Amazon’s Echo is the market leader in smart speakers, with a nearly 72 percent market share.47 Powered by the Alexa digital assistant software, customers use the Echo to listen to music, as an alarm clock, as a tool for getting answers to questions, and even as a source of jokes to brighten their day. Alexa and competitive products are also becoming a major factor in consumer decision making that may radically change the relationship between brands and their customers.

First released to the general public in 2015, the Echo is a small desktop speaker that users place in their bedroom, living room, or kitchen—sometimes all three. Users interact with it by calling out “Alexa” followed by a question or command. Through its basic functionality, the unit responds to commands to play music, report the weather, or to read your appointments for the day.48 A wider array of capabilities is provided through the installation of “skills”—third party apps that use Alexa to accomplish tasks. Amazon says there are more than 30,000 of these and that four out of five registered customers have used at least one.49 Need to find a breed of dog that behaves in apartments? Purina can help with their Ask Purina skill. Tide Stain Remover will help you remove that spot on your favorite shirt. And you can just shout out to Campbell’s Kitchen skill and a helpful assistant will read you a recipe while you cook!50,51 While it operates primarily on the Amazon Echo, Alexa can run on a variety of devices, including in selected automobiles.

Alexa fits into a broader category of technology known as AI (artificial intelligence) assistants. This category includes tools such as Apple’s Siri, Microsoft Cortana, and Google Assistant, the latter of which is available on 400 million devices.52 In one way, Alexa and her humanoid friends simply provide another way to access the internet, by voice instead of keystrokes. However, the embedded AI capabilities combined with the human touch of voice command/voice response are significant differences that are changing the game for brand marketing, and not necessarily in positive ways.

AI assistants offer consumers savings in time by automatically ordering routine items, and by evaluating the many options for nonroutine purchases, making logical choices based on algorithms or customer-defined criteria. For example, shopping for shoes can be fun, but choosing the perfect electric toothbrush can be painful. The AI assistant can do the heavy lifting for you, sorting through reviews and ratings and picking out the toothbrush that best fits your needs at a price you can afford. Through its understanding of your needs, its access to the full spectrum of product options, and its algorithms, your trusty AI assistant provides the trifecta of shopping pleasure: convenience, lower costs, and risk reduction.

The rise of AI assistants as a dominant channel has important implications for brand management. We often buy the same brand repeatedly to lower the risk of a bad decision.

If consumers start to trust Alexa with product choices, brands lose an important benefit. Loyalty can be very fleeting and more dependent upon being in sync with the algorithms of the AI assistant than with the positioning in the mind of the customer.

Brand loyalty–building activities such as understanding/

filling needs, assuring quality, and focusing on customer interests may be better performed by AI. Customer satisfaction becomes a more sophisticated proposition in a world dominated by AI assistants. Much of marketing research is focused on understanding the levels and dimensions of satisfaction; what if AI platforms could do a better job of assessing—and projecting—satisfaction than the consumers themselves? Smart assistants could be able to anticipate, for example, how much room in a car an auto shopper would sacrifice for improved fuel efficiency.

In the age of AI, promotion will likely be directed more to “push” activities (focused on the distribution channel) than

“pull” activities (focused on the consumer). This is not so different from convincing retailers to put products on their shelves. Except now that “shelf” is digitally embedded in the algorithm of an AI assistant. In this environment, the power of the AI assistants increases significantly, most notably Amazon, which now has a long list of its own “private label”

brands.53 This could also radically change the amount of promotion devoted to advertising, particularly of the image-oriented variety. Alexa may not care if she purchases the same shampoo as all the cool AI assistants buy.

DISCUSSION QUESTIONS CS 1-1 Choose two of your favorite brands and devise an idea for an Alexa “skill” that consumers could find useful. How would these skills help sell more of the brands’ products and/or increase customer loyalty?

CS 1-2 How can brands remain relevant in the Age of Alexa? What strategies should brand managers employ to continue to influence consumer purchase decisions if consumers become more reliant on AI assistants?

CS 1-3 What kinds of products or brands will most likely be either negatively or positively affected by an increased use of AI assistants? Explain your answer.

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