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Module 2: AI Application to Segmented Marketing

Kenneth Chinweike Nwauzoma

Master of Business Administration, Nexford University

AIA 6600: Artificial Intelligence

Dr. Nicholas Bucciarelli

March 17, 2024

Memo

To: The Management Date: 17/03/2024

From: Marketing Manager

Re: AI Project for E – Commerce Platform

PHASE I

In this phase, the AI application is introduced, and the implementation plan is described briefly

for management understanding.

Following the effect of COVID on various businesses globally, it has become very necessary

to consider the use of AI in the successful delivery of businesses especially in the e –

commerce industry. As a manager leading the project for the successful implementation of AI

in the company’s e – commerce platform, we have been able to identify several steps in the

implementation of the AI plan for the business. These steps include

1. Raw data sourcing: Here, our team will raw data from various sources for the project. The

data collection process will involve gathering information from a wide range of sources,

such as the current electronic commerce platform, feedback from customers, and social

media. Thanks to AI, the process of gathering and examining up-to-date consumer data,

such as online browsing patterns and past purchases, has become more convenient and

budget friendly (A, 2023).

2. Data filtration and processing: Being that the data collected from the first step above are

still raw data, there is need them to be filtered. This process will involve the merging of

duplicate records or entries, correction of errors and proper data filling

3. Model Development: Exploring the fascinating realm of data science and machine learning

to create advanced AI models capable of analyzing vast quantities of data (Semeney,

2023).

4. Model coaching: The data that has been prepared will be used to train an artificial

intelligence model. Through training, the algorithm will be taught to recognize trends in

the collected information that may be utilized for the purpose of making predictions.

5. Model Implementation: We will apply the trained model/algorithm to the e-commerce

platform. The model will need to be integrated with the back-end systems of the platform

to accomplish this.

6. Supervision: On successfully deploying the model to the e-commerce platform, the AI

behavior needs to be monitored to identify areas that need adjustment or elimination.

For this project, the use of prediction will be very necessary. In the field of machine learning,

the term "prediction" refers to the results obtained by an algorithm that has been trained using a

dataset previously collected. After that, the algorithm begins to produce possible values for

variables that are not yet known in each record of the new data (h2o.ai, 2024). This will help the

company to predict future customers behaviors and buying patterns.

We must note that this project cannot be a success without data, as such the appropriate data for

use in this project will include

1. Market data

2. Product data

3. Browsing historical data

4. Demographic data of customers

5. Customer’s purchasing history and so on

AI Enhanced Operating profit

Before the implementation of AI, the operating profit is $148,000.

Operating profit is calculated as Revenue - Operating expenses

Operating profit = $150,000 - $2,000

Operating profit = $148,000

Operating profit per annum = $148,000 * 12 = $1,776,000

On implementation of AI, Operating profit = $250,000 - $3,000

Operating profit = $247,000

Operating profit per annum = $2,964,000

If $1,000,000 is invested, the breakeven point in years will be calculated thus

Investment / Annual operating profit with AI implementation – Annual operating profit with AI

implementation.

Figuratively, this will be

$1,000,000/$2,964,000 - $36,000

Break even in years = $1,000,000/$2,928,000

Break even in years = 0.34*12

Break even in years = 4 months

PHASE II

Optimizing production with the help of AI for this project can be in the form of

- Predictive demand as to the customer’s choice of products thus guiding the production of

fast-moving products.
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- Exposes areas where there are snags in the production process. This will enable the

company to put more attention on the bottle necks to ensure efficiency.

- Inventory Management. We can utilize AI technology for the purpose of optimizing supply

chain operations. Demand forecasting from customers, planning for product replenishment

(A, 2023).

- Finally, we can improve our personalized marketing with the use of artificial intelligence.

With the use of artificial intelligence, it is much simpler and more cost-effective to collect

and analyze real-time consumer data, such as web surfing patterns and previous purchases.

PHASE III

With the help of Artificial Intelligence, user experience can be enhanced. This project will

experience this enhancement in divere forms which includes

- Improved customer satisfaction: The provision of a personalized experience for the

consumer is essential to the enhancement of customer happiness. Using artificial

intelligence technologies, it is possible to forecast client behavior by analyzing their past

interactions and purchases.

- Shopping experience customization: Artificial intelligence makes it simpler and more

expedient to provide a tailored buying experience.

- Product search optimization: With the implementation of AI, it will be very easy for

customers to search and find a specific product within the shortest time possible.
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References

A, J. (2023, June 8). AI in eCommerce: Maximizing Profits and Customer Satisfaction With AI in 2023.

Hostinger Tutorials. https://www.hostinger.com/tutorials/ai-in-ecommerce

h2o.ai. (2024). What is Prediction in AI and Why is It Important? | H2O.ai. H2o.ai.

https://h2o.ai/wiki/prediction/

Semeney, A. (2023, July 10). How to Implement AI in Ecommerce: A Complete Guide. DevTeam.Space.

https://www.devteam.space/blog/how-to-implement-ai-into-ecommerce-a-complete-guide/

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