Will AI connect brands to consumers or create a chasm between them?

Artificial intelligence (AI) has already transformed multiple industries to the benefit of consumers. Yet when it comes to how consumers actually experience the world, AI is still in its infancy. Today we can talk to our phones or smart devices around the home, but it’s often a frustrating experience, and the functionality is limited. Nonetheless, even in these early stages of the AI revolution, it’s clear that the way consumers engage with brands is going to change fundamentally. The question is, how?

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Five implications for consumer products companies

1. Brands can win from the rise of direct to consumer (D2C), if they invest in the right infrastructure. AI will become a significant bridge between brands and consumers. This is a huge opportunity for brands that can sell direct to consumers. To take advantage of it, they need to build infrastructure, especially fulfilment logistics and customer services.
2. Companies will form unexpected alliances to master last-mile fulfillment. Future consumers will expect fulfillment to happen in a way that suits them, at no extra cost. Brands will have to work with logistics firms, retailers and other suppliers to aggregate the delivery of goods and services. Without these alliances – some of which could involve competitors working together or directly with “brand ambassadors” – it will be impossible to satisfy the consumers’ fulfillment expectations at a profit.
3. Everyone can become a brand ambassador, and be rewarded for their influence. Smart companies will value future consumers not just by how much they spend, but by their ability to influence other people. Today, brand ambassador roles – and the benefits that come with them – are limited to celebrities and social media stars with obvious influence. In future, brands will be able to measure and engage the influence-power of every consumer. The ability to mobilize a mass of micro-influencers will be key to marketing success.
4. Brands will have to choose how they play in a world where shopping and buying are different activities. Future consumers will trust their chosen AI platform to buy most of what need; they’ll only consciously “go shopping” for a select few products and services. Future consumers will expect whatever they purchase to meet their exact needs and expectations, even when their AI bot is doing the buying. Engaging a human shopper and meeting the purchase criteria of an AI bot will require very different business models. The former is about premium services and immersive brand experiences that reflect the values and purpose of the target consumer. The latter is about the strength of the algorithm, the best value proposition, efficient fulfillment and minimal marketing or packaging costs. One brand can’t thrive in both spaces.
5. Subscription models will grow. Consumers will likely buy fewer goods “on demand.” Instead they’ll prefer subscription services. Products may become secondary to the services or experiences that frame them. To play in this space, companies will need to give the consumer end-to-end support for the lifespan of their relationship.

By Helen Merriott, EY UK&I Consumer Industries Advisory Leader

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