#5: AI and the Consumer

Ian Bowie
Hello and welcome to AI unfiltered with me Ian Bowie and our resident expert Michael Stormbom. Where we will be talking about everything to do with AI in our modern digital society and what the future holds for all of us. So here we are once again talking about all things AI and other things to do with the digital world that we live in. Today we will be talking about AI and the consumer and predict with particular reference to dynamic pricing. Perhaps that’s a good place to start actually Michael, you could perhaps explain what dynamic pricing is.

Michael Stormbom
So basically, there is no not necessarily a fixed price that everyone every prospective customer pays but rather and it is particularly prevalent obviously in Digital Learning in Online stores. So depending on the person who goes and looks at the product or service, their pricing is adjusted.

Ian Bowie
So what you’re actually saying is everybody sitting on the airplane has payed a different price for their seat.

Michael Stormbom
Potentially, potentially. And obviously, well, I mean, it’s all about how much is the customer willing to pay, how much is to prospective customer willing to pay? So that’s what’s underlying it. If someone is willing to pay more.

Ian Bowie
you’re bringing back memories actually, I remember years ago and I think I was flying with Finnair. And it was one particularly bad winter and quite a few flights had been canceled because of the weather. And I found myself flying from Helsinki to Manchester sitting next to a lady, and we just got talking, and she said she booked her ticket the previous day. Because her original flight had been canceled. I just asked her how much have you paid? And she said, Oh, it was 290 euros and I thought wow. Okay, because I think I was sitting in 125 Euro seat. But that’s probably a very good example of dynamic pricing. I mean, I booked several months in advance. She was literally desperate. had booked within the last 24 hours. And of course Finnair knew that they had to buy what we call in English the short and curlies so she paid more than double what I paid.

Michael Stormbom
Yeah indeed. That’s definitely an aspect of dynamic pricing as well that how many seats are available can affect the pricing like how, how much in advance do you want to book and so forth? So I mean, that’s certainly that’s certainly an aspect.

Ian Bowie
Right? What about cinema seats? So you go to the premiere of the next whatever, Avengers movie, and you’re sitting there in your seat and you’ve paid your 20 euros and if you’re sitting somewhere else, not not in Finland, you realize how expensive Finland really is. And is it possible somebody sitting in front of you pay 25?

Michael Stormbom
To my knowledge that is not currently the case but let’s see what the future brings.

Ian Bowie
What happens in the future. Yeah. All right. So we know that dynamic pricing is basically price adjustment, depending on many different factors. Can we fight back against dynamic pricing? I mean, I’ve tried it I have. I know that it exists. So what I’ve actually done is clear my search history, clear all cookies from my computer, and then try again because I know that these websites remember you when you come back.

Michael Stormbom
Yeah, no, absolutely. So I mean, there are certainly things you can do. You can start your browser in incognito mode and so forth to prevent it from using all of these various tracking cookies and so forth to to figure out how much you’re willing to pay because that’s what it comes down to really. So I mean, that’s one thing but then there are photos other factors like for example, your location, and so forth. I mean, it could even be down to let’s say that you’re living in an affluent neighborhood, perhaps, for example, and then it offers you at a higher price.

Ian Bowie
Because you can mess with that by using a VPN.

Michael Stormbom
Yes you can, you can indeed, I don’t know in the case of Amazon specifically because well, I mean, you do need to be if you’re registered on a website, of course, we have your purchase history. So but yeah, many people. I mean, for example, those hotel websites and stuff, you buy those online, tickets and so forth. I mean, that’s where dynamic pricing is very, very prevalent. We shouldn’t mention any names, but yes…

Ian Bowie
No no mentioning no names, but…

Michael Stormbom
A commercial site about booking things. Yes. That one.

Ian Bowie
A commercial site about booking hotels. Yes, we know. Okay, so we know that the minute we go online, we’re being tracked, and especially when we start involving ourselves in e-commerce, but because we can always think from the from the e-commerce providers point of view, the more data that they can collect about us our buying history, etc, etc, etc. It’s going to be useful to them. But what about for us? Yeah. Is there a benefit to us as consumers to allow the sites actually to track us?

Michael Stormbom
I would say that there could be, I don’t know if that’s really the case. But of course, I mean, you could well argue that a more personalized experience means that you’re, for example, over products that you are genuinely interested in…

Ian Bowie
Perhaps didn’t know existed.

