The 101 of artificial intelligence in marketing

By Alexis Mavrommatis

Artificial intelligence (AI) is everywhere. From recommending films based on what you’ve already watched to automating jobs on production lines, it’s an inescapable revolution in business and society.

Marketing is no exception: AI offers organisations a host of ways to better understand, predict and engage customers and can enhance every stage of the planning process.

AI is already underpinning a vast array of customer/brand interactions to improve the experience, such as predicting customer demands and answering simple service queries. However, significant potential remains for marketers to adopt advanced AI capabilities, such as personalizing campaigns and employing predictive modelling.

A team of global marketing experts, including Alexis Mavrommatis from Esade, have published research in Business Horizons summarising the benefits of AI throughout the marketing process. In it, they describe how each of the nine components inherent to strategic marketing can be improved by AI.

101-AI-Marketing

1. Analysing the current situation

AI techniques such as social listening can glean information on markets and consumers, particularly in terms of satisfaction, purchasing patterns, and product demand. From this perspective, AI affords marketers the opportunity to identify changes in competitor behaviour (including pricing), estimate product demand and assess customer sentiment (including customer satisfaction).

2. Understanding markets and customers

At this stage, marketers aim to develop an understanding of the specific markets they operate in and the consumers they target, monitoring behaviour to track success. During this process, AI provides a vast array of opportunities beyond traditional web analytics and customer satisfaction market research. Customer preferences and data can be mined from web, social media, mobile activity and contact-centre interactions, with data analysed and fed back in real time to allow immediate decision making.

AI provides a vast array of opportunities beyond traditional web analytics and customer satisfaction market research

3. Segmenting, targeting and positioning

AI not only helps to predict customers’ intent but also helps marketers segment customers into more refined groups. The potential for segmentation is immense, from tailoring promotions and ads to making better product and brand recommendations.

However, marketers should be aware of the dangers of discrimination through AI: it can lead to unintended and illegal price discrimination through its emphasis on targeting different audiences. In the EU, it’s considered discriminatory behaviour when algorithms are used to set prices on the basis of observable group characteristics.

4. Planning direction, objectives, and marketing support

AI and chatbots can assist growth strategies by integration into apps or social media to encourage consumer purchasing. Chatbots are commonly employed in customer service to address simple queries and can reduce costs, but their effect on customer satisfaction can be varied. Many customers still prefer to speak with human agents for more complicated requests. But despite this, AI can still provide back-end support in customer service. For instance, AI can assign agents to customers to ensure they’re connected with someone who can address their needs. By doing so, AI can streamline the interaction and provide value for organisations.

Artificial intelligence marketing
Related content: The 8 Ms of artificial intelligence marketing

5. Developing product strategy

Opportunities for AI assistance in product strategy include identifying gaps for new product development, facilitating the production of products customised to consumers’ specifications, and assisting with product delivery and logistics. AI can also identify which products to manufacture, allowing brands to draw inspiration from top trending posts on Instagram or best-selling goods on shopping platforms. Algorithms can optimise how products are arranged in store, improve size availability and allow brands to ensure the most popular pieces are stocked.

AI-powered audience-insights platforms that are used to understand what existing and potential customers are saying on social media also help brands to understand how customers see their products and create marketing campaigns they can relate to.

6. Developing pricing strategy

AI can assist pricing in a number of ways, including estimating consumer price elasticity, enabling surge pricing and detecting anomalies such as pricing errors, fraud and nonprofitable customers. AI enables marketers to track buying trends and determine more competitive product price points to nudge customers at the point of decision. In hotels and the travel industry, dynamic pricing allows underoccupancy to be addressed by adjusting pricing to balance supply and demand and maximise profit.

AI enables marketers to track buying trends and determine more competitive product price points to nudge customers at the point of decision

7. Channels and logistics

In some instances, AI can provide access to new channels to market; relatively new systems allow consumers to take pictures of things they see and then find the items for them to buy online. Similar developments are underway in the B2B sales process. Within logistics, AI allows marketers to predict and optimise distribution, inventory, store displays, and store layouts (both in person and online).

8. Developing marketing communications and influencing strategy

A diverse range of opportunities exist for AI within the broad domain of marketing communications, including conducting AI-driven A/B ad testing, contextual ad targeting, AI-optimised ad retargeting, keyword bidding, and automation and personalisation of content creation. In terms of data requirements, marketers should seek historical data to optimise placement and creation of ads, as well as real-time data about customer behaviour at the point of purchase.

9. Planning metrics and implementation control

Two key benefits of AI in planning and implementation are that human operators are not required to command or analyse outputs, and the fact that AI works on a trial-and-error basis. Algorithms pick up detailed information by mimicking the behaviour of the human brain, and marketers are able to understand, anticipate, analyse and act to solve problems. A key way AI is being used at this stage of the marketing function is in A/B testing, to assess advertising or online features. A benefit of A/B testing underpinned by AI is that websites, ads, and other online assets can self-optimise in real time as a result of assessment of behaviour.

The future of marketing

There is no doubt that AI is becoming increasingly integrated into marketing practice, enabling companies to reduce process times and engage with individual consumers at scale. But despite widespread concerns that AI will take jobs away from workers, its rapid development is instead seeing jobs change and adapt to evolving needs. Analytical tasks will become less important, but the need for intuition and empathy will increase; to progress to the point where AI can add wisdom, human judgment will be required.

Careful design of strategy, talent management and performance incentives are essential to incorporate AI to a beneficial level for organisations, employees and customers. Managers need to lead by example and stay abreast of best practice to ensure they and their organisations aren’t the ones who are left behind.

All written content is licensed under a Creative Commons Attribution 4.0 International license.