Need for AI in Consumer Behaviour

Artificial intelligence and consumer behaviour are a natural connection for retailers. Gathering
evidence to analyse and to work out just how consumers are shopping these days is so complex and
there is so much data available, you won’t find patterns or behaviour signals unless you use artificial
intelligence. [4] Making sense of all the data and understanding how AI is influencing consumers is
crucial for businesses and marketers to stay ahead of the curve. [1]
Marketers need to understand the following in order to send relevant communication to consumers.
o Buyer behaviors
o Motivations
o Expectations
In order to do so, consumers’ digital trail is collected and analyzed, getting deeper than audience
demographics and down into consumer psychographics as psychographics are a much better indicator
of motivations, needs, and purchase behavior. [3]
How is it done?
Now that large amount of data is available from multiple sources, there arises the need to make use of
it, for instance, to predict consumer behavior days and even months from now. Anticipating consumer
needs is made possible through Big Data and advancements in Artificial Intelligence (AI). [8]
Artificial intelligence can look at behavior on a much more granular level and predict what a
consumer will do next based on their past actions. It can draw conclusions between certain types of
people to anticipate their next move, motivations and desires. [3]
The advancements in AI, analytics, and machine learning allow companies to forecast what
consumers will be excited about, worried about, or need in the future, future being from 24 hours to
even 12 months from now. This can give important insights for product development based on
consumer needs. [6]
Big data and deep learning which is a subset of AI, have the potential to transform the future of
marketing by helping businesses to predict consumer behavior working with enormous amounts of
data. [2]
PREDICT OR INFLUENCE
AI can be used in consumer behaviour and marketing, either to predict the target group’s response to
something specific or behaviour in general in order to develop the products or services the consumers
want or need, or influence their decisions using the insights AI provides us with to stay ahead of the
curve and create a market altogether for the product or service that the companies already have.
Consumer behaviour today online
The undeniable fact is that online business today has increased at a very fast pace everywhere around
the globe. This happens through the widespread use of various Social Media platforms and the
constant dependence on social media for all the needs of today’s consumers. It would be really useful
for the digital marketers, if the intentions of the web patrons can be interpreted when any brand posts
any form of marketing communication who’s target audience would be their fans or followers. [5]
Social media is growing into a significant tool for monitoring customer needs, satisfaction,
dissatisfaction, and overall behavior. Big Data and AI better customer experience by predicting what
they will want in the near future. Companies can easily enhance a product or service, do away with it,
or introduce a new and better one altogether all based on the information gathered from AI analytics.
Big Data and AI yield more relevant and creative solutions for consumers before they even know it. [8]
Dentsu’s AISAS Predictive Model for behaviour analysis

Figure 1: AISAS Model [7] - Pornpimon Kachamas, Suphamongkol Akkaradamrongrat, Sukree

Sinthupinyo, and Achara Chandrachai, "Application of Artificial Intelligent in the Prediction of
Consumer Behavior from Facebook Posts Analysis," International Journal of Machine Learning and
Computing vol. 9, no. 1, pp. 91--97, 2019.
Working process of AISAS model starts when a consumer notices or sees a product, a service or an
advertisement (Attention). Then, the Interest is stimulated in order to get more information about
such product or service (Search). In this stage, a consumer will seek for the others’ comments,
reviews, posts from internet, comparison websites, formal webpages of an organization or even from a
conversation with family members or friends who have been using the product or service. After that,
the consumer will express his/her own opinion considering the others’ opinions on that product or
service. This stage leads to the decision of the consumer to buy (Action). Finally, the consumer will
act as a messenger by word of mouth, conversation, or online posts of his or her opinion and
impression (Sharing). Dentsu’s AISAS model does not restrict the order of the occurrence of stages,
they can be shifted, altered or repeated. The predictive model for AISAS behavior can give average
accuracy higher than 86 percent. [7]
How AI is used to predict consumer behaviour
Deloitte
Deloitte’s Blab tool used by Deloitte-owned creative agency Heat. This intelligence tool mines data
from over 50,000 sources, for instance, social media platforms and the news, and from that predicts
themes and topics that will characterize what consumers will be talking about in 72 hours. The tool
has shown 70% accuracy. With such information, the enterprise creates a strategy to customize its
services in line with the upcoming trends before they even take off. [6]
Target
After analyzing historical data on customer purchase behavior, Target uncovered a connection
between the purchase of unscented lotion and dietary supplements with being pregnant. When
shoppers start buying those items, Target sends them offers related to pregnancy and baby items. [3]
How AI can be used to influence the consumer behaviour
AI is able to use machine learning to uncover customer insights that encourage loyalty. [1] Hence, the
use of AI invokes loyalty in consumers as the precision of AI is proven to please the consumers in
numerous ways that make them satisfied and loyal to the brand or service.
Relevance
Digital consumers have become exhausted by an endless stream of unsuitable produce choices. If they
can find an online solution that is able to recommend products they’ll enjoy, they are more likely to
stick with that solution. AI is able to meet this consumer demand. [1] For example, online shopping
brands such as Zivame and Myntra suggest product styles, colours and sizes based on your past
purchases and by recording your answers to simple questions. Refer figure 2.
Figure 2 : Relevance prediction [1] - https://blog.crobox.com/article/ai-consumer-behavior
Personalisation
Netflix, for instance, has an AI-driven focus on personalization, and its recommendation system
influences about 80 percent of the content that its subscribers watch. The company also estimates that
its algorithms help it to save $1 billion annually in value from customer retention. [2]
Convenience
AI makes the consumers lifestyle easier and convenient which makes them pleased and addicted. For
example, Pinterest recently launched Pinterest Lens, which uses AI to help consumers find everyday
items in their own home online. All they need to do is take a picture of, say, a piece of clothing, and
upload it to the app. [1]
AI enables services that in turn encourages consumers to spend
Satisfying the consumer in aforementioned ways, the businesses can improve the probabilities of any
consumer’s buying decision. Fully cognitive websites will drastically change buying behavior and
selection. We see the average spend of a buyer per session significantly increasing with these website.
Cognitive sites take consumers through a much smarter funnel, allowing them to buy before user
fatigue starts to kick in or the user gets distracted. [1]
Examples of use of AI in Marketing and Consumer Behaviour Analysis
Neural networks in analysing consumer response to advertising stimuli and how different factors
affect their purchase decision. [9]
The development of an AI enabled intelligent Decision Support System that is useful for making
product development and design decisions. The system acts as a consultant for marketers, providing
visual support to enhance understanding and to overcome lack of expertise. The databases of the
system are the results of consumer surveys, as well as financial information of the enterprises
involved in the decision making process. The system's model base encompasses statistical analysis,
preference analysis, and consumer choice models. The model MARKEX incorporates partial
knowledge bases to support decision makers in different stages of the product development process.
[10]

