived interactivity after shopping with AR and examines the relationship between perceived interactivity and mental imagery, as well as the relationship between mental imagery and other consumerreactions in a mobile shopping environment A total of 302 Korean female online

consumers participated in the survey

To increase external validity, the current study used a real-life virtual makeup

application, “YouCam Makeup,” which offers hundreds of cosmetics using ARtechnology You have been directed to access the app; search for cosmetics they areinterested in e.g lipstick, eyeliner, eyeshadow, and blush And use the AR feature to

apply multiple products while imagining them buying it Once a participant opens the

app, a camera scans their face and locates their lips and eyes on the phone screen When

they select a cosmetic product shown in the mobile app, the AR feature instantly appliesthe product to their face

The results of this study provide valuable practical and theoretical insights that

allow researchers and retailers to understand how consumers' perceived interactivityaffects mental images and, in turn, behavioral intentions The findings help usunderstand the importance of mental imagery by providing empirical evidence that vivid mental imagery can increase positive attitudes toward a product, which in turn can have

a positive impact on behavioral intentions

Figure 2 Model researched by Park, M., & Yoo, J (2020) 2.1.3 Discernible impact of augmented reality on retail customer ’ s experience, satisfaction and willingness to buy

This study attempts to explore the impact of augmented reality (AR) on user

experience (UX) in the retail industry and its impact on user satisfaction and user

purchase intention The study was conducted in a laboratory setting at a large

southwestern university in the United States It used a real experiment in which

participants were randomly assigned to three treatments AR is considered as an incentive for two levels of interactivity (i.e., high and medium) For the experimental group (high and medium levels of interactivity), two AR treatments, Ray-Ban sunglasses and virtual models, were examined A control group (very low interactivity) was examined for classic online shopping

This study explores the impact of AR on user experience and the resulting impact

on user satisfaction and user willingness to buy AR has a significant and positive impact

on user experience AR provides more 3D product information in different colors andstyles, improving users' perception of reality AR also provides users with enhanced

product information they receive in physical and online stores For example, AR allows

users to simulate the features of a product on a website when shopping online Regarding

the impact of AR on user experience in the United States, the results show that AR uxallows users to perform tasks better and appreciate a product's functionality more Augmented reality (AR) rich user experiences are more entertaining and allow potential

customers to interact endlessly with virtual information

Recognizing the power of AR in user experience and the role it plays in customer satisfaction and purchase intent, retailers and AR companies can work together to

develop marketing strategies that effectively enrich and enhance the customer shopping experience For example, retailers can implement promotions that increase customer

engagement using AR apps like Blippar, which are used to reveal objects around them

on smartphones by pointing the smartphone at the merchandise A lot of virtual information related to real products appears on the smartphone screen as if the viewer has entered a fantasy world As a result, customers are encouraged to download ARapplications that enhance both reality and offers In turn, retailers can make more sales,

and AR companies can get more orders for the technology

Figure 3 Model researched by Poushineh, A., & Vasquez-Parraga, AZ (2017)

Source: Poushineh and Vasquez-Parraga, AZ (2017).

foundations of SOR It posits that the environment comprises stimuli (S) that can affect and change individuals' internal or organismic states (O) Individuals then respond (R)

to these internal moods by either approaching or avoiding situations

This framework can be constructed as the following:

Stimulus (S) ; J Organism (O) J : Response (R)

Figure 4 S-O-R Framework

SOR theory has been used by a wide range of researchers to analyze the effects

of technological attributes, for example online shopping (Parboleeah el al., 2009), virtual worlds (Animesh et al., 2011), social worlds (Cao & Sun, 2018), and surveillance (Jung

et al., 2021) The utilization of the SOR paradigm as the theoretical foundation for the present study on the effect of AR in the beauty industry offers two notable advantages First and foremost, the SOR model has already been used to research online consumer behavior, focusing on how the interaction between humans and technology affects consumers' intentions to make purchases Therefore, its application is appropriate for analyzing consumers' behavioral intentions in the context of the application of AR Second, the organism in the model represents the emotional and menial slates of the users, while the stimuli indicate the elements that impact how well tourism applications operate (stimulus) This dynamic interaction acts as an intermediary platform that gives rise to specific behavioral outcomes (response) (Pavón et al., 2023) Thus, our research

is based on the SOR theoretical framework, which covers physical, technological, environmental, and social stimuli, perceived interactivity of the applications used on online platforms when choosing the products, behavioral intention, and consumers' attitudes towards the products and brands.

