A Study on the Role and Impact of Artificial Intelligence in Marketing Decision-Making and Customer Engagement in the FMCG Retail Sector in Ahmedabad

Abstract

The application of Artificial Intelligence (AI) to assist in marketing functions like customer segmentation, personalisation, demand forecasting, product recommendations, customer service via chatbots and promotional planning is becoming more common amongst FMCG retailers. The study seeks to gain insights into the role and impact of Artificial Intelligence on Marketing Decision Making and Customer Engagement in FMCG Retail Sector in Ahmedabad, understand the use of AI applications in FMCG marketing, impact of AI in customer engagement, how AI is used to understand customer preference and challenges faced by retailers in adopting AI. The study further indicates how the retail marketing of FMCG can be more effectively done by the incorporation of AI.

The study is of quantitative type, descriptive, analytical and cross sectional. The primary data was collected from 101 Ahmedabad based FMCG consumer from the convenience sampling method by using a structured questionnaire in the form of Google Form. The questionnaire included questions about the profile of the respondents and eleven statements regarding the use of AI in marketing decisions, use of AI tools, customer engagement with AI and the balance between AI use and human involvement, rated on a 5-point Likert scale. Secondary data was collected from research papers, journals and industry reports. The data was analysed in MS Excel and SPSS using frequency and percentage analysis, charts, descriptive statistics, Cronbach's Alpha, Pearson correlation and linear regression and four hypotheses were tested at 5% level of significance.

The findings revealed that the perceptions of consumers about the use of AI in FMCG marketing were mixed, with the mean scores being near the neutral point from 2.81 to 3.24. Personalised advertisements and recommendations were the top two applications that were most accepted (43.56% agreement for both) whilst personalised recommendations and advertisements had the highest disagreement (51.49%). The most unanimous agreement (46.53%) was that FMCG firms should strike a balance between adopting AI and involving human expertise. The results for AI in marketing decisions was indicative as the scales were not very reliable, with a weak positive, but not significant correlation with customer engagement (r = 0.191, p = 0.056); the four null hypotheses were not rejected and the regression model explained only 4.7% of the variance in engagement. For FMCG retailers, the study identifies several recommendations including making personalisation more relevant to the customer, making the advantages of AI transparent to customers, being transparent about the use of data and using a hybrid approach where AI complements, but does not replace human interaction.