how artificial intelligence will change the future of marketing pdf

By employing these tools, AI provides a means to “interpret external data correctly, learn from such data, and exhibit flexible adaptation” (Kaplan and Haenlein 2019, p. 17). First, we develop a multidimensional framework for the evolution of AI, noting the importance of dimensions pertaining to intelligence levels, task types, and whether the AI is embedded in a physical robot. Haslam, N., Bain, P., Douge, L., Lee, M., & Bastian, B. Contingent on levels of predictive accuracy, firms may even substantially change their business models, providing goods and services to customers on an ongoing basis based on data and predictions about their needs. Many would argue that basing auto insurance premiums on religion is offensive, but from the point of view of an AI algorithm designed to “slice-and-dice” data in every way possible, the distinction between using gender versus religion, as a basis to determining auto insurance rates, may not be obvious. Lashinsky, A. The lower half of Fig. Journal of Personality and Social Psychology, 89(6), 937–950. For example, Amazon abandoned a tool that used AI intelligence to rate job applicants, in part because it discriminated against female applicants (Weissman 2018). As a curious tech enthusiast, a few days back, I was reading about the buzzwords of this century, Artificial Intelligence and Machine Learning, it was completely fascinating how these technologies are changing and are likely to change the coming future of human life on earth. Too little protection means that customers may not adopt AI-related applications; too much regulation may strangle innovation. https://hbr.org/2016/11/how-one-clothing-company-blends-ai-and-human-expertise. In Proceedings of the IEEE International. Retrieved on July 09, 2019 from https://www.forbes.com/sites/louiscolumbus/2019/07/07/10-charts-that-will-change-your-perspective-of-ai-in-marketing/amp/. A study by Smart Insights shows that out of 100 senior marketers from different industries, 55 percent of companies are implementing or already considering using AI in their marketing practices. The Future of Communication: Artificial Intelligence and Social Networks ... digital marketing and customer service of social media is in the first line for this demand, ... defines them not only as agents of communicational influence but also of social change. Value from regulatory construal fit: The persuasive impact of fit between consumer goals and message concreteness. Second, important research questions pertain to whether data privacy management efforts should be driven by legal regulations or self-regulation, in that “it is not clear yet if market driven incentives will be sufficient for firms to adopt policies that favor consumers or whether regulatory oversight is required to ensure a fair outcome for consumers” (Verhoef et al. The goal appears to be to get robots to perform tasks that repeat and are predictable, enabling (human) associates to focus on serving customers (Avalos 2018). Our discussions with senior managers at 84.51Footnote 7 indicate that they are working with Kroger to implement in-store robots that can identify misshelved or out-of-stock items. On a daily basis, we are witnessing controversial claims about the pros and cons of the technology, ranging from: "it will help us erase all diseases", to "it will erase the human race". Research also might address state factors, such as the product type; perceived autonomy may be less relevant for utilitarian product choices than for hedonic ones, because of differential links to customers’ identity. Finally, we consider the privacy–personalization paradox (Aguirre et al. What the Lowe’s robot will do for you – and the future of retail. Here again, the objective is to augment human security guards’ capabilities (Robinson 2017). 0000012139 00000 n Castelo, N., Bos, M., & Lehman, D. (2018). Developing social robots for aging populations: A literature review of recent academic sources. 3230–3235). Harvard Business Review, 89(12), 84–92. Lastly, will salespeople be able to be trained/ to be able to manage customers’ concerns relating to AI, specifically issues related to data privacy and ethics. Davenport, T. H., & Ronanki, R. (2018). Firms use AI to analyze vast amounts of numeric data (including less intuitive predictor variables) to both set optimal prices and then change prices in real time. 2018). << /Metadata 579 0 R /Names 495 0 R /OpenAction [ 653 0 R /FitH 1297 ] /Outlines 707 0 R /PageLabels 544 0 R /PageLayout /SinglePage /PageMode /UseOutlines /Pages 464 0 R /Type /Catalog >> AI is definitely going to showcase its impact on digital marketing. Wainer, J., Feil-Seifer, D. J., Shell, D. A., & Mataric, M. J. The compensatory consumer behavior model: How self-discrepancies drive consumer behavior. xref 0000002785 