New Research: Promoting AI In Products Has Negative Effect On Consumers

Two new consumer surveys reveal that corporate hesitancy about AI is justified at this point, as consumers are not only unconvinced or skeptical about its benefits, but find it a disincentive to purchase - and especially about having to pay more for it. 

What makes this particularly compelling is that younger consumers, who presumably are more tech savvy, are even more skeptical than their older peers. The implication is that despite Silicon Valley's hype, the advantages of AI to consumers are not well understood - or believed, while the potential threats have clearly had an impact. If AI is to become what investors and big tech execs expect it to, they will have to do a far better job of demonstrating its advantages - and they may have to be less greedy in trying to grab the financial benefits in terms of higher prices for themselves so quickly. JL

Sean Captain reports in the Wall Street Journal:

Recent research suggests that marketing which promotes the idea that your product or service has AI in it could backfire and actually turn off consumers. The effect is especially pronounced for offerings perceived to be riskier buys, such as a car or a medical-diagnostic service. Of the 4,000 Americans in the survey, 18% said AI would make them more likely to buy, 24% said less likely and to 58% it made no difference. “Consumers see fewer compelling benefits. A ‘smart’ fridge carries a premium price tag, requires regular software updates and may raise privacy concerns if it tracks your groceries or eating habits.”

It seems like it’s the latest marketing strategy: Push the idea that your product or service has artificial intelligence in it.

 

But recent research suggests that approach could backfire and actually turn off consumers. The effect is especially pronounced for offerings perceived to be riskier buys, such as a car or a medical-diagnostic service, say the researchers, who were from Washington State University and Temple University.

“When we were thinking about this project, we thought that AI will improve [consumers’ willingness to buy] because everyone is promoting AI in their products,” says Dogan Gursoy, a regents professor of hospitality business management at Washington State and one of the study’s authors. “But apparently it has a negative effect, not a positive one.”

‘AI-powered’

In multiple experiments, involving different people, the researchers split participants into two groups of around 100 each. One group read ads for fictional products and services that featured the terms “artificial intelligence” or “AI-powered,” while the other group read ads that used the terms “new technology” or “equipped with cutting-edge technologies.”

In each test, members of the group that saw the AI-related wording were less likely to say they would want to try, buy or actively seek out any of the products or services being advertised compared with people in the other group. The difference was smaller for items researchers called low risk—such as a television and a generic customer-service offering.

Decisions seemed to come more from the heart than the head—that is, they were based mostly on emotions, say the researchers. Those with a negative view didn’t trust AI-enabled products and services, especially if they didn’t understand what AI in the offering does or if the offering poses any sort of safety risk. And that prevented them from making a clear assessment about whether they wanted to make a purchase.

Gursoy says that he and colleagues are now working on additional projects to identify the cause of negative attitudes toward AI, though they speculate that concern for privacy is one.

For example, the researchers found that enthusiasm for an AI-enabled refrigerator was weaker than for all the other products in the low-risk category. It could be that people just don’t see the point of AI in a fridge, Gursoy says.

“Consumers simply see fewer compelling benefits,” says Gursoy. “A ‘smart’ fridge often carries a premium price tag, requires regular software updates and may raise privacy concerns if it tracks your groceries or eating habits.”

Age differences

Meanwhile, a separate new study from market-research firm Parks Associates that used different methods and included a much larger sample size came to similar conclusions about consumers’ reaction to AI in products.

“We straight up asked consumers, ‘If you saw a product that you liked that was advertised as including AI, would that make you more or less likely to buy it?’ ” says Jennifer Kent, the firm’s vice president of research.

Of the roughly 4,000 Americans in the survey, 18% said AI would make them more likely to buy, 24% said less likely and to 58% it made no difference, according to the study. “Before this wave of generative AI attention over the past couple of years, AI-enabled features actually have tested very, very well,” Kent says.

While Gursoy’s research didn’t provide any insight into whether younger people are more receptive to AI in products and services than older people, Kent says her firm’s study did.

Among younger respondents (age 18 to 44), 24% to 27% said they would likely buy a product advertised as including AI, compared with 18% overall. Among respondents age 65 and older, 32% said they would be less likely to buy a product advertised with AI, compared with 24% overall.

In any case, companies have to do a better job of making the argument for AI in their products, both Gursoy and Kent say. “While AI-enabled appliances are appealing in theory,” says Gursoy, “the specific advantages of AI must be obvious and worthwhile to justify the investment.”