The stimulus is a trigger that arouses consumers and refers to marketing and/or situation stimulus (Chan et al., 2017; Kamboj et al., 2018) According to Jung et al

(2021), stimuli are environmental cues that affect people’s psychological states by forming perceptions and acting as a springboard for decision-making (Koo & Ju 2010)

In the context of AR, the attributes that can be introduced into the consumer’s mind such

as product informativeness, system quality, and reality congruence (Kowalczuk et al.,

2021; Park & Yoo, 2020) In this study, the features of AR acting as factors influencing consumer attitudes can be listed: Mental Imagery (consisting of elaboration and quality) and Interface (consisting of challenge of use, interaction and realism)

In terms of organism, according to Basha et al (2022), the organism is an internal state of an individual and is represented by affective and cognitive states It is also regarded as an intermediary state between the stimulus and response (Zheng et al.,

2019) The SOR paradigm encompasses essential aspects, including attitudes, emotions, beliefs, perceptions, judgments, motivations, and thinking (Pavon et al., 2023) In order

to enhance the quality of services and behavioral intention, this study focuses on an organismic variable, namely perceived interactivity

The last factor in the S-O-R model is the response which can also be called behavior (Kamboj et al., 2018) The S-O-R model has been used to explain the relationship between affective and cognitive states and behavioral responses

(Kowalczuk et al., 2021) and therefore deemed appropriate for this study to adopt and guide the path of the AR characteristics on consumers’ willingness to pay This study assumed that AR characteristics (stimulus) affect consumers’ willingness to pay (response) through the mediating mechanism of perceived interactivity (organism)

2.3 KEY CONCEPTS

2.3.1 Mental Imagery

Mental imagery is the mental ability to depict static or dynamic information in working memory (Drigas et al., 2020) Park and Yoo (2020) also defined mental imagery as a “mental activity that visualizes a concept or relationship” and it plays an

important role in information processing Heller et al., (2019) argued that a mental image

is “an internally generated representation of an object, scene, or event”, and acknowledged that mental imagery is “a process by which visual and optical information

is represented in the working memory”

While the generation of mental images can be derived from a wide range of auditory, verbatim, or haptic stimuli, visual stimuli predominate during making and consuming decisions Before making purchases, consumers visually simulate the use of offerings to foresee the results of use and get confidence in the relationship between product qualities and satisfaction (Heller el al., 2019; Schifferstein, 2009) In other words, customers may also use mental imagery (also known as pre-experiencing) to conjure up never-before-seen visuals or pictures of potential future events (Park & Yoo,

2020; Schacter, 2008) Similarly, in virtual contexts where consumers are unable to physically scrutinize the products, they may engage more actively in mental imagery fol­product evaluation (Li et al., 2003)

Consumers who use mental imagery are likely to conjure up mental images of their future consumption experiences, which become an important and reliable source

of information for the decision-making process (Yoo & Kim 2014) Several studies suggest that imagining a product or service experience considerably influences consumers’ attitudes and behaviors (Escalas, 2004; Roggeveen et al., 2015; Heller el al.,

2019) For instance Miller and Stoica (2016) indicated that mental imagery triggered

by images in tourism advertising is the key driver ofbehavioral intentions In the context

of AR, one of AR's primary features is the ability for users to alter (by rotating, for example) digital content, which helps visual imagery processes during making decisions Using AR, working memory can be freed up to handle less cognitively taxing visual changes (Heller el al., 2019) Take Sephora - an industry-leading chain of cosmetic stores as a prime example, Sephora has given their consumers the option to personalize and customize their shopping experience by trying on makeup virtually using AR and AI

The concept of mental imagery is multi-dimensional and varies based on elaboration and quality Elaboration is the number of mental images that a person forms while processing and analyzing information, and quality is the vividness and clarity of these mental images (Park & Yoo, 2020)

2.3.2 Interface

User Interface (UI) would be the first thing that users meet In the study by

Wonjin (2017), User Interface is defined as the first impression that a user meets This crucial aspect becomes evident when considering its impact on consumer behavior Understanding the significance of UI in shaping consumer perception lays the foundation for exploring its role in determining product usage In other words, UI toward Purchase Intention is the tendency that determines the acceptance of user feedback