00000 n 0000014913 00000 n 0000093115 00000 n 2018). (2016). Robots and organization studies: Why robots might not want to steal your job. We outline these areas in Fig. Results from an expert assessment. In this sense, AI could augment salespersons’ capabilities, but it also might trigger unintended negative consequences, especially if customers feel uncomfortable about AI monitoring conversations. LeCun, Y., Bengio, Y., & Hinton, G. (2015). Marr, B. The Conversica AI bot works to move customer transactions along the marketing pipeline, and the AI bot used by 1–800-Flowers provides both sales and customer service support. Levin, S. (2017). Psychological Bulletin, 125(3), 367. In theory, because AI facilitates data-driven, micro-targeting marketing offerings (e.g., Gans et al. This paper outlines a framework to understand how AI will impact the future of marketing, specifically to outline how AI may influence marketing strategies and customer behaviors. Rahwan, I., Cebrian, M., Obradovich, N., Bongard, J., Bonnefon, J. F., Breazeal, C., et al. The first cell in Fig. This too may be a way to mitigate the points raised prior. Tesla has removed any “self-driving” labels from its website, noting that these labels were causing confusion (Hawkins 2019). Castelo, N. (2019). (2018). However, the work raised ethical concerns, in that many argued that this AI-based technology may be used by spouses on their partners (if they suspected their partners were closeted), or—more frighteningly—may be used by certain governments to “out” and then prosecute certain populations (Levin 2017). At the core of digital disruption reside the following three key transformative technologies: (a) artificial intelligence, (b) mixed reality and (c) blockchain. 2018; Schrift et al. Finally, customers interacted longer with a robot diet coach than with either a virtually present diet coach or a diet diary in a paper form (Kidd and Breazeal 2008). A., & Peters, J. How might AI combine text and other communication inputs (e.g., voice data), actual customer behavior, and other information (e.g., behaviors of similar customers) to predict repurchases? Notes from the AI frontier: Applications and value of deep learning. One especially important research area may relate to how well prediction AI–driven algorithms may extend to forecasting demand for really new products (RNPs; described in Zhao et al. AI and machine learning for predictive data scoring. (2017). Finally, AI is of interest to policymakers. The former involves AI applications that are standardized, or rule based, such that they require consistency and the imposition of logic (Huang and Rust 2018). 0000096448 00000 n Finally, AI can engage customers, before and after the sale. 1, we do not distinguish between numeric and non-numeric data, because context awareness–capable AI likely will be able to handle any types of data. Using AI for consequential tasks is perceived as involving more risk, in turn reducing adoption intentions. (2018). to the future of marketing and topics centered around the challenges, solutions, and adoption of Artificial Intelligence (AI). New technologies often alter customer behavior (e.g., Giebelhausen et al. Hassler, C. A. Noting that the AI applications in companies like Conversica and Stitch Fix use all types of data (i.e., use numeric data and non-numeric data), we term the AI applications in this cell as reflecting “Controller of Data.”. There are many predictions made by experts about the future of data analytics and how it is going to shape AI and machine learning in coming years. Castelo, N., & Ward, A. Schrift, R. Y., Wertenbroch, K., André, Q., & Frank, D.H. (2017). Thereafter, Kanetix would direct their advertising towards these “in-between” customers, which would provide the greatest returns, and not expend efforts on those either very likely to buy or very unlikely to buy. Gender differences in risk taking: A meta-analysis. Villasenor, J. We build from two points: (1) when outcomes are consequential, this increases perceptions of risk (Bettman 1973), and (2) women perceive more risk in general (Gustafsod 1998) and take on less risk (Byrnes et al. Also, in the future, firms may primarily use AI bots,Footnote 1 which—in some cases—function as well as human salespeople, to make initial contact with sales prospects. Byrnes, J. P., Miller, D. C., & Schafer, W. D. (1999). Retrieved June 12, 2019 from https://www.seas.harvard.edu/news/2019/05/science-of-artificial. 