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Chapter 3
DOI: 10.4018/978-1-6684-7735-9.ch003
ABSTRACT
Artificial intelligence software called chatbots are designed to imitate human
conversation. They utilize natural language processing technology to comprehend and
interpret user input and produce responses based on pre-programmed rules or machine
learning algorithms. Chatbots are widely utilized in sales and customer service
domains. Customers appreciate the convenience of chatbots’ instant responses and
ability to quickly provide needed information without human intervention. Chatbots
benefit businesses by handling multiple inquiries of customers and reducing the need
for additional staff, and can also be used for internal purposes such as responding
to employee queries and assisting with various tasks. This chapter examines the use
of chatbots in marketing, customer service, and sales, covering their classification
and common types, impact on customer experience and service costs, and ethical
considerations. This chapter will be useful for scholars researching chatbots and
professionals looking to integrate them into their marketing and customer service
strategies.
INTRODUCTION
Today’s digital marketing is very different from the traditional marketing of the
past. Digital age marketing is data driven, automated, and intelligent (Chintalapati
Chatbots in Digital Marketing:
Enhanced Customer Experience and
Reduced Customer Service Costs
Farid Huseynov
Gebze Technical University, Turkey
Copyright © 2023, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
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Chatbots in Digital Marketing
and Pandey, 2022). Big data analytics, artificial intelligence (AI), advances in data
storage technologies, increasing speed of microprocessors and other important
developments in information technologies are reshaping processes and practices in
marketing as in other fields. All these technologies are helping businesses come up
with new technological solutions that will dramatically change the way they interact
with their customers. These technologies are transforming the company-customer
interface from being people-oriented to being technology-oriented (Konya-Baumbach
et al., 2023). One of the novel technologies that significantly changes the customer
experience and customer service processes is artificial intelligence based chatbots.
This smart software is also known as a talkbot, chatterbot, bot, IM bot, interactive
agent, conversational agent, digital assistants, or Artificial Conversational Entity
(Kaczorowska-Spychalska, 2019). Chatbots can be defined as computer software
that can mimic human conversation by oral or text and act as a virtual assistant for
online customers (Luo et al,, 2019; Kaczorowska-Spychalska, 2019). Industries
that widely benefit from the power of chatbots include human resources, education,
tourism, entertainment, healthcare, real estate, banking, and others. Gartner (2022)
predicts that Chatbots will become the Primary Customer Service Channel for about
a quarter of organizations by 2027.
This chapter discusses how chatbots are applied in the field of marketing and
customer service and its implications in these field. The subtopic which will be
discussed within this chapter are as follows: adoption and use of artificial intelligence
based chatbots by online customers, the influence of chatbots on online customers
experience levels, the impact of anthropomorphic chatbots on online consumer
behavior, ethical challenges that chatbots raise, and the future of chatbots in marketing.
DIFFERENT TYPES OF CHATBOTS
In the present-day business landscape, it’s crucial to identify the ideal chatbot for
your enterprise in order to optimize operations and enhance business workflows.
To select the appropriate chatbot, it’s essential to accurately categorize them and
assess the pros and cons of each category. There are various methods of classifying
chatbots, some of which are explained below.
Intended Use or Purpose
Chatbots can be categorized based on their intended use or purpose. These intelligent
bots can be designed to provide customer service, to assist customers in online
shopping, to provide medical information and assistance to patients, to provide answers
to various job related questions of employees, to enable educators to counsel students
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Chatbots in Digital Marketing
Table 1. Chatbot usage examples in different sectors
Organization Domain Explanation
Amazon E-commerce
Amazon, the leading e-commerce platform, by getting help from
chatbots provide customer support through their platform, assisting
customers with inquiries about orders, returns, and general product
information.
Facebook Social Network
Facebook, the social media giant, incorporates chatbots into its
Messenger platform, enabling businesses to deploy automated
customer service bots. These messenger bots can handle inquiries,
provide information, and offer support to users.
Uber Ride-hailing
Uber, the leading ride-hailing company, uses chatbots to handle
customer support inquiries within their app. Users can report issues,
ask for assistance, and receive updates on their rides through the
chatbot.