(Watulingas & Permana, 2020) Individuals have always speculated that good design can trigger and influence their Purchase Intention based on a good User Interface, including Visual Design, Micro-interaction, and Design Layout (Youm & Yu, 2013).According to Stone el al (2005), user interface is a component of the computer systems with which a user interacts to complete his or her tasks and achieve his or her goals Thus, an interface is the bridge between the worlds of the computer system and the world

of the user It is how the computer system shows itself to the users and responds to their needs The style of the interface is known as its look and feel

The User Interface (UI) followed by Mithun and Yafooz (2018) is the space between the system (computer) and human (user) that occurs in interaction Because it concerns the effectiveness and efficiency of the interface to the associated technology, User Interface design is a broad research area in human-computer interaction (HCI) The usability of system actions and activities is dependent on efficient user interfaces, which should adhere to appropriate design methodology when developing interfaces, although there are various issues involved for a good user interface design (e.g., methods, tools, principles, and guidelines) to increase productivity

Wodehouse and Abba (2016) identified three important themes of consumer behavior: technology, interface, and psychology Interface design issues will be critical

to the virtual catalog's success They have opted to focus on the interface's role, with the intention of guiding the creation of future catalog environments Three major interface characteristics were identified: interaction, ease of use, and realism In broad terms, interaction is the transmission of information between the computer and the user (Hornb^k & Oulasvirta, 2017) Ease of use is defined as “the degree to which a person believes that using a particular system would require no effort” (Ramayah, 2006);realism relates to the degree to which the images of the simulated world are perceived

to be real by the user (Lee et al., 2013) However, instead of analyzing ease of use, our research investigates the challenge of use to evaluate client obstacles in using the design interface and provide suitable solutions to tackle the difficulty Consequently, this study examines the Challenge of use, Interaction, and Realism.

2.3.3 Perceived Interactivity

Digital technologies, including social networking sites and augmented reality, have shaped new kinds of consumer engagement, allowing them to participate more actively in brand-consumer conversations (Arghashi & Yuksel, 2022) Although it is challenging to define precisely, previous researches have agreed that interactivity is a crucial concept for effective online and mobile marketing and communication (Park &

Yoo, 2020) Do et al (2020) defined interactivity as the ability of users to alter a mediated environment's form and content in real-time Interactivity might occur in people’s social behavior or in how they respond to technological features Media and psychological elements that are influenced by communication situations, media or technological features, and people's perceptions are all connected to interaction

(Arghashi & Yuksel, 2022) Interactivity is a vital feature in media and digital technologies (Kim et al., 2017), enabling customers to change and customize the design elements, product features, and angle of view or distance ofthe product (Do el al., 2020)

Previous studies have demonstrated the high degree of interactivity that ARtechnology produces (McLean & Wilson 2019; Nikhashemi et al., 2021; Yim et al.,

2017) Augmented reality (AR) technology elicits three-dimensional virtual content in the form of images, objects, or information, and integrates it into consumers' real-world environment (Poushneh, 2018) Interactivity with AR allows users interact with content and change the mediated environment's forms and contents in real time (Arghashi &Yuksel, 2022), leading to numerous advantages such as positive brand altitude (Cheung

et al., 2020) and brand usage intent (Hollebeek et al., 2014) Another study suggested that advanced technologies, including virtual reality (VR), augmented reality (AR) and mixed reality generate a greater sense of customer involvement through more realistic experiences (Flavian el al., 2019)

Interactivity can be categorized into three different types: user-to-user, user-to- content, and user-to-system (McMillan, 2002) The current study examines how the perceived interactivity affects shopping responses with an emphasis on user-to-syslem

(or more specifically, user-lo-AR) interaction Because this study focuses on augmented reality technology rather than other features that are frequently present on mobile websites, like product reviews, live chat, and online communities or forums, the communication factor of perceived interactivity is not applicable and is therefore eliminated from our model.