Michael Stormbom
And didn’t know existed. Yeah, indeed. And, and I mean, certainly, from a dynamic pricing standpoint. If you are fortunate, fortunate or unfortunate enough, depending on the perspective to get offered the lowered price. I mean, certainly, then that’s beneficial to it if you would otherwise not be able to, to pay or not willing to pay at a higher price point. Do we actually get any benefit from this in practice as opposed to in theory that I’m not sure about? I think it’s…

Ian Bowie
Do you think that companies are operating ethically, ethically in this area? I’m just thinking of one example. That came up a little while ago, and it was somebody that I happen to know, personally, and that they used to work for a company in their legal department. And they were working with a team in the marketing department and the marketing department’s job was simply to drive more sales and one of the ways that they decided to drive more sales was to make credit, much more easily available to people that they knew were susceptible to using credit. Now, although they were operating legally, this person that I know said, Well, look, you’re not actually operating ethically because the people that you’re specifically targeting are the people who are most likely to run into problems with not being able to pay back these levels of credit,

Michael Stormbom
On a on a sort of a related topic. Those those quick loan companies that give you fast loans…

Ian Bowie
Payday loan companies.

Michael Stormbom
Yeah, those give you a very high interest rates. I mean, as for example here in Finland there’s now regulation to counter that. So. So if you’re asking me if we need more regulation of companies in certain areas, I certainly would say so.

Ian Bowie
Yeah, I think I would concur with that. Yeah. Do you think that AI on e-commerce websites is actually of benefit in terms of aiding customer retention and building customer loyalty?

Michael Stormbom
There, I think you can definitely say that it plays a big role. Certainly, I mean, I mean, how do you I mean, well, I mean, one way to build customer retention and loyalty is well spamming the crap out of you with various…

Ian Bowie
Don’t they just get pardon my French pissed off. I don’t like for example, having visited some website somewhere and then having registered for something, and then the next minute, you’re, you know, your email inbox is full of various offers from that company, simply because I missed the box to tick please do not send me all your marketing crap.

Michael Stormbom
Yeah. Well, let me qualify my use of the term, the spam there. I mean, if of course you’d be sending you relevant content. I think that’s the thing. And relevant product recommendations. Certainly, well, not spam exactly. But yeah.

Ian Bowie
They might think what they’re sending you is relevant. Yes, you don’t. I mean, for example, I you know, if I go to a website and I buy something, I have something specific in mind. I go there and I have something that I want to buy. And I don’t want them to receive lots and lots of offers for other things that some algorithm is trying to second guess might interest me.

Michael Stormbom
No, indeed. So I mean, I think that comes down to the general issue, but also it these are like recommending algorithms that how well do they actually work? And I mean, if they work well enough, and they’re actually able to recommend you stuff that you’re actually interested in.

Ian Bowie
Then I’ve never stopped buying crap, would I? I mean, things that interests me, and I am a bit of a sucker for a good offer, I have to admit. And that’s probably one of the reasons I don’t want to keep getting them. Another one. I’ll have some of that if we… Okay, let’s let’s get away from the e-commerce arena, and go into brick and mortar shops. How are brick and mortar shops using AI in their premises? I mean, you think about it we can think about supermarket we could think about a large bookshop, for example. Only because I like books.

Michael Stormbom
Yeah, well, I don’t know to what extent various brick and mortar stores have digitized, let’s say. But I mean, there’s certainly plenty of use cases for AI. So I mean, surely inventory management, I mean, keeping track of that. Dynamic pricing, of course comes into play there as well like in relation to, in relation to available inventory, and so forth. I mean, they’re already stores here in in Turku, so they have those like digital price tags. So just so you can sort of like update them

Ian Bowie
What I’m actually thinking of is imagine that you have registered as a loyal customer with a particular chain or shop or whatever. So Are we near the point where when you walk into that shop if you’ve got your phone with you, they automatically know you’re in and then they can start pushing office to you. Perhaps they can even guide you to the aisles where the products they think might interest you most are if they have electronic price tags that they can actually slightly adjust those in real time while you’re standing in front of a particular packet of biscuits for example, are we are we close to that level of I’m not going to say manipulation but customer experience

Michael Stormbom
Customer experience to put a positive spin on it. Well, I mean, all that is technically possible. Certainly, right. I don’t know if anyone has actually implemented like that, but I I mean, certainly. I mean, I find myself when I when I go into a store and I’m looking for something then I then I go on the phone and look up and watch on the store’s website and look upon what aisle that particular item I’m looking for is in, let’s say if I go go to an electronics store or that sort, right, okay. Yeah, yeah. Yeah, I’m still able to find the milk by myself without guidance, but I mean,

Ian Bowie
even in an eletronic shop, I mean, I’ll just find an assistant and say, Hey, what is such and such?

