Even as tech giants pour billions of dollars into what they herald as humanity’s new frontier, a recent study shows that tacking the “AI” label on products may actually drive people away.

Findings of the Study

A study published in the Journal of Hospitality Marketing & Management in June found that describing a product as using AI lowers a customer’s intention to buy it. Researchers sampled participants across various age groups and showcased the same products – the only difference being one described as “high tech” and the other as using AI, or artificial intelligence.

“We looked at vacuum cleaners, TVs, consumer services, health services,” said Dogan Gursoy, one of the study’s authors. “In every single case, the intention to buy or use the product or service was significantly lower whenever we mentioned AI in the product description.”

Despite AI’s rapid advancement in recent months, the study highlights consumers’ hesitance to incorporate AI into their daily lives—a marked divergence from the enthusiasm driving innovations in big tech.

The Role of Trust

The study delved into how participants viewed products considered “low risk,” like household appliances using AI, and “high risk,” such as self-driving cars, AI-powered investment decision-making services, and medical diagnosis services. Non-buyers were the majority in both product groups, with a higher rejection rate in the high-risk category.

There are two kinds of trust that the study identifies as influencing consumers' perception of AI-powered products:

1. Cognitive Trust: This type of trust is associated with the expectation that AI, as a machine, should be free from human error. When AI makes mistakes, the eroded trust can be significant. For example, AI-generated search results that provide incorrect information can quickly diminish trust in the technology.

2. Emotional Trust: Limited knowledge and understanding about AI compel consumers to rely on emotional trust, making subjective judgments about the technology. Fear of the unknown plays a crucial role here. Gursoy points out that even before public awareness of tools like AI chatbots, AI had been running in the background for years without much public knowledge.

   
   

Pop culture, particularly Hollywood science fiction films portraying robots as villains, has significantly influenced public perception of AI, adding to the general mistrust.

Lack of Transparency

Another major factor influencing customers is the perceived risk around AI, especially concerning data privacy. Consumer concerns about how companies handle their personal data have dampened enthusiasm for AI tools that aim to streamline user experience. This lack of transparency could sour customers' perceptions toward even well-established brands.

Gursoy emphasizes the importance of transparency, advising companies against using “AI” as a mere buzzword without elaborating on its capabilities. “The most advisable thing for them to do is come up with the right messaging,” he said. “Rather than simply putting ’AI-powered’ or ’run by AI,’ telling people how this can help them will ease the consumer’s fears.”

Conclusion

While AI technology continues to advance rapidly, bridging the gap between innovation and consumer trust remains crucial. Companies aiming to incorporate AI into their products must carefully consider how they communicate these advances to avoid alienating potential buyers.