2.3.4 Willingness to pay

The success and failure of any product or service are solely determined by developing an effective pricing strategy based on consumers' willingness to pay more for the value that it provides (Kasilingam & Krishna, 2022) Homburg el al (2005)

defined the willingness to pay as ‘the maximum amount of money that a consumer is willing to pay for a product or service’ Thus, willingness to pay (WTP) is a measure of the value that a person attaches to a consumption or usage experience in monetary units Managers must understand the maximum amount consumers are willing to pay when evaluating demand for a product or service in order to develop an optimal pricing strategy that maximizes profits while also pleasing customers (Sukhu et al., 2017).Individuals’ buying intents and willingness to pay more are both influenced by the values supplied by products, services, and technologies

According to Orme (2006), willingness to pay is commonly recognized as a

“characteristic of buyers’' and displays “how much value, measured in terms of money, that an individual customer places on a product or service ” WTP is also sometimes known as the customer’s “reservation price” and is primarily used to collect information

on their perceived value of a product or service in monetary terms WTP studies are frequently emphasized by the need to understand how consumers assess the value of a service and how much they are willing to pay for it, especially when the new service often modifies the nature of exchange in the marketplace (Yip, 2011)

Consumer willingness to pay, from a marketing point of view, is a measure of a customer’s perceived value of a consumption or usage experience, and it is frequently employed as a means for market segmentation (Li & Meshkova, 2013) In another study, Willingness to Pay could be defined as the attention or perception of consumers towards the purchase of a product related to the psychological approach to paying a premium price for a “Made in” or a specific brand product (Cappelli et al., 2016)

2.4 RESEARCH HYPOTHESIS

2.4.1 The impact of Mental Imagery on Perceived Interactivity.

Authors Lee and Gretzel (2012) argue that research on menial images in the Web context mainly addresses the impact of object interactivity According to Yoo and Kim

(2014), the mental representation of a situation engages individuals emotionally as if they were experiencing the situation in reality In retail, Yoo and Kim (2014) suggested that consumers' emotions can be greatly influenced by imagination Consumers who construct vivid mental images have more positive attitudes toward products than consumers who do not experience such mental images (Park & Yoo, 2020) Elaboration refers to the activation of information in the production of mental imagery beyond what

is provided by the stimulus (Gavilán et al., 2014) Consumers can elaborate more vividly through digital technologies to build more favorable attitudes toward the products and services (Sharma el al., 2023) The process of constructing mental imagery that influences basic attitudes can be explained by the availability value hypothesis, which states that the evaluation of a product depends on the availability of information about that product (Park & Yoo, 2020) According to this hypothesis, as consumers learn more information, the information becomes more vivid and they are therefore able to process more information Mental imagery processing aroused by image interactivity is an important underlying source of online experiential value perceptions (Overmars &Poels, 2014) Image interactivity arousing mental imagery are therefore likely to increase the ability to entertain and deliver intrinsic enjoyment (i.e., eliminating dullness and lifelessness) Additionally, consumers may evaluate products more positively when more positive information evokes images (e.g., visual information rather than verbal information) (Kisielius, 1982) Consumers with positive attitudes toward AR shopping systems find them useful during the shopping process (Park & Yoo, 2020) Therefore,

we developed the following hypothesis:

Hl: Elaboration of mental imagery positively influences perceived interactivity.

According to Park and Yoo (2020), quality indicates the vividness and clarity of these mental images Therefore, with immediate interaction, AR enhances the consumer experience by providing highly vivid, connected, and engaging experiences in the digital environment (Hilken et al., 2018) In the context of e-commerce, vividness was related

to the quality of product presentations that stimulated customers' cognitive elaboration processes (Jiang & Benbasat, 2007) Both the elaboration and quality of mental imagery increase positive emotions experienced (Park & Yoo, 2020) According to Whang et al.

(2021), high-quality product presentations help reduce risk by creating a sense of non­mediation, reducing the barrier between consumers and products Pantano et al (2017)

argue that the perceived usefulness of AR applications is specifically related to the quality of information they provide in an online retail environment, leading to positive consumer attitudes toward AR Consumers who perceive AR applications as a useful tool for their purchasing process will distinguish AR technology as more relevant and will therefore have a more positive attitude towards it (Holdack et al., 2020) Consumers who perceive controllability and playfulness experience greater mental imagery elaboration and quality after shopping with AR Based on the above arguments, it can

be seen that the higher the quality of the mental image, the more consumers perceive the interaction between AR and them Therefore, the authors proposed the following hypothesis:

H2: Quality of mental imagery positively influences perceived interactivity 2.4.2 The impact of Interface on Perceived Interactivity.