Spotify Music Streaming
Spotify, the digital music streaming service, has successfully
integrated a Facebook Messenger bot into its platform, providing a
convenient way for customers to explore, stream, and share music. By
initiating a conversation, users can effortlessly search for their favorite
songs, albums, or artists. Moreover, the chatbot offers personalized
playlist recommendations tailored to the user’s mood, activities, or
specific music genres of interest. With this seamless integration,
Spotify aims to enhance the user experience and make music
discovery an enjoyable and effortless process.
Delta Air Lines Airline
Renowned airlines like Delta Air Lines have adopted chatbots to
provide assistance to customers regarding flight details, booking
modifications, and general customer service inquiries. Chatbots excel
in managing the initial queries from passengers, even if immediate
rebooking might not be feasible due to existing IT system limitations.
A bot could easily send information about a system outage and could
analyze flight data to check for delays and possible flight options.
By deploying chatbots, airlines can streamline their customer service
processes and ensure prompt responses to initial inquiries, thereby
enhancing the overall customer experience.
Florence, Ada
Health Healthcare
In the healthcare field, Florence, for example, provides a medication
management chatbot that helps patients stay on medication schedules.
It sends reminders, monitors compliance, and helps organize
medication information. Similarly, Ada Health developed a chatbot
that engages users in a conversational interface to assess symptoms,
provide potential diagnoses, and offer relevant medical information. It
aims to help individuals make informed decisions about their health.
Georgia State
University, UC
Berkeley
Education
Several institutions have integrated chatbots to enhance the
educational services. For instance, Georgia State University utilizes a
chatbot to aid students with inquiries related to admissions, financial
aid, and course registration. This chatbot delivers personalized
guidance and information round-the-clock. Similarly, UC Berkeley
employs a versatile chatbot to assist students with a wide range of
services. This chatbot provides support for enrollment, financial
aid, billing and payment services, registrar’s office queries, housing
inquiries, and sports facility information. Furthermore, it offers
multilingual capabilities, accommodating communication in English,
Spanish, Simplified Chinese, and Vietnamese.
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Chatbots in Digital Marketing
and help them learn faster, and so on. The examples given in Table 1 shows how
organizations in different sectors utilize chatbots while interacting with their users.
All of the examples stated above shows various possible implementations of
chatbot technology across diverse industries such as e-commerce, social network,
airline, healthcare, education and so on. Implemented examples indicate that chatbots
are very effective technology in meeting diverse needs of users’ and provide them
timely support in every interaction.
Interaction Type
Chatbots can also be classified according to the mode of interaction. Some chatbots
are designed for text-based communication, while others focus on voice-based
communication. Text-based chatbots are designed to understand and respond to
written language in the form of text input. It is possible to encounter such chatbots
in messaging applications, online forums, or other platforms that support text-based
communication. For example, Facebook provides developers with the necessary tools
to create text-based chatbots for use on their platforms. Organizations can use these
chatbots to automate responses to customer queries, provide personalized content,
and perform other tasks. In 2018, Facebook reported that there exist more than
300,000 active bots on Messenger platform (Facebook Business, 2018). Facebook
also reported that in the same year each month with the help of chatbots more than
8 billion messages were exchanged between people and businesses. LivePerson,
Zendesk, and Salesforce also offer solutions that enable businesses to implement
text-based chatbots in customer service and support. Solutions provided by these
platforms allow businesses to use text-based chatbots in automating responses,
providing information, and engaging in meaningful conversations with customers.
Thanks to these intelligent tools, companies can enhance their customer interactions,
streamline support processes, and provide timely assistance to their customers.
Voice-based chatbots, on the other hand, interact with users through spoken
language. They employ speech recognition technology to comprehend and respond
to user requests and commands. Voice-based chatbots offer a more natural and
intuitive user experience and can be integrated into numerous devices and platforms.
It is possible to encounter many examples of businesses successfully implementing
voice-based chatbots. Amazon employs voice-based chatbots through its virtual
assistant, Alexa. Customers can interact with Alexa using voice commands to
inquire about products, place orders, track shipments, and access various services.
