GOLDEN GATE UNIVERSITY

SAN FRANCISCO, CA, USA

ACADEMIC YEAR: 2023-24

COURSE: MASTER OF BUSINESS ADMINISTRATION (MBA)

ASSIGNMENT: INFORMATION TECHNOLOGY GRADED INDIVIDUAL

ASSIGNMENT

SUBMITTED BY: RAMNEEK JAIN , MBA STUDENT (2023 BATCH)

 Introduction

Artificial intelligence (AI) is transforming the retail industry, transforming shopping

experiences and personalization. AI chatbots are influencing customer interactions, with 74%

of customers favouring chatbots over human interactions. This AI-driven revolution benefits

both brands and customers, allowing for personalized and intuitive shopping experiences.

This shift defies traditional transactional nature, fostering deeper brand loyalty and

transforming the retail landscape.

Explanation about Diderot Effect

The Diderot effect illustrates the scenario of purchasing something new and replacing our old

assets with stuff that match the new one, even if this results in an empty bank account.

According to the Diderot Effect, acquiring a new possession frequently triggers a cycle of

consumption that leads to the acquisition of even more new goods. As a result, we wind up

purchasing items that our former selves never required to be happy or fulfilled. It means that

purchasing something new might set off a chain reaction of purchasing more and more things

since the new item makes one feel as if other items are required to accompany or keep up

with it. This might lead to overspending and gathering more goods than you need or use.

How Amazon uses AI to personalize the shopping experience and play Diderot effect
Amazon uses artificial intelligence to personalize the buying experience, potentially

triggering the Diderot effect. By analyzing your purchasing and browsing history, Amazon

can recommend similar products. It also tracks your search history, allowing it to display

more relevant results in subsequent searches. Reviews and ratings on products can also be

considered to suggest products that other customers have liked. Amazon also uses AI to

power Amazon Prime Air, a drone delivery service, and Amazon Echo, a voice-activated

speaker. This AI-powered approach helps Amazon increase the likelihood of customers

purchasing products linked to their previous purchases.

IKEA using AI to personalize shopping experience and plays with Diderot effect

Ikea uses AI to personalize the shopping experience and trigger the Diderot effect. Online

room planning tools suggest furniture arrangements based on room dimensions, while mobile

apps with AR features visualize furniture models. AI analyzes browsing history to suggest

complementary products. Personalized marketing campaigns showcase curated collections

and home decor ideas, potentially leading to additional purchases beyond initial needs. These

strategies aim to create a more engaging shopping experience.

Conclusion

In conclusion, the Diderot effect, as illustrated by Amazon and Ikea, shows how acquiring

new possessions can lead to a cycle of consumption and the purchase of additional items that

were not initially needed for happiness or fulfillment. Both companies use artificial

intelligence to personalize the shopping experience, potentially triggering this effect by

recommending products based on past purchases or browsing history.

 References

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What is the Diderot effect? (2020, June 10). ING Think.

https://think.ing.com/articles/what-is-the-diderot-effect/

Clear, J. (2020, February 4). The diderot effect: why we want things we don’t need. James Clear.

https://jamesclear.com/diderot-effect

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digital-experience-empowering-customers-to-create-lifelike-room-designs-pub58c94890

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shopping with AI. ETCIO.com.

https://cio.economictimes.indiatimes.com/news/next-gen-technologies/ikea-is-bringing-in-

store-experience-to-online-shopping-with-ai/84627211