Creation of a simulated consumer population to mimic the original target population and their
behaviour to marketing experiments. Models such as CUstomer BEhavior Simulator (CUBES), which
has been realized for implementing the customer model and leading multi-agents simulations and
genetic algorithms (GA), in addition to multi-agent systems, are used to fit the characteristics of the
virtual consumers' population into a global realistic market behaviour. [11]
Study of online consumer reviews, the post- purchase behaviour of consumers and the helpfulness of
those reviews in the buying behaviour of potential target groups. [12]
Study of brain activity using artificial intelligence and machine learning techniques to predict
consumer behaviour and to apply the learning in neuro-marketing. [13]

1. Kas Szatylowicz, 5 Ways Retail AI Will Influence Consumer Behavior,

https://blog.crobox.com/article/ai-consumer-behavior
2. Jane Irene Kelly, The Future of Marketing: Predicting Consumer Behavior with AI,
https://blog.invoca.com/future-of-marketing-predicting-consumer-behavior-ai/
3. Erin O'Bannon, Applications of Artificial Intelligence in Marketing: Consumer Insights,
https://www.meetcortex.com/blog/artificial-intelligence/ai-consumer-insights
4. Graham Jones, Artificial Intelligence and Consumer Behaviour Work Well Together,
https://www.business2community.com/business-innovation/artificial-intelligence-consumer-
behaviour-work-well-together-02038884
5. Kachamas, Pornpimon & Akkaradamrongrat, Suphamongkol & Sinthupinyo, Sukree &
Chandrachai, Achara. (2019). Application of Artificial Intelligent in the Prediction of
Consumer Behavior from Facebook Posts Analysis. International Journal of Machine
Learning and Computing. 9. 91-97. 10.18178/ijmlc.2019.9.1.770.
6. Steve King, Using AI and Analytics to Predict Consumer Behavior,
https://deloitte.wsj.com/cmo/2018/11/26/using-ai-and-analytics-to-predict-consumer-
behavior/
7. Pornpimon Kachamas, Suphamongkol Akkaradamrongrat, Sukree Sinthupinyo, and Achara
Chandrachai, "Application of Artificial Intelligent in the Prediction of Consumer Behavior
from Facebook Posts Analysis," International Journal of Machine Learning and Computing
vol. 9, no. 1, pp. 91--97, 2019.
8. Emmanuel Urias, How to predict consumer behavior with Big Data and AI,
https://invidgroup.com/how-to-predict-consumer-behavior-with-big-data-and-ai/
9. Curry, B. and Moutinho, L. (1993), "Neural Networks in Marketing: Modelling Consumer
Responses to Advertising Stimuli", European Journal of Marketing, Vol. 27 No. 7, pp. 5-20.
10. Matsatsinis, Nikolaos F. & Siskos, Yannis, 1999. "MARKEX: An intelligent decision
support system for product development decisions," European Journal of Operational
Research, Elsevier, vol. 113(2), pages 336-354
11. L. B. Said, T. Bouron, and A. Drogoul, A., "Agent-based Interaction Analysis of Consumer
Behavior", Proceedings, First International Joint Conference on Autonomous Agents and
Multiagent Systems: Part 1, Bologna, Italy, 2002.
12. Schindler, Robert & Bickart, Barbara. (2012). Perceived Helpfulness of Online Consumer
Reviews: The Role of Message Content and Style. Journal of Consumer Behaviour. 11. 234-
342. 10.2139/ssrn.1701043.
13. G. A. Calvert, M. J. Brammer, "Predicting consumer behavior: using novel mind-reading
approaches", IEEE Pulse, vol. 3, no. 3, pp. 38-41, 2012.