Microsoft is integrating voice-based chatbots into its virtual assistant, Cortana.
Cortana can provide information, perform tasks, schedule appointments, and interact
with various Microsoft applications using voice commands. IBM Watson offers
voice-based chatbot capabilities that companies can leverage in customer service.
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Chatbots in Digital Marketing
Businesses can provide voice-based assistance to their customers by integrating
Watson’s natural language processing and speech recognition capabilities to their
systems. The global AI-driven voice and speech recognition market was valued at
14.42 billion USD in 2021 and is projected to grow at a compound annual growth
rate of 15.3% from 2022 to 2030 (Grand View Research, 2021), with a predicted
revenue of 53.66 billion USD in 2030.
Both text-based and voice-based chatbots have applications across various
industries and possess their own advantages and disadvantages. The ideal chatbot
type for a specific situation depends on multiple factors, including the most suitable
interaction mode for the task and user preferences. Text-based chatbots may
encounter more interaction challenges compared to speech-based chatbots, as they
cannot leverage additional communication forms like speech and gestures (Rapp
et al., 2021). Conversely, users can more easily identify speech-based agents as
non-human (Lunsford & Oviatt, 2006), while text-based chatbot interactions may
be more ambiguous (Shi et al., 2020).
Conversational Style
Different types of chatbots can be identified based on their conversational style and
how they interact with users. Scripted chatbots follow pre-defined scripts and have
limited abilities to handle tasks or questions. Interactive chatbots use natural language
processing and machine learning techniques to understand and respond to user input
in a more human-like way. Chit-chat chatbots are designed for casual conversation
and small talk, while persistent chatbots maintain a conversation with a user over time
using memory and context. Adaptive chatbots use machine learning to personalize
their responses and improve their behavior based on a user’s interactions. Social
chatbots simulate conversation with human users for entertainment or information.
On the other hand, task-oriented chatbots are designed to perform specific tasks
or functions for users and often used in customer service or e-commerce contexts,
such as helping users book a hotel room or track a package.
Some outstanding examples of the previously mentioned chatbot types found in
various fields are given as follows. Starbucks Barista Chatbot users can place orders,
make personalized beverage requests, and get suggestions or recommendations
through the chatbot. National Geographic started a social chatbot which is called
“Genius”. Genius provides users with quizzes, facts, and information about animals,
nature, and various scientific topics. It engages users in interactive conversations,
delivering educational content in an entertaining manner. Domino’s Pizza has also
integrated a chatbot into its social media platforms, including Facebook Messenger
and Twitter. Users of the chatbot can place pizza orders, track deliveries, and access
special offers. It regulates the ordering process and provides a seamless customer
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Chatbots in Digital Marketing
experience. Skyscanner, a travel search engine, implemented a chatbot on Facebook
Messenger that guides users in finding and booking flights, hotels, and rental cars.
The chatbot provides personalized travel recommendations, sends price alerts, and
facilitates the booking process, making travel planning more convenient for users.
Another interesting example of chatbots is Mitsuku, which has won the Loebner
Prize Turing Test competition for multiple times for its conversational abilities.
One of Mitsuku’s important features is its ability to hold engaging and dynamic
conversations. It has the ability to respond to user queries, engage in small talk,
provide jokes, play games, and even offer emotional support. The chatbot is designed
to create an enjoyable and interactive experience for users, allowing them to engage
in conversation as if they were talking to a human.
Underlying Technology
Chatbots can also be categorized based on the technology used to create them. Some
chatbots are based on rule-based systems, while others utilize machine learning
techniques. Additionally, there are hybrid chatbots combining features of both rule-
based and machine learning techniques.
