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    Ai Application To Segmented Marketing

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    The document discusses applying AI to improve the operations of an e-commerce clothing company. It describes using AI for demand and supply forecasting, personalized recommendations, dynamic pricing, and chatbots. Forecasting would analyze historical data to predict sales and inventory levels. Recommendations and pricing would optimize for sales. Chatbots would improve customer service. Overall AI could increase annual profits by over $1 million.

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    Ai Application To Segmented Marketing

    Uploaded by

    jafman
    52 views4 pages
    The document discusses applying AI to improve the operations of an e-commerce clothing company. It describes using AI for demand and supply forecasting, personalized recommendations, dynamic pricing, and chatbots. Forecasting would analyze historical data to predict sales and inventory levels. Recommendations and pricing would optimize for sales. Chatbots would improve customer service. Overall AI could increase annual profits by over $1 million.

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    AI APPLICATION TO SEGMENTED MARKETING

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    AI APPLICATION TO SEGMENTED MARKETING

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    The document discusses applying AI to improve the operations of an e-commerce clothing company. It describes using AI for demand and supply forecasting, personalized recommendations, dynamic pricing, and chatbots. Forecasting would analyze historical data to predict sales and inventory levels. Recommendations and pricing would optimize for sales. Chatbots would improve customer service. Overall AI could increase annual profits by over $1 million.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    52 views4 pages

    Ai Application To Segmented Marketing

    Uploaded by

    jafman
    The document discusses applying AI to improve the operations of an e-commerce clothing company. It describes using AI for demand and supply forecasting, personalized recommendations, dynamic pricing, and chatbots. Forecasting would analyze historical data to predict sales and inventory levels. Recommendations and pricing would optimize for sales. Chatbots would improve customer service. Overall AI could increase annual profits by over $1 million.

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    of 4

    AI APPLICATION TO SEGMENTED MARKETING

    Abduljafar Kamarudeen, March 2024

    Introduction

    Artificial Intelligence (AI) has vast potential in marketing. It aids in proliferating information

    and data sources, improving software's data management capabilities, and designing intricate and

    advanced algorithms. AI is changing the way brands and users interact with one another. The

    application of this technology is highly dependent on the nature of the website and the type of

    business. Marketers can now focus more on the customer and meet their needs in real time. By

    using AI, they can quickly determine what content to target customers and which channel to

    employ at what moment, thanks to the data collected and generated by its algorithms (Abid,

    Mohd, Ravi, Rajiv, 2022).

    The purpose of this memo is to apply AI in providing alternatives to supplement the reduced

    revenues of a renowned worldline clothing line. We shall be focusing on the organization’s

    e-commerce platform which contributes 65% of the sales. We shall focus our work on the

    various value chain phases of Artificial Intelligence.

    Phase I

    Applying AI for supply and demand forecasting in the e-commerce platform can significantly

    enhance the ability to adapt to market fluctuations and optimize inventory management. We shall

    Utilize machine learning algorithms such as regression analysis, time series analysis, and neural

    networks to analyze historical data patterns and make predictions. Neural networks especially are

    applicable to almost all problems where the goal is to represent a relation between predictor

    variables (independent or input variables) and predicted variables (dependent or output


    variables), especially when this relation is too complex to be considered as association or

    clustering. Neural networks are able to learn through examples and to model non-linear relations

    among multiple variables, without nevertheless providing any explanation or human

    understandable rules (George, Dimitrios, Athanasios, 2014).

    The models will be trained to understand seasonal trends, product lifecycle dynamics and

    customer behavior patterns.

    Demand forecasting: the system shall predict future demand for each product category, SKU, or

    region based on historical sales data and external factors. Factors to be considered will be

    promotions, marketing campaigns, holidays, and economic conditions.

    Supply forecasting: the system shall forecast the availability of products based on production

    lead times, supplier capacities, and inventory levels. We shall incorporate data from suppliers,

    manufacturing processes, transportation logistics, and inventory management systems to predict

    supply availability accurately.

    Data Sources: data from various sources including historical sales data, website traffic, social

    media trends, economic indicators, and external factors like weather forecasts.

    Operating Profit

    An important component to determining the profitability of a company is the operating profit, or

    operating profit margin. Businesses commonly use this calculation to determine their operational

    profitability and establish a benchmark for comparing their performance to that of market

    competitors. Knowing how this formula works and how to use it successfully can also make it

    easier for small business owners and professionals to understand their organization’s economic

    health and discover areas of increased opportunity (indeed.com, 2023).


    Operating Profit = Revenue - Operating Expenses - Cost of Goods Sold - Other Day-to-Day

    Expenses. Since we have limited data, we shall be using a simplified version of this formula.

    Operating profit = Sales - Maintenance cost.

    Without AI:

    Monthly operating profit = Monthly sales - maintenance costs

    Monthly operating profit = $150,000 - $2,000 = $148,000

    Annual operating profit = $148,000 * 12 = $1,776,000

    With AI:

    Monthly operating profit = Monthly sales - maintenance costs

    Monthly operating profit = $250,000 - $3,000 = $247,000

    Annual operating profit = $247,000 * 12 = $2,964,000

    Increase in annual operating profit = $2,964,000 - $1,776,000 = $1,188,000

    Break-even time = Initial investment / Annual operating profit

    Break-even time = $1,000,000 / $2,964,000 = 0.337 years.

    Phase II

    The system shall adopt personalized recommendations. AI-driven recommendation engines can

    analyze customer data, browsing history, and purchase behavior to provide personalized product

    recommendations. By offering relevant suggestions to customers, sales can be increased through

    cross-selling and upselling opportunities.


    Phase III

    The system shall adopt dynamic pricing; AI algorithms can analyze real-time market data,

    competitor pricing, and customer behavior to optimize pricing strategies. By dynamically

    adjusting prices based on demand fluctuations and competitive landscape, sales can be

    maximized while maintaining profitability. We shall introduce Chatbots and virtual Assistants.

    AI-driven chatbots and virtual assistants can provide instant support to users, answering

    questions, assisting with product selection, and addressing concerns. This improves customer

    service and reduces the time users spend searching for information or waiting for assistance.

    References

    ● Abid Haleem, Moh’d Javaid, Mohd Asim, Ravi Pratap, Rajiv Suman, 2022. Artificial

    Intelligence Applications for Marketing: A literature-based study. International Journal of

    Intelligent Networks. Vol 3.

    ● George Stalidis, Dimitrios Karapistolis, Athanasios Vafeiadis, 2014. Marketing decision

    support using Artificial Intelligence and Knowledge Modeling: application to tourist

    destination management. International Conference on Strategic Innovative marketing,

    September 1-4, 2014.

    ● Indeed Editorial Team, 2023. How to Calculate Operating profit.

    https://www.indeed.com/career-advice/career-development/how-to-calculate-operating-profit

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