CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Over the past few years, the field of marketing has undergone significant changes due to technological advancements. One notable technological breakthrough that has had a transformative impact on marketing is Artificial Intelligence (AI). AI encompasses a range of technologies and academic disciplines that have existed for many years, but only recently have become viable for practical use. Although still relatively new in the market, AI applications have already demonstrated remarkable effectiveness in various industries, particularly in marketing (Cannella, 2018).
The recent progress in AI technology, along with the increasing number of successful applications, has generated enthusiasm among marketers. However, this excitement has not translated into a widespread understanding of how the technology operates, how to implement it practically, and the long-term implications it carries. As AI continues to advance and gain wider acceptance in the field of marketing, the ability of marketers to effectively incorporate and manage AI will become an increasingly vital skill (Cannella, 2018).
Understanding one's role in creating and delivering value in an AI-driven workplace is crucial for individuals to succeed in their careers, benefit their companies, and serve consumers effectively. Consequently, it is likely that AI will bring about significant changes to the very essence of marketing (Cannella, 2018).
Artificial intelligence refers to the replication of human intelligence processes by machines, particularly computer systems. According to Kaplan and Haenlein (2019), AI is characterized by a system's ability to accurately comprehend external input, learn from it, and utilize that knowledge to achieve specific performance objectives through adaptable adjustment. AI encompasses various applications, including expert systems, natural language processing, speech recognition, and machine vision.
Conversely, marketing is widely recognized as one of the most promising domains for advancement, with artificial intelligence (AI) deployment showing significant potential for revenue growth and success (Fagella, 2019). A report by PwC (2017) predicted that investments in AI development would contribute to a 14% increase in global GDP by 2030. Additionally, it was forecasted that AI would generate $13 trillion in output by 2030, resulting in an annual global GDP growth of approximately 1.2% (Bughin et al., 2018).
According to a survey conducted in late 2020 among marketers worldwide, 41% of the respondents reported improved revenue growth and enhanced performance as a direct result of implementing AI in their marketing initiatives. Another 38% attributed the creation of personalized consumer experiences to the utilization of AI in marketing (Gutman, 2020).
Artificial intelligence is poised to make significant contributions to tasks that were traditionally performed by humans, such as effective communication, conversation, and displaying empathy. The emergence of smart virtual assistants exemplifies this trend, and some companies are already leveraging this technology in digital marketing to unlock new possibilities (Faruk et al., 2021). Over the past two decades, AI has brought about drastic transformations not only in marketing but also in fields like finance, healthcare, engineering, and education (Huang and Rust, 2018; Rust, 2020).
The growing personalization of consumer-firm interactions, driven by abundant data, has led to profound digital effects. Organizations are increasingly investing in machine learning to enhance their marketing capabilities. According to BCC Research, the market for machine learning solutions is projected to experience a remarkable annual growth rate of 43.6%, reaching $8.8 billion by 2022 (Information Technology Industry Analysis and Market Research Report, 2022 as cited in Alkhayyat and Ahmed. 2022).
Marinchak et al. (2018) suggest that AI is fundamentally transforming the development of marketing processes. The authors argue that marketing strategies and processes are increasingly being augmented and automated by AI. However, there is a scholarly debate regarding the future of AI in marketing. Some believe that automation is the key, while others argue that AI should be utilized in conjunction with human input (Jarrahi, 2018; Epstein, 2015).
In general, AI has a significant impact on marketing and can facilitate the growth of business opportunities. It is clear that integrating AI into marketing strategies is imperative for businesses that wish to remain competitive (Pradeep et al. 2018). The e-commerce sector, which is projected to reach global sales of $6.5 trillion by 2023, offers immense growth potential. However, along with these opportunities, significant challenges arise.
E-commerce business owners must juggle multiple daily tasks, including meeting high customer expectations, facing fierce competition, and managing complex logistics, all while maintaining effective communication with customers, suppliers, and partners. Attempting to handle all these responsibilities alone is a recipe for burnout (Ghosh, 2023).
Given these circumstances, it is crucial for e-commerce business owners to harness the power of AI to alleviate the workload. AI technologies, such as chatbots, can play a pivotal role in providing instant customer support, addressing inquiries, and offering product recommendations. By implementing AI-powered chatbots, businesses can enhance customer satisfaction and reduce the burden on their support teams.
Konga, a prominent e-commerce company, has recognized the benefits of leveraging AI to enhance its marketing strategies. Konga operates as an online marketplace, offering a wide range of products to consumers. Therefore, this study aims to explore the application of AI in marketing, specifically focusing on the case of Konga.
1.2 Statement of the Problem
In today's marketing landscape, it is essential to have a deep understanding of customers' desires and interests, coupled with the ability to promptly and efficiently respond to that knowledge. Businesses that have not integrated AI into their marketing strategies often struggle to make real-time, data-driven decisions (Camilleri, 2018). The collection of vast amounts of data enables personalization, allowing businesses to gain better insights into consumer behavior and interests across various platforms and touchpoints. This, in turn, enables businesses to tailor their content to align with customer interests, ultimately leading to increased sales (Dwivedi et al., 2021).
Particularly in the context of ecommerce, engaging consumers throughout their entire journey—from awareness and investigation to purchase, review, and consumption—becomes crucial. However, the concept of personalization in ecommerce remains ambiguous, with numerous suppliers claiming to offer it. Nevertheless, personalization holds distinct meanings for individuals, and it should primarily be grounded in a robust design framework and deliver a seamless customer experience across all touchpoints with the seller. This process typically begins with a one-to-many approach and gradually evolves into a one-to-one experience based on comprehensive knowledge about each customer (Alkhayyat and Ahmed, 2022).
This further underscores the significance of AI in the e-commerce industry. Konga, a prominent e-commerce company, has recognized the advantages of leveraging AI to enhance its marketing strategies. Therefore, this study focuses on investigating the specific case of Konga to understand how AI can be effectively utilized in marketing.
1.3 Aim of the Study
The aim of this study is to examine the application of AI in marketing, specifically focusing on the case of Konga.
1.4 Objectives of the Study
The study had the following specific objectives:
- To investigate the ways in which AI is utilized in Konga's marketing strategies.
- To analyze the impact of AI on Konga's marketing performance and effectiveness.
- To explore the benefits and challenges of integrating AI into Konga's marketing practices.
1.5 Research Questions
The research questions that will guide this study are as follows:
- How does Konga utilize AI in its marketing strategies?
- What is the impact of AI on Konga's marketing performance and effectiveness?
- What are the benefits and challenges of integrating AI into Konga's marketing practices?
1.6 Research Hypothesis
The research hypothesis for this study is as follows:
H0: There is no significant relationship between the application of AI in marketing and the marketing performance of Konga.
Ha: There is a significant relationship between the application of AI in marketing and the marketing performance of Konga.
1.7 Justification of the Study
This study is important as it contributes to the existing body of knowledge regarding the application of AI in marketing, particularly in the e-commerce industry. By examining the case of Konga, valuable insights can be gained on the effectiveness and challenges of implementing AI in marketing strategies. The findings of this study can help e-commerce companies, including Konga, make informed decisions and improve their marketing practices.
1.8 Scope of the Study
This study will focus specifically on the application of AI in marketing within the context of Konga, an e-commerce company. The research will explore how Konga utilizes AI in its marketing strategies and examine the impact of AI on Konga's marketing performance.
