Even though nearly a quarter of U.S. adults use ChatGPT and thousands of businesses are incorporating artificial intelligence into their operations, many consumers still have fears of Terminator-like AI domination — which could be bad news for brands trying to get customers to buy AI-powered products.
A study published in June in the Journal of Hospitality Markets & Management found that consumers are less willing to buy products labeled with “AI.” In a series of studies, participants were asked about their intentions to buy products with one of two descriptions: “AI-powered” or “high-tech,” ranging from televisions to vacuum cleaners to consumer and health services. According to Dogan Garsoy, a professor of hospitality management at Washington State University's Carson College of Management and one of the study's authors, there was consistency among the roughly 200 participants across ages and genders about the impact that an AI label has on consumers' willingness to purchase a product.
“In each case, when we mentioned 'AI' and 'high tech,' consumers' purchase intent decreased,” Gersoy told Fortune.
In fact, a Cognizant survey of 1,000 U.S. consumers found that they are highly threatened by AI, with only 30% saying they trust generative AI. Nearly three-quarters of respondents believe genAI will increase profits for businesses, while 28% believe genAI will benefit consumers the least compared to businesses, small businesses, employees, and governments.
Brands significantly overestimate consumer trust in AI, Gersoy said, and there's research to back up that claim. When consumers' emotional trust is a key factor in whether or not a shopper will buy a product, they also have lower willingness to buy products labeled “AI-powered.” Purchase intent and emotional trust were lower for products that survey participants considered riskier, such as cars.
Identity threat and existential fear
For many consumers, anxiety about AI stems from the identity threat it poses, Gersoy said. Fears that AI will take over humanity remain prominent, as exemplified by Gen Z's fears of losing their jobs to the technology.
“It threatens my identity, it threatens the identity of the human race,” Gersoy said. “Nothing is supposed to be smarter than us.”
These concerns are exacerbated by consumer privacy fears. According to Cisco's 2023 Consumer Privacy Survey, most consumers say their trust in AI has already been eroded by organizations that use the technology. Lawmakers are responding accordingly. Following the proliferation of deepfake video and audio content, Massachusetts Attorney General Andrea Campbell sounded the alarm about AI, warning companies that use it that they must comply with state consumer protection and data privacy laws. Amazon's rollout of palm-scanning payment systems at Whole Foods Markets has raised concerns from cybersecurity experts.
“When you hand over your data to a private company, you're trusting that company to keep it safe, and in most cases, they shouldn't do that,” Evan Greer, director of tech regulation advocacy group Fight for the Future, told CNBC.
Chris Betts, chief information security officer at Amazon Web Services, said in a June blog post that the company is making security a top priority as it continues to invest in genAI.
Nobody gets it right
Brands that make and promote AI-enabled products will face an uphill battle because there is already distrust for AI. Consumers need to be convinced of the benefits of AI in a particular product, Gersoy said. “People often wonder, 'Why do you need AI in a coffee maker? Why do you need AI in a refrigerator or a vacuum cleaner?'”
The only problem, he argued, is that no company has been able to successfully leverage the strategy.
“Companies are not doing a good job with that messaging,” Gersoy said. “Everyone is being secretive about AI developments and what's going on with AI, which is understandable, but consumers also need to know that their data is safe.”
For consumers to buy products that claim to be powered by AI, brands must first allay fears about the technology, which means companies need to detail the benefits of AI in their products and be more transparent about their data usage.
“There's always going to be people who never want that,” Gersoy said, “but you have to nudge the majority of consumers a little bit.”