Rule-based chatbots adhere to a predetermined set of rules to generate responses
to user input (Agarwal, R., & Wadhwa, 2020; Meshram et al., 2021). These chatbots
have limitations in comprehending and reacting to natural language, and their
replies might be somewhat repetitive. Rule-based chatbots excel in specific tasks
or delivering uncomplicated responses to user inquiries. However, their capacity
to understand and react to complex or natural language input is limited, making
them less adaptable and intelligent than other chatbot types. Rule-based approaches
work well when conversations are focused on a specific topic or task but become
less effective as input becomes more natural or strays from the defined domain
(Agarwal, R., & Wadhwa, 2020). Although rule-based bots are cost-effective and
convenient, their inability to self-learn is a drawback since they can only answer
questions addressed by predefined rules (Meshram et al., 2021).
Machine learning chatbots employ advanced algorithms and natural language
processing to understand and respond to user queries more flexibly and intelligently.
They are designed to continually evolve based on accumulated data. By learning
from user interactions, these chatbots can enhance their performance and adapt
to changing circumstances. Machine learning chatbots are more advantageous
compared to rule-based chatbots considering some factors such as including better
comprehension of user input, adaptability, and the ability to personalize responses
based on individual user data, which enhances user experience and fosters trust
and engagement.
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Chatbots in Digital Marketing
Hybrid chatbots blend characteristics of both rule-based and machine learning
systems. They offer a more functional response range by applying predefined rules
to specific input types while also using machine learning algorithms to refine their
natural language understanding. While designing, these chatbots are planned to learn
and adapt over time, handling a broader scope of input and delivering personalized
responses. Hybrid chatbots are more effective and adaptable than rule-based chatbots
which makes them an increasingly popular option for chatbot development.
There are some prominent vendors offering comprehensive chatbot solutions such
as Salesforce Service Cloud, Microsoft Bot Framework, IBM Watson Assistant, Oracle
Digital Assistant, and Google Dialogflow. These platforms incorporate advanced
features such as natural language processing and machine learning techniques. So,
they go beyond rule-based responses. By getting advantage of these capabilities,
businesses can create chatbots that not only follow predefined conversation flows
but also understand and respond to user input in a more human-like manner. As it
provides a higher level of assistance and support, businesses can have more dynamic
and engaging interactions with their customers.
In conclusion, chatbots are possible to be classified based on their purpose,
interaction type, conversational style, and underlying technology. Businesses have
the option of choosing between text-based and voice-based chatbots, as well as rule-
based and machine learning chatbots, depending on their specific use case. Each
chatbot type has its strengths and weaknesses, and the optimal choice depends on
the specific requirements of the business and its users.
THE MOST COMMONLY USED CHATBOTS
Various organizations developed chatbots and used them to meet different needs
and requirements. Commonly used for customer service, marketing, and automation
tasks, chatbots can be found on websites, messaging apps, and other platforms. While
some estimates suggest that millions of chatbots are currently in use, the precise
number is likely in constant flux as new chatbots emerge, and older ones are retired
or discontinued. Statista (2022) forecasts the chatbot market to reach approximately
1.25 billion U.S. dollars by 2025, a significant increase from the 2016 market size of
190.8 million U.S. dollars. Table 2 highlights the most popular chatbots in use today.
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Chatbots in Digital Marketing
Table 2. The most commonly used chatbots
Name Description Capabilities
Apple’s Siri
Siri is an intelligent virtual assistant developed by
Apple that is available on a range of devices, such
as iPhone, iPad, iPod touch, Apple Watch, Mac, and
HomePod. It is designed to assist users with tasks
and answer questions using artificial intelligence
and natural language processing. Users can interact
with Siri using voice commands or through the Siri
interface on their device, and can customize their
Siri settings and preferences through the Settings
app. Apple places a strong emphasis on user privacy
and has implemented measures to ensure that Siri
respects user privacy. It does not collect or store
information about a user’s contacts, and users can
disable certain features, such as voice recording,
through the Settings app.
• Siri offers assistance in sending and receiving messages
on Apple devices, including suggesting automatic or
personalized responses for users.
• Siri can make phone calls for users or provide them with a
list of phone numbers for specific businesses or services.
• Siri is capable of setting reminders and alarms, and can
also display a list of upcoming appointments and events for
users.
• Siri can provide information on various topics such as
news, weather, sports, entertainment, answer questions, and
translate languages.
• Siri can assist users in performing tasks such as booking
hotel rooms, making restaurant reservations, or purchasing
event tickets.