0000042813 00000 n 0000001901 00000 n Note that in the lower half of Fig. However, if it is disclosed that the customer is conversing with an AI bot, purchase rates drop by 75%. In this sense, researchers and practitioners should conceive of virtual and real forms not as distinct categories but rather as endpoints on a continuum, within which AI entities are spread out. Risk Analysis, 18(6), 805–811. Moving past adoption issues, we note some usage considerations, including how AI should communicate with customers. Duluth, MN: Association for Consumer Research. Retrieved February 11, 2019 from https://www.computerworld.com/article/3067264/artificial-intelligence/at-stitch-fix-data-scientists-and-ai-become-personal-stylists.html. Journal of Personal Selling & Sales Management, 1–21. 1. Mark Houston served as accepting Editor for this article. As noted, these negative views often stem from customers’ sense that AI is unable to feel (Castelo et al. endobj We build on this latter perspective. Retrieved February 11, 2019 from https://www.sltrib.com/news/business/2019/02/01/doorbells-have-eyes/. Journal of Consumer Psychology, 27(1), 133–146. Nature, 521(7553), 436–444. Retrieved June 12, 2019 from https://www.forbes.com/sites/bernardmarr/2019/04/01/how-robots-iot-and-artificial-intelligence-are-changing-how-humans-have-sex/#3679d398329c. Does this mean that it is acceptable for AI to calculate auto insurance premiums based on religion? Yet it also could undermine customers’ perceived autonomy, with implications for their evaluations and choices (André et al. 3-4). Finally, the authors suggest AI will be more effective if it augments (rather than replaces) human managers. But such robots arguably could be damaging to society at large, by increasing social isolation, reducing the incidence of marriage, or reducing birthrates—which is critical for countries like Japan, where birthrates are already low. How AI is changing sales. Timna Bressgott. In a pilot test with a telecommunications company called Century Link, Angie appropriately understood more than 95% of emails received (and sent the rest to human agents for interpretation), and Century Link earned a 20-fold return on its investments in Angie. Image captioning with semantic attention. An advanced AI also could be embedded in a robot form, such as the AI Dorian from the television show Almost Human. 0000094229 00000 n Motyka, S., Grewal, D., Puccinelli, N. M., Roggeveen, A. L., Avnet, T., Daryanto, A., et al. %%EOF Political affiliation moderates attitudes towards artificial intelligence. Consumer connectivity in a complex, technology-enabled, and mobile-oriented world with smart products. Developing a point of view on what the future may hold In this third installment of The Futurist Report series, AT&T Foundry, Ericsson, and RocketSpace are taking an inside look into the cutting-edge technologies and startups shaping the Future of Artificial Intelligence in Consumer Experience. Beyond concerns associated with culture, it may be pertinent to examine which other trait factors determine whether customers are willing to have their hair styled by robots or accept childcare/elderly care services delivered by robots (Pedersen et al. In an interview with one of the authors of this paper, a Kroger data scientist reported that the proper functioning of Kroger’s AI application requires hardware upgrades; specifically, it needs to upgrade its cameras to higher resolution levels if the AI application is to work properly. However, other research shows that customers’ discomfort with AI is accentuated when the AI application is embedded in a robot. Technological Forecasting and Social Change, 108, 28–41. Next, the authors propose a research agenda that addresses not only how marketing strategies and customer behaviors will change in the future, but also highlights important policy questions relating to privacy, bias and ethics. Journal of Marketing Research, 55(3), 339–351. Nature, 521(7553), 452–459. Further, AI bot deployment can be scaled up or down as needed, when demand ebbs or flows. These impending transformations might be best understood using three illustrative cases from diverse industries (see Table 1). Unraveling the personalization paradox: The effect of information collection and trust-building strategies on online advertisement effectiveness. Finally, the AI embedded in proposed multifunctional, companion robots (that today remain under development) would entail substantially more reality, featuring both physical embodiment and the capacity to operate in wide range of contexts (specifically, share physical proximity with individuals without any protective barrier, travel with individuals, etc.). Download our Free Resource: Future of marketing report Read about the foundational capabilities that are important for businesses of every size and the investments you need to compete using inbound marketing. While Artificial Intelligence is still an unclear buzzword in tech for many, there is no denying that the recent AI and machine learning is heavily dependent on the huge amount of data. %PDF-1.4 Article  Fowler, G. (2019). Another important research avenue pertains to allocations of advertising resources. Larson, K. (2019). Miller, G. (2016). In