As competition in B2C e-commerce becomes fiercer, online stores have strived

to attract consumers’ attention by adopting innovative technologies (Suh et al., 2006).However, challenges may arise when using AR applications for beauty products, potentially impacting perceptual interaction abilities, particularly in the context of online shopping Gotow et al (2010) emphasize the importance of a visually appealing and intuitive interface, stating that it directly contributes to users' satisfaction and engagement Moreover, Mekni and Lemieux (2014) highlight the correlation between

an efficient interface and increased user confidence, underlining the role of a seamless and comprehensible design in enhancing the overall online shopping experience If the user interface is unclear or non-intuitive, it can disrupt the flow of interaction and proximal perceptual interaction capabilities Users may need to navigate through various menus, options, and settings to select and apply virtual beauty products Despite the subjective nature and reliance on user experience, websites offer clear advantages in presenting product information, facilitating comparisons, and providing a convenient environment for transitioning between different pages Yadav el al (2023) assert that

the usefulness, user-friendliness, and appeal of shopping environments or convenient interactive media influence consumer shopping behavior Therefore, the following hypothesis is proposed:

H3: Element in the Interface - Challenge of use negatively influences Perceived Interactivity.

In the context of AR applications, perceptual interaction capability is related to the extent to which users feel positively engaged and immersed in the augmented environment AR applications often involve real-time interaction between users and the augmented environment, Rahman et al (2023) An AR-based product display offers higher website quality, interactivity, and vividness compared to a picture-based product display (Kim & Kader, 2022) The depth and nature of interaction with the virtual environment have a close relationship with consumer behavior, influencing decision­making, orientation, endor (Kim et al., 2022) sement, stimulation, and enjoyment (Bozkurt et al., 2021; Nandi et al., 2021) Interactive design can also be utilized to manage customer traffic in a virtual portfolio, with the impact of customer actions on the behavior of other consumers highlighted in the INTELLECT interactive marketing project (Fikouras et al., 2000) This means that when users have more interactive andengaging experiences in AR applications, they are more likely to perceive the overall experience as highly interactive (McLean & Wilson, 2019) These interactive elements contribute to a sense of autonomy and feedback, leading to a higher perception of interactivity When users can actively interact with enhanced content, such as through touch, gestures, or voice commands, they feel a stronger connection to virtual elements and the overall experience, (Park & Yoo, 2020) This increased sense of presence can contribute to enhancing the perception of interactivity Additionally, users can freely explore the augmented environment, discover hidden content, and interact with virtual objects in new ways According to Papadopoulos et al (2021), the freedom to interact and experiment promotes a sense of exploration and interaction, enhancing the perceptual interaction capabilities of AR applications Based on this, a hypothesis can

be proposed:

H4: Element in the Interface - Interaction positively influences Perceived Interactivity.

Users tend to allocate more time and attention to AR experiences perceived as more authentic and realistic (Haile & Kang, 2020) Therefore, understanding the nuanced relationship between the sense of presence and customer engagement can provide valuable insights into designing effective AR applications that not only captivate users but also influence their purchasing decisions The authenticity of an augmented reality (AR) application plays a crucial role in shaping the perceived level

of interactivity (Suh el al., 2006) When users perceive the AR content and environment

as authentic, they are more likely to experience a sense of immersion and engagement, ultimately leading to an elevated perception of interactivity Realistic visuals, audio elements, and interactive features contribute to a heightened sense of presence and seamless integration between the virtual and real worlds, evoking emotional responses and increasing user commitment to the AR experience The concept of realism in the online shopping experience holds significant sway over consumer decision-making

(Berneburg, 2007) Virtual shopping environments may face limitations due to screen size, user-screen distance, and transaction execution time, all of which can impact consumer behavior Nevertheless, an enhanced environment tends to encourage consumers to invest more time and actively participate in promotional product programs

(Poushneh and Vasquez-Parraga, 2017) In essence, a stronger sense of presence related

to virtual entities contributes to a more profound customer experience (Lin et al., 2015).While most studies on virtual reality focus on the environment and its navigation, paying more attention to the inherent presence of the product is crucial for attracting customers and guiding purchasing decisions Consequently, the next hypothesis was stated to clarify is:

H5: Element in the Interface - Realism positively influences Perceived Interactivity.