• Siri Shortcuts allows users to create custom voice
commands for Siri to perform specific tasks or actions, either
by creating their own or using pre-made ones.
• Siri integrates with HomeKit, enabling users to control
their smart home devices using voice commands, such as
adjusting thermostats or turning on/off lights.
• Siri is available in several languages, and users can choose
their preferred language in the Settings app on their device.
Amazon’s
Alexa
Alexa is a virtual assistant developed by Amazon that
allows users to interact with devices, such as smart
speakers and smart displays, using voice commands.
It uses artificial intelligence and natural language
processing to assist with tasks and answer questions.
Alexa can be used on a variety of devices, including
Amazon’s Echo smart speakers and smart displays,
as well as third-party devices that have integrated
with the Alexa Voice Service. It is designed to be
a personal assistant and can learn and adapt to a
user’s preferences and habits over time to provide
more personalized recommendations. Alexa can be
controlled through voice commands or the Alexa
app, which is available for Android and iOS devices.
The app allows users to set up and customize
their Alexa devices, view and edit their to-do and
shopping lists, and access additional features and
settings. Alexa also has a range of “Skills,” or apps,
that can be added to extend its functionality, such as
ordering a pizza or booking a ride with Uber. There
are thousands of Skills available in the Alexa Skills
Store and users can browse and enable them through
the app or voice commands. Alexa is designed to
prioritize privacy and users can manage their privacy
settings through the app or online at Amazon.com.
They can turn off certain features, such as voice
recording and location tracking, or delete their voice
recordings and other data through the app or online.
• Alexa can set reminders for you based on time, location,
or events.
• Alexa can provide you with answers to general knowledge
questions when asked.
• You can ask Alexa to play music or videos from a variety
of sources, including Amazon Music and Pandora.
• Alexa can control connected smart home devices, such as
lights or thermostats.
• Alexa can make phone calls.
• Alexa can provide information on a range of topics, such as
weather, traffic, and news, and make recommendations based
on your interests and past activity, such as books or movies.
• Alexa can integrate with other services, such as ordering
from Amazon or setting appointments with OpenTable.
• Alexa can recognize and respond to voice commands,
making it a convenient hands-free assistant.
Microsoft’s
Cortana
Cortana is a virtual assistant developed by Microsoft
that uses artificial intelligence and natural language
processing to assist users with tasks and answer
questions. It was first introduced in 2014 for
Windows Phone 8.1 and later became available on
other platforms, including Windows 10, Xbox One,
and Microsoft Edge. Cortana is integrated across
the Microsoft 365 suite for use with Windows OSes
version 2004 and later and the Microsoft Edge
browser. It can also integrate with other Microsoft
products and services like Outlook and OneDrive.
You can activate Cortana by voice or by typing
commands into a search bar, and it is designed to be a
helpful and convenient assistant that works with users
to make their daily lives easier and more productive.
The virtual assistant uses the Microsoft Bing search
engine to perform tasks such as answering questions.
• Cortana has the ability to create reminders for users based
on time, location, or events.
• Cortana can search the internet for information on a
specific topic and provide relevant results.
• Cortana can answer general knowledge questions asked
by the user.
• Cortana can provide recommendations based on the user’s
interests and past activities, such as suggesting restaurants
or events.
• Cortana can integrate with other Microsoft products
and services, like OneDrive and Outlook, to create a more
seamless user experience.
• Cortana can perform specific tasks like opening apps,
playing music, or sending emails.
• Cortana can provide alerts and notifications for important
events or tasks, like reminding the user of an upcoming
meeting or alerting the user to new email messages.
• Cortana can recognize and respond to voice commands,
allowing for hands-free use.
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Chatbots in Digital Marketing
Table 2. Continued
Name Description Capabilities
Google
Assistant
Google Assistant is a virtual personal assistant
developed by Google. It was first introduced in
2016, initially on the Google Allo messaging app
and Google Home smart speaker. Since then, Google
Assistant has become widely available on various
devices, including smartphones, tablets, and other
smart home appliances. It has also been integrated
into other Google services such as Google Search,
Google Maps, Google Calendar, and Android TV to
provide users with more comprehensive assistance.