other work on how customers engage with AI, Luo et al. 2017). In The Economics of Artificial Intelligence: An Agenda. How robots, IoT and artificial intelligence are changing how humans have sex. Harding, K. (2017). Journal of Consumer Research (forthcoming). Revenues may increase through improved marketing decisions (e.g., pricing, promotions, product recommendations, enhanced customer engagement); costs may decline due to the automation of simple marketing tasks, customer service, and (structured) market transactions. Such AI applications can address complex, idiosyncratic tasks by applying holistic thinking and context-specific responses (Huang and Rust 2018). First, data privacy choices may reflect a firm’s strategy (e.g., if it wants to be perceived as a trusted firm; Martin and Murphy 2017; also see Goldfarb and Tucker 2013) but also could be driven by ethical concerns. Like Jarvis, Dorian can adapt to a variety of new contexts. A related research topic might involve examining how ethical concerns about AI vary across cultures. This point suggests some interesting research opportunities. Marketing is just one of the many areas of business heavily influenced by the growth of artificial intelligence.Businesses must be aware of and adjust to the implementation of artificial intelligence in the marketing arena. Mehta, N., Detroja, P., & Agashe, A. Second, we suggest that AI will be more effective if it is deployed in ways that augment (rather than replace) human managers. Pedersen, I., Reid, S., & Aspevig, K. (2018). ), NA - advances in consumer research (pp. Technological Forecasting and Social Change, 80(8), 1615–1628. Testing for whether there is bias in AI applications is an important topic. Customers thus may become concerned if Amazon has access to data recorded through Ring, which it could use or sell. Thus, reactions become negative as robots move. In the future, artificial intelligence (AI) is likely to substantially change both marketing strategies and customer behaviors. Elsewhere, the robot Pepper can provide frontline greetings, and IBM’s Watson can provide credit scoring and tax preparation assistance. The Cafe X robot barista augments the capabilities of the human barista, who can then focus on providing high-quality customer service, and also facilitating what the company calls “coffee education” (e.g., managing tastings). AI is going to make our lives better in the future. This bias emerged because the training data sets used to develop the algorithm were based on data relating to previous applicants, who were predominantly men. Futurists would have us believe that such AI will emerge in the long term, with strong predictive abilities for customers’ preferences and high capability levels for managing customer service. Not only do these AI bots have lower error rates, but also they free up human agents to deal with more complex cases. When individuals are asked to administer pain—via electric shocks—to a (physically present) robot or a robot simulation, both of which go on to display marks indicating pain after being subjected to an shocked, individuals empathized more with the physically present robot (Kwak et al. Nature, 518(7540), 529–533. 0000012655 00000 n AI might not deliver on all its promises, due to the challenges it introduces related to data privacy, algorithmic biases, and ethics (Larson 2019). Customers do not associate AI applications with autonomous goals (Kim and Duhachek 2018); for example, customers do not believe Google’s AlphaGo has the self-driven goal to be a national Go champion. Harvard business review online. Wilson J., Daugherty P., & Shukla P. (2016). Müller, V. C., & Bostrom, N. (2016). The authors thank Eric Colson (Stitch Fix), James Kotecki (Infinia ML) and Charu Kohli (CognitiveScale), who shared their time, materials and insights with the authors as this paper developed. Feeling robots and human zombies: Mind perception and the uncanny valley. Today, the combination of AI and big data implies that firms know much about their customers (Wilson 2018). it immediately started discriminating against women. Artificial intelligence and bias: Four key challenges. %���� (2018). We argue that the marketing discipline should take a lead role in addressing these questions, because arguably it has the most to gain from AI. The probable modifications are at the elementary phase now. Retrieved February 11, 2019 from https://www.theguardian.com/technology/2017/sep/07/new-artificial-intelligence-can-tell-whether-youre-gay-or-straight-from-a-photograph. For example, individuals enjoy interacting with a physically present robot than with either a robot simulation (on a computer) or a robot presented via teleconference (Wainer et al. To examine the full scope of the impact of AI, we propose a research agenda covering three broad areas: (1) how firms’ marketing strategies will change, (2) how customers’ behaviors will change, and (3) issues related to data privacy, bias, and ethics. 