Algorithmic business and EU law on fair trading

This thesis studies how commercial practice is developing with artificial intelligence (AI) technologies and discusses some normative concepts in EU consumer law. The author analyses the phenomenon of 'algorithmic business', which defines the increasing use of data-driven AI in marketing organisations for the optimisation of a range of consumer-related tasks. The phenomenon is orienting business-consumer relations towards some general trends that influence power and behaviors of consumers. These developments are not taking place in a legal vacuum, but against the background of a normative system aimed at maintaining fairness and balance in market transactions. The author assesses current developments in commercial practices in the context of EU consumer law, which is specifically aimed at regulating commercial practices. The analysis is critical by design and without neglecting concrete practices tries to look at the big picture. The thesis consists of nine chapters divided in three thematic parts. The first part discusses the deployment of AI in marketing organisations, a brief history, the technical foundations, and their modes of integration in business organisations. In the second part, a selected number of socio-technical developments in commercial practice are analysed. The following are addressed: the monitoring and analysis of consumers’ behaviour based on data; the personalisation of commercial offers and customer experience; the use of information on consumers’ psychology and emotions, the mediation through marketing conversational applications. The third part assesses these developments in the context of EU consumer law and of the broader policy debate concerning consumer protection in the algorithmic society. In particular, two normative concepts underlying the EU fairness standard are analysed: manipulation, as a substantive regulatory standard that limits commercial behaviours in order to protect consumers’ informed and free choices and vulnerability, as a concept of social policy that portrays people who are more exposed to marketing practices.

Customer Evolution in Sales Channel Migration

This research has been triggered by an emergent trend in customer behavior: customers have rapidly expanded their channel experiences and preferences beyond traditional channels (such as stores) and they expect the company with which they do business to have a presence on all these channels. This evidence has produced an increasing interest in multichannel customer behavior and it has motivated several researchers to study the customers’ channel choices dynamics in multichannel environment. We study how the consumer decision process for channel choice and response to marketing communications evolves for a cohort of new customers. We assume a newly acquired customer’s decisions are described by a “trial” model, but the customer’s choice process evolves to a “post-trial” model as the customer learns his or her preferences and becomes familiar with the firm’s marketing efforts. The trial and post-trial decision processes are each described by different multinomial logit choice models, and the evolution from the trial to post-trial model is determined by a customer-level geometric distribution that captures the time it takes for the customer to make the transition. We utilize data for a major retailer who sells in three channels – retail store, the Internet, and via catalog. The model is estimated using Bayesian methods that allow for cross-customer heterogeneity. This allows us to have distinct parameters estimates for a trial and an after trial stages and to estimate the quickness of this transit at the individual level. The results show for example that the customer decision process indeed does evolve over time. Customers differ in the duration of the trial period and marketing has a different impact on channel choice in the trial and post-trial stages. Furthermore, we show that some people switch channel decision processes while others don’t and we found that several factors have an impact on the probability to switch decision process. Insights from this study can help managers tailor their marketing communication strategy as customers gain channel choice experience. Managers may also have insights on the timing of the direct marketing communications. They can predict the duration of the trial phase at individual level detecting the customers with a quick, long or even absent trial phase. They can even predict if the customer will change or not his decision process over time, and they can influence the switching process using specific marketing tools

Experimenting with the role of performance of hygiene and motivators on customer satisfaction: studying the temporal effect

Marketers continuously attempt to identify important attributes and innovate in order to understand how attribute performance could lead to customer satisfaction in the short term and in the long term. Understanding the impact of customer satisfaction may offer a competitive edge to companies. Researchers are discussing the importance of performance attributes in leading to satisfaction; however, there is no clear understanding of whether an attribute that leads to satisfaction at one time (e.g., short run) can cause it also in the long run, without excluding the possibility that it could lead to dissatisfaction and no satisfaction. The present research tries to understand anomalies related to asymmetric attribute performance and satisfaction over time with the help of Herzberg's (1967) Two-Factor Theory (TFT) and construal level theory (CLT). More precisely, there are main purposes of this dissertation. First, the present research tries to understand whether positive or negative hygiene attribute performance and motivator attribute factors exert different weights on overall customer satisfaction depending on the time elapsed from the service experience. Second, to test if positive or negative hygiene/motivator attribute performance affect to revisit intention and to word of mouth by considering mediating role of satisfaction. The results reveal that in the near past (NP) experience, the positive performance of hygiene concrete attributes creates a differential effect on overall satisfaction higher than the negative performance of hygiene concrete attributes. Results also confirmed mediating role of satisfaction in the relationship between attribute performance and revisit intention for near past condition but not for distant past. Likewise significant relationship was found for the mediating role of satisfaction in the relationship between attribute performance and word of mouth (WOM) for near past condition but not for distant past.