The Impact of AI-Driven Personalization on Consumer Purchase Intentions

Abstract

The idea of artificial intelligence has provided the strategy of personalization with a new facet that enables companies to personalize their products, messages, and experiences more accurately than ever before. The impact of AI-based personalization on the consumer purchasing intentions will be analyzed in this paper in the context of the psychological processes that are performed during the establishment of the decision-making process and the technological conditions that make such personalization feasible. Resting on the data provided by the complex of online survey and controlled experiments, the research studies the reaction of the consumers towards personalized recommendations, dynamically displayed product displays, and dynamically displayed promoting messages. The outcomes indicate that the perceived relevance, reduced searching effort, and increased emotional involvement of the individual are significantly increased through the use of AI-based personalization, which in totality increases the purchase intentions. The results, however, also indicate at the serious limit situation: the personalization is most effective when the consumer is convinced that the information concerned is appropriate and is handled in a responsible manner. Since the encroachment of personalization is excessive, or the information that is inferred proves to be shared by the consumer without his/her approval, the impact on purchase intention would greatly decline as the issue of privacy and manipulation comes to the fore. The study also reveal that the impact of AI-based personalization is mediated by the degree of trust to the brand and transparency on the utilization of the gathered information. The more brands disclose information about how their personalization systems work and what kind of data they are anchored on, the higher they should be able to attract more consumer acceptance and purchase intentions. Overall, this paper notes that the role of AI-based personalization can be immense in influencing consumer purchasing behaviour, but the effectiveness of this strategy requires the presence of balance between relevancy, visibility, and consumer privacy sensitivity. It is possible that these lessons can make some valuable suggestions to the marketers who intend to introduce AI-based personalisation techniques in a way that maximizes the consumer value without breaking the principles of ethical conduct.