2006). (2018). Huang, M. H., & Rust, R. T. (2018). (2019) show that customers’ reservations are due to their concerns about uniqueness neglect (i.e., the AI is perceived as less able to identify and relate with customers’ unique features). At Café X, for example, a robot barista can serve up to 120 coffees per hour (Hochman 2018). Second, the preceding examples highlight mostly positive consequences of AI, without detailing the widespread, justifiable concerns associated with their use. 0000012517 00000 n This point aligns well with sentiments expressed by Ginni Rometty, the CEO of IBM, who proposed that AI would not lead to a world of man “versus” machine but rather a world of man “plus” machines (Carpenter 2015). Verhoef, P. C., Stephen, A. T., Kannan, P. K., Luo, X., Abhishek, V., Andrews, M., et al. (2015). Retrieved February 11, 2019 from https://www.chicagotribune.com/bluesky/originals/ct-northwestern-virginia-rometty-ibm-bsi-20150619-story.html. However, such capabilities remain distant; a 2016 survey of AI researchers indicated there was only a 50% chance of achieving context awareness (or its equivalent) by 2050 (Müller and Bostrom 2016). 0000080690 00000 n Reciprocity in human-robot interaction: A quantitative approach through the prisoner’s dilemma and the ultimatum game. 2017). 2013; Guha et al. Put simply, the dream of getting into a driverless car outside in one city, falling asleep, and waking up in another city is not reality and may not be achieved anytime soon. Consistent with this perception, customers are more likely to focus on “how” (rather than “why”) the AI application performs; implying that when engaging with AI, customers will be in a low level construal mindset. 0000003069 00000 n Neighbors also might protest if Ring cameras record their front yard activities without their permission. For example, IBM’s Deep Blue applied standardized rules and “brute force” algorithms to beat the best human chess player. Thereafter, AI can be leveraged to analyze such data and deliver personalized recommendations (relating to next product to buy, optimal price etc.) Mandel, N., Rucker, D. D., Levav, J., & Galinsky, A. D. (2017). Reese, B. Moon, Y. Answering these questions could help firms design sales to take the most advantage of AI. MIT Sloan Management Review, 60(4), 22–28. Reese (2018, p. 61) cautions that this type of AI is in no way “easy AI.”. Task type refers to whether the AI application analyzes numbers versus non-numeric data (e.g., text, voice, images, or facial expressions). Customers place orders on a kiosk touchscreen (or via an app), so all inputs are numeric. (2015). Singh, J., Flaherty, K., Sohi, R. S., Deeter-Schmelz, D., Habel, J., Le Meunier-FitzHugh, K., et al. Walmart tests shelf-scanning robots in Bay Area. The valley reflects these trends, as reactions initially becoming more negative, then turn positive. You, Q., Jin, H., Wang, Z., Fang, C., & Luo, J. Sci. (2019) show that these reservations are more for customers who have higher scores on the ‘personal sense of uniqueness’ scale. The widespread “retargeting” of digital ads is one example of this phenomenon. Artificial intelligence is top of mind for many in the marketing and communications world. Carpenter, J. In Proceedings of the IEEE International Conference of Intelligent Robot Systems (pp. More human than you: Attributing humanness to self and others. (2018). These robots have better sensing capabilities than humans, because they incorporate thermal cameras and other high-technology sensing tools. To elaborate, if a certain consumption activity is central to a customer’s identity, then the customer likes to take credit for consumption outcomes (Leung et al. A senior manager in Infinia ML indicated that often data is stored in formats and structures less amenable to AI deployment. Stitch Fix elicits data from customers using both direct questions about their preferences (which can be put in tabular formats) and indirect elicitations from customers’ Pinterest pages and likes. Rather, they believe that this AI application is programmed to play the game Go. Reframing the discount as a comparison against the sale price: Does it make the discount more attractive? Here’s another: Tesla founder and tech titan Elon Musk recently donated $10 million to fund ongoing research at the non-profit research company OpenAI — a mere drop in the proverbial bucket if his $1 billion co-pledge in 2015 is any indication. Kidd, C. D., & Breazeal C. (2008, September). 2018), and so are an important area of research for marketing researchers. Harvard Business School Press. 0000091614 00000 n (2009). 0000047974 00000 n (2019) propose that offering customers the opportunity to slightly modify the AI may get these customers to look past uniqueness neglect, and focus more on the benefits of personalization. 