Michael Stormbom
Alright, well, welcome to Finland where we avoid human contact as much as possible.

Ian Bowie
Although actually I suppose we might we might get to the stage where as stores reduce the number of actual staff they have there, that they have a virtual assistant that you can ask via your mobile phone. So you know, it knows that you’re in the Raisio store, and you’re looking for a microphone and it can tell you.

Michael Stormbom
Yeah, no, I don’t think I don’t think that’s too much of a too much of a leap. I think all that is technically feasible.

Ian Bowie
So that children’s game where it’s like it was called hump the thimble. And as you got warmer, it’s getting warmer, get no no colder, colder warmer. So as a guide you to wear to the product you’re looking for. I could actually see shops almost turning into a game to enhance the customer experience.

Michael Stormbom
Yeah, well, I mean, gamification, you know, sort of…

Ian Bowie
Yeah, absolutely. Yeah. You know, why not gamify the customer experience, we have hidden the product you are looking for. Can you find it in the next five minutes to get a 10% discount for example?

Michael Stormbom
I think if it’s going to discount then yes. Otherwise hiding their products might not be one

Ian Bowie
I mean, there’s got to be a carrot and stick hasn’t that. Yeah.

Michael Stormbom
I’ve understood or I read on the internet, so it must be true. That stores they very frequently rearrange how their products are laid up so as to confuse their more loyal customers or people in general so that they have to walk past products and look around and thereby sort of do spontaneous purchases along the way. Okay. Yeah. I don’t know how prevalent that is here in Finland, for example, but I read it on the internet, so it must be true, right?

Ian Bowie
Yeah, it’s got to be true. Everything on the internet is true. Yeah. Don’t forget that people. Yes. Yeah. Thank you to our sponsors. No, joking. I don’t know I mean, these point of sale purchases and impulse purchases. I’m actually quite guilty of that. I was out shopping for a microphone yesterday. And it just so happened when I got quite close to the the point of sale. I noticed, ooh, they’ve got English chocolate bars. And of course I couldn’t resist could I saw I bought one of those as well.

Michael Stormbom
Yeah. That’s why they put the candy next to the…

Ian Bowie
Candy next to the checkout. Exactly. Yeah. For all the children like me. Yeah, yeah. But, yeah no, it’s we’re living in quite interesting times. As far as retailers are concerned, and I suppose actual brick and mortar retailers really do need to start working hard to encourage people to actually use their shops in the first place because more and more people are going online.

Michael Stormbom
Yeah, and I mean, certainly the corona pandemic has accelerated that trend quite a bit.

Ian Bowie
And I think an awful lot of people nowadays are very wary about going back to for example, the shopping centers and and going back into proper shops. I mean, I know a lot of people who like to order even their groceries online nowadays. An either collected store or even have them delivered. I think there’s there’s a new Norwegian company opening up in, in, in Finland. And their whole business model is you order online and they deliver home.

Michael Stormbom
Yeah, no, no, I mean, and that Finnish company that just sold for X amount of billions.

Ian Bowie
I’m not gonna even say how ridiculous I think that price was. Yeah.

Michael Stormbom
Do you think there’s some air in the price there?

Ian Bowie
I think there might be a little bit of air in the price. Yeah. I actually don’t even know where they get those kinds of price calculations from that kind of money. More than possibly even some car manufacturers, in my opinion is just absolutely ridiculous.

Michael Stormbom
Yeah, well, presumably they believe that the return of investment…

Ian Bowie
in my opinion somebody’s AI isn’t working properly. But

Michael Stormbom
Or perhaps just someone’s I’s isn’t not working.

Ian Bowie
Yeah, maybe that’s, that’s a subject for another time. Yeah. These are very straight question. Do you think that consumers actually, like AI? Do you think they even think about it?

