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How Ai Algorithms works in the Marketing Process

Algorithms, e.g. in the shape of bots, can be applied in all four steps of the

marketing process. In the situation analysis, in the marketing strategy, in the

marketing mix decisions and in the implementation and control.

The situation analysis is meant to identify the customers’ unfulfilled

wishes. Bots can be applied in the internal situation analysis of identifying

the key performance indicator that provides information about the company’s strengths and weaknesses. In an external situation analysis, bots can

search for certain keywords on the Internet to learn more about the customers and the competitors. Consumer behaviour can be observed and analysed

with the help of bots. If companies use chatbots in customer service, bots

can observe the courses of conversations and analyse them to obtain more

information about the market and the customers. Bots can also hold interviews with certain customers or trend experts to conduct qualitative analyses. This can save both time and money as the interviews can take place

at different places at the same time. Algorithms that can make predictions

about factors and effects influencing the marketing activities (predictive

modelling algorithms) can be used to research future demand.

In the second step of the marketing process, the creation of the marketing

the amount of customers and analyse them according to various characteristics. The definition of the value proposition of the product, however,

needs both creative and analytical skills, making this task less suitable for

automation.



A widespread instrument for implementing strategic decisions is the

marketing mix with the four Ps: Product, price, promotion and place.

Algorithms can be applied in the following areas:

• Product: Chatbots can be applied in customer care, for example.

Moreover, algorithms enable companies to develop new and innovative

products and services that are tailor-made to the customer.

• Price: Product prices can be automatically changed with the help of algorithms, depending on the demand, availability and prices competitors

have. Examples of companies that apply this dynamic pricing are airlines

as well as Amazon and Uber.

• Promotion: Algorithms with AI can learn the customers’ purchasing behaviour and needs and thus display individualised content and

product recommendations to the customer. This is more efficient and

cheaper than mass advertising for the company and can happen in real

time. In addition, mature self-controlled recommendation systems can

increase the opportunities of cross-selling, the offer and sales of additional prices.

• Place: Bots alleviate electronic commerce, also called e-commerce. If payment information and delivery address have been provided, the entire

transaction can be performed by bots. On the basis of previous purchasing behaviour, a personal butler can also independently decide where a

product will be bought. This can, however, also be problematic as this

means the customer’s purchasing behaviour can no longer be measured

in the long term. The question is also posed as to how to proceed with

regard to brand management in the future.strategy, target groups can be identified with the help of bots that segment 

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