3 Ways Artificial Intelligence Will Change Marketing Let’s start out with AI and marketing since the topic is less specific, and might be of interest to you whether you run a restaurant, a retail chain, a QSR, or any other type of business. Kaplan, A., & Haenlein, M. (2019). 0000005299 00000 n 650 0 obj Customers should adopt AI if its use leads to significantly fewer accidents; instead, customers impose higher standards and seek zero accidents from AI. 0000012826 00000 n In the future, salespeople will be assisted by an AI agent that monitors tele-conversations in real time. In particular, customers might perceive a loss of autonomy if AI can substantially predict their preferences. Tucker, C. (2018). How AI is streamlining marketing and sales. The discomfort with AI is accentuated in case the AI application is embedded in a robot. For example, two Stanford researchers used deep neural networks to identify people’s sexual orientation, merely by analyzing facial images (Wang and Kosinski 2018). Metz, C. (2018). Artificial Intelligence enables marketers to create highly personalized consumer experiences that cost significantly less than traditional high-dollar campaigns. In effect, Conversica’s AI augments salespersons’ capabilities. In addition, firms need to consider how they (re)organize their sales and innovation processes. 2016), and their reciprocity towards the robot partner increased even more if the robot provided early signs of cooperation (vs. random behavior). 0000060767 00000 n 2019; Syam and Sharma 2018). A world class new product development best practices model. On the cruise ship Symphony of the Seas, two robots, Rock ‘em and Sock ‘em, make cocktails for customers. Futurists predict that such robot experts will emerge in the long term to serve as companions that meet various customer needs (e.g., in-home service, home security, medical support). That is, retailers will use AI to identify customers’ preferences and ship items to customers without a formal order, with customers having the option to return what they do not need (Agrawal et al. Such factors may hinder AI adoption and deserve study. (2017). Hayes, A. 652 0 obj Human-level control through deep reinforcement learning. Data privacy: Effects on customer and firm performance. 2016), without requiring the customers to actually engage in a formal shopping task. Masahiro Mori wrote an influential paper arguing that making robots look more human is beneficial, but only up to a certain point, after which such robots elicit negative reactions. 2018; Gray 2017) or that AI is relatively less able to identify what is unique about each customer (Longoni et al. In Proceedings of the IEEE conference on computer vision and pattern recognition (pp. Parekh, J. Amazon created a hiring tool using a.I. 1.2 Artificial Intelligence and Social Networks Such AI is best suited to contexts with clear rules and predictable outcomes, like chess. Journal of Consumer Psychology, 13(1–2), 125–137. Also deserving of study is other ways of mitigating such effects. Colson, E. (2018). Waiting for a sales renaissance in the fourth industrial revolution: Machine learning and artificial intelligence in sales research and practice. (2018). Secondly, how should the firm manage the tradeoff between AI focusing on customers’ expressed needs versus salespeople being relatively better able to manage issues like customer stewardship. Second, firms choose to deploy AI by defining which problems the AI will tackle. Customers appear to hold AI to a higher standard than is normatively appropriate (Gray 2017), as exemplified by the case of driverless cars. Would these advertising dollars be required in the future, wherein firms may be able to better predict customers’ preferences, and thus would not need to advertise as much? This research agenda warrants consideration by academia, firms, and policy experts, with the recognition that although AI already has had some impact on marketing, it will exert substantially more impact in the future, and so there is much still to learn. Prior research (Table 2) indicates that using robots offer substantial advantages, especially in cases involving customer interactions. The doorbells have eyes: The privacy battles brewing over home security cameras. This view is popular among practitioners, according to our personal discussions and interviews with various senior managers. The Uncanny Valley. Miller (2016) outlines the difference between an AI bot and a chatbot. Practitioners, such as senior managers from Infinia ML, formulate this categorization slightly differently, noting that data that can be organized into tabular formats are significantly easier to analyze than those data that cannot.

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