2.4.3 The impact of Perceived Interactivity on Willingness to Pay.

According to Merrilees and Fry (2003), interactivity refers to the interaction between the site and a user of that site and goes to the core of a computer-mediated communication environment From a perception-based perspective, perceived interactivity is “the extent to which users perceive their experiences as a simulation of interpersonal interaction and sense they are in the presence of a social other" (Zhao &

Lu, 2012) Besides, previous e-commerce research has extensively investigated

interactivity from the interaction between customers and products/services Interactivity with products, for example, allows customers to adjust and customize design components, product characteristics, and angle of view or distance from the product (Do

et al., 2020) Batool and Mou (2023) stated that perceived interactivity is a consumer attribute that evaluates how users feel about a product or piece of technology in terms

of interaction and engagement, emphasizing users' satisfaction and fascinating experiences The most widely used interactive media tools are virtual product experiences (3D models, virtual models, interactive decision aids such as recommendation agents and comparison matrices) and video presentations (interactive videos with and without narration) (Li & Meshkova, 2013)

Perceived interactivity could positively impact users' satisfaction by improving the communication quality or increasing positive perception of the communication process (Zhao & Lu 2012) The marketing literature has already demonstrated that interactivity is a necessary condition for endorsement to be effective in online environments (Labrecque, 2014) This evidence is supported by studies underlying its positive impact on customers' attitudes toward the brand, as well as on the users' overall satisfaction with the website (Yuan et al., 2021), positive perceptions of site effectiveness (i.e., attitude toward the website) as well as on willingness to buy

(Penttinen el al., 2022), repurchase intentions and eWOM (Labrecque, 2014)

Furthermore, there are several reasons why consumers may be willing to pay more for interactivity in a digital information product (Kirk, 2011) In particular, it is feasible that interactivity in digital information products can reduce search costs (Liu &

Shrum, 2009), especially in a goal-directed context, hence incentivizing consumers to pay a higher price Ye et al (2019) find that interactivity can improve a company's telepresence, which in turn influences customer engagement (for example, active cognitive processing, instrumental, and experiential value) Interactivity appears likely

to help customers derive greater value (e.g., instrumental and experiential value) from websites and a unique brand experience Furthermore, interactivity has been shown to positively influence consumer buying behaviors Based on previous research findings,

we predicted that the higher the level of perceived interactivity, the larger the level of customers' willingness to pay It is expected that Perceived Interactivity provides more benefits to users (e.g., interacting with products through AR, lowering research costs,

traveling to test and purchase directly) and that it may improve users' brand experiences and cultivate their brand preferences with AR website In other words, the following hypothesis is proposed:

H6: Perceived Interactivity has a positive impact on Willingness to Pay

2.4.4 The impact of Trade off Price and Value on relationship between Perceived Interactivity and Willingness to pay.

Value is the idea of the exchange between monetary sacrifice and the quality of the products and consumers will use price to judge quality and sacrifice (Liu,

2020) In terms of interactivity, Beuckels and Rudders, (2016) discovered that improved image interactivity had a beneficial effect on a product's perceived quality, improving the consumer experience, and acting as a precursor to the likelihood of purchase But when confronted with a new (higher) price, consumers need to determine whether the product is still worth it to them (Ko et al., 2011) After interacting with the products and platform, they may use a range of criteria to determine perceived product quality, such

as the quality or composition of a product's ingredients, brand reputation; consumer research reports; and previous experiences If consumers perceive that they are receiving value from the products, they may be willing to purchase these products, and vice versa (Wilkins et al., 2020) In other words, consumers who believe that a product is valued based on the value they receive are more likely to make a purchase than those who believe that a service is valued more highly based on the value they receive (Liu, 2020)

Tandon et al (2017) also found that the trade off price and value has a role in determining the level of willingness to pay and online shopping Poushneh et al (2017)

stated that customers' perceptions of the trade-off between price and value might be increased or decreased, depending on whether they think it is acceptable or unacceptable

Therefore, the study suggested that trade off price and value strengthens the association between perceived interactivity and willingness to pay Thus, it is hypothesized as:

H7: Trade off Price and Value would strengthen an existing positive relationship between Perceived Interactivity and Willingness to pay.

2.4.5 The impact of Health Concern on relationship between Perceived Interactivity and Willingness to pay.

In the 1950s, social scientists in the USA developed the Health Belief Model(HBM) to explain how the acceptance of preventive health programmes was affected by the sense of a health hazard (Janz & Becker, 1984) Any preventive action taken will depend upon the threat assessment, a combination of perceived severity with perceived susceptibility (Champion & Skinner, 2008) According to the HBM, health decisions are dependent on two factors: risk perception and behavioral evaluation (Wang el al.,