Michael Stormbom
I mean, you mean to the extent that customers are even aware of…

Ian Bowie
Yes, that’s right. Yeah. Do you think I mean, the average customer even gives it the time of day?

Michael Stormbom
No, I don’t think so. And I mean, to the extent that we are spammed and products are pushed on that we do not want I well, I don’t think that’s a good customer experience. Certainly.

Ian Bowie
So, yeah, I mean, I agree, but the thing is, why do we put up with it? Because we do.

Michael Stormbom
Well, that is a question indeed. And I mean, if there wasn’t, if it wasn’t profitable to spam, no one would do it. So that’s the reality of it. Yeah.

Ian Bowie
So even though we say we don’t like it, maybe we do.

Michael Stormbom
Maybe we do or maybe we just don’t dislike it enough.

Ian Bowie
have we become immune to the spam. I’ll just now accept it as a part of our online existence.

Michael Stormbom
I think that might be part of it. And I guess you sort of like tune it out after a while. I certainly know that my mild mail mailboxes. To find out the actual email sender is sometimes a challenge.

Ian Bowie
Yeah. Because, I mean, you can opt out. There’s a lot of unsubscribe buttons and things that you can you can press.

Michael Stormbom
You can but then over the course of your journey on the internet, you end up signing up for quite a few services.

Ian Bowie
I suspect. A lot of this is actually linked to social media. You see, I’m not on social media personally. Whereas my wife is and she gets huge numbers of emails from companies basically trying to sell stuff. And I somehow have managed to avoid all of that.

Michael Stormbom
I think there’s definitely a connection in terms of how companies get hold of your contact information. So I mean, as we discussed in a previous episode about Cambridge Analytica are getting hold of data of personal data that they were not supposed to so I mean, similar similar things applies to companies trying to sell you some stuff as well. Well, obviously Cambridge Analytica was trying to sell stuff as well, but I mean, consumer…

Ian Bowie
So are we basically now just products, walking, talking living products.

Michael Stormbom
If you were to ask Mark Zuckerberg that question, I think that would be an emphatical yes on that one.

Ian Bowie
Yeah, yeah, yeah. So every single one of us is potentially a source of income for these kinds of companies.

Michael Stormbom
Well, yes, most definitely.

Ian Bowie
So what we have to do is decide for ourselves how valuable we want to be to them.

Michael Stormbom
Yeah, that much power we have in our self certainly. But coming back to the point about whether customers like it, and about manipulation, I don’t think anyone likes the notion of being manipulated. Or just if you put it like in front of people that this is what is happening. This is what’s what is being sort of done to you, then I think people would have a pretty negative response to that, but I were just so unaware of…

Ian Bowie
It isn’t really sold like that, though. Is it? Really I mean, no, I don’t think that’s helping you. Perhaps educating you guiding you…

Michael Stormbom
A personalized experience and more. Absolutely.

Ian Bowie
And everybody wants a personalized experience. Yeah.

Michael Stormbom
Well, it comes a little bit back to the to the fake news conversation as well. Let’s we’ll take what’s take at face value, what’s put in front of you probably the same sort of same mechanism there in the background. I think.

Ian Bowie
I mean, I think it’s, I don’t know, do I think but I mean, what do you think? Is it just a gradual dumbing down of the population? That in the end, we will no longer make choices for ourselves, but those choices will just be made for us and we will happily accept them.

Michael Stormbom
Sort of cognitive overload that we’re constantly being bombarded with information to the beyond our capability of processing it really, and then I think that also makes us very susceptible to manipulation and easy answers.

Ian Bowie
Exactly. Yeah. The easy answer. Yeah, that’s what everybody wants.

Michael Stormbom
Yeah, I mean, we all like shortcuts. Yeah.

Ian Bowie
Yeah. Yeah. Well, I’ve been taking shortcuts ever since. I was introduced to cross country running at school, which I absolutely hated by the way. So yeah, definitely like shortcuts. But at least I like to think that when I do take a shortcut, I’m in control of it.

Michael Stormbom
But are you really that is the..

Ian Bowie
That’s the big question. And I think we might have to leave it with that big question and if you’ve got any comments about everything you’ve just heard this morning, please do let us know via our social media channels.

Michael Stormbom
Where we are definitely not trying to manipulate you.

Ian Bowie
Absolutely not.

Transcribed by https://otter.ai