2021) In the context of livestream shopping technology, livestream shopping can help consumers avoid being infected by the virus (Pang et al., 2021) Specifically, Shaw et

themselves or household members to be more susceptible to the virus may be more reluctant to enter physical stores to try the sample versions Besides, Wong and Chok, (2021) discovered that COVID-19 plays a moderating role on consumers’ awareness of utilities, leading to an increase in online purchasing decisions

In this study, we consider that using AR to try beauty products without visiting physical stores can help consumers stay away from infectious diseases from other consumers who used to test the products at conventional shops Those who are uncertain

of the adverse impacts that the infectious diseases may exert on themselves may behesitant to test the trials at brick-and-mortar stores (Shaw et al., 2022) Therefore, with the application of AR consumers can reduce the threat of being infected with infectious diseases and increase their trust in the platform, acting as a precursor to the increase in willingness to pay among consumers Accordingly, we propose the following hypothesis:

H8: Health Concern would strengthen an existing positive relationship between Perceived Interactivity and Willingness to pay.

Table 2 Research Hypothesis

Hl Elaboration of mental imagery positively influences perceived interactivityH2 Quality of mental imagery positively influences perceived interactivity

H3 Element in the Interface - Challenge of use negatively influences Perceived

InteractivityH4 Element in the Interface - Interaction positively influences Perceived

InteractivityH5 Element in the Interface - Realism positively influences Perceived

InteractivityH6 Perceived Interactivity has a positive impact on Willingness to Pay

H7 Trade off Price and Value would strengthen an existing positive relationship

between Perceived Interactivity and Willingness to payH8 Health Concern would strengthen an existing positive relationship between

Perceived Interactivity and Willingness to pay

2.5 PROPOSED RESEARCH MODEL

The proposed research model inherits from previous theoretical models andresearch, including the Stimulus - Organism - Response Theory model by Woodworth

(1929), research on the effect of Augmented Reality on the purchase intention of beauty products by Whang et al (2021), research on 3D visualization for online retail: factors

in consumer behavior by Wodehouse and Abba (2016), research on the effects of perceived interactivity of augmented reality on consumer responses by Park and Yoo (2020), and research analyzing factors affecting satisfaction and purchase intention towards mobile augmented reality e-commerce applications by Stefanie and Togar

(2020)

The research on the effects of perceived interactivity of augmented reality on consumer responses of Park and Yoo (2020) explores the aspects of perceived interaction following an augmented reality shopping experience and looks into the connections between perceived interaction and mental imagery as well as between mental imagery and other customer reactions in the context of mobile purchasing The study specifically proposed that mental imagery influences customers' views about a product and their behavioral intentions, and that mental imagery is influenced by the controllability and playfulness elements of perceived interaction Park and Yoo (2020)

claim that the majority of earlier studies on interaction disregarded the connection between these two ideas and did not dig into the mental picturing process Customers

are likely to conjure up images in their minds of their future consuming experiences through the use of mental imaging, and these images serve as a valuable source of information when making judgments about what to buy (Yoo & Kim, 2014) Therefore, this study expects that Mental Imaginary including Elaboration and Quality will have a positive impact on customers' Perceived interactivity when shopping for fashion through

AR technology

The study of 3D visualization for online retail: factors in consumer behavior by

inclination towards immersion and the presence they felt As a result, the interface is crucial in determining how much interaction customers perceive to be there Prior studies have also demonstrated that Augmented Reality (AR) interfaces have the special ability to create value through engaging consumer experiences in both established and new retail channels (Rafaeli et al., 2017) Consequently, this study expects AR interface variables include: Challenge of use, interaction, and realism to impact perceived interactivity in fashion shopping through AR

The research analyzing factors affecting satisfaction and purchase intention towards mobile augmented reality e-commerce applications by Stefanie and Togar

(2020) seeks to examine the variables that influence user happiness and inclination to buy in mobile augmented reality e-commerce applications According to this study, factors including perceived augmentation, enjoyment, trade-off between price and value, and satisfaction all had an impact on purchase intention In the meantime, perceived augmentation, perceived utility, perceived enjoyment, trade-off price and value, and system quality all have an impact on satisfaction Stefanie and Togar (2020)

argue that trade-off between price and value affects Indonesian mobile augmented reality e-commerce application customers' pleasure Additionally, Akhter (2009)

discovered that the degree of happiness and inclination to buy is influenced by the trade - off between price and value Developing from previous studies, this study examines the relationship between Trade-off value and price as a moderator of two variables Perceived Interactivity and Willingness to pay