The main purpose of Google Assistant is to help
users complete tasks and answer questions by
interacting with them through voice or text input.
Powered by artificial intelligence, it can understand
and respond to a variety of natural language queries.
Some of the capabilities of Google
• Google Assistant utilizes AI technology and can
comprehend and respond to a wide range of natural language
queries.
• Users can instruct Google Assistant to set reminders to
help them recall important tasks or events.
• Google Assistant is capable of providing answers to
diverse questions covering a range of topics like news,
definitions, and math problems. It can also offer information
regarding specific businesses, such as operating hours or
contact details.
• Google Assistant can play music for users, generate
playlists based on their preferences, and control playback.
• Google Assistant can be used to control compatible smart
home devices, like lights, thermostats, and security systems.
• Google Assistant can be integrated with other Google
services, such as Google Search, Maps, and Calendar, to
offer users more comprehensive assistance.
• It has the ability to translate between many languages,
providing users with multilingual communication.
• Google Assistant can send text messages to other users
through compatible messaging apps and place phone calls
to other users or businesses through a connected phone or
device with built-in microphone and speaker.
IBM Watson
Assistant
IBM Watson Assistant is an AI-powered chatbot
platform developed by IBM. It allows businesses to
create and deploy conversational agents or virtual
assistants that can engage in natural language
conversations with users. IBM Watson Assistant
leverages natural language processing (NLP) and
machine learning techniques to understand user
inputs and generate relevant responses. IBM has
designed the platform to be user-friendly and
accessible to a wide range of users, including those
without extensive technical expertise.
• With NLP technology it enables to Understand and
interpret user inputs in natural language.
• It can determine the intent or purpose behind user queries.
• It can maintain context and remember previous interactions
for more meaningful conversations.
• It has capabilities to manage the flow and structure of
conversations.
• IBM Watson Assistant can be seamlessly integrated
with various platforms, applications, and systems. It
allows deployment across websites, messaging apps, voice
assistants, and other channels.
• It supports multiple languages for global reach.
• It allows users to customize and personalize the chatbot’s
responses.
• It provides analytics and insights into user interactions and
behavior.
• It offers pre-built templates for different industries to
facilitate chatbot development.
• It can be scaled to handle high volumes of conversations
and users.
• It ensures data security and compliance with industry
standards.
Slackbot
Slackbot is a chatbot integrated into the Slack
messaging platform with the purpose of helping
users manage their workspace and accomplish
various tasks. These tasks include setting reminders,
answering questions, and providing information.
Slackbot can be tailored to execute a wide range of
tasks and users can communicate with it through
messages or mentioning it in conversations. It is an
effective tool for automating tasks and enhancing
productivity in a Slack workspace.
• Slackbot can send users a notification at a specified time or
date as a reminder for an upcoming event or task.
• Slackbot can notify someone when they are mentioned in a
channel they’re not a part of.
• Slackbot can be programmed to provide users with
information about specific topics or to answer common
questions.
• Slackbot can be connected to other tools and services, such
as Google Calendar or Trello, to perform tasks or provide
information from those platforms.
• Slackbot can be customized to perform a wide range of
tasks, and users can interact with it by sending messages or
mentioning it in conversations.
• Slackbot can be programmed to respond to specific
keywords or phrases, allowing it to be used as a simple
chatbot in conversations with other users.
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Chatbots in Digital Marketing
Table 2. Continued Table 2. Continued
Name Description Capabilities
ChatGPT
Chat Generative Pre-trained Transformer” (Chat
GPT) is a language model developed by OpenAI.
It is designed to generate human-like text and is
specifically tailored for use in chatbots and other
conversational systems. Chat GPT can generate
responses to user input in real-time, allowing it
to hold natural, human-like conversations with
users. It is trained on large datasets of human
conversations and is able to generate responses that
are coherent, appropriate, and contextually relevant
to the conversation at hand. OpenAI is a research
organization that was founded in 2015 by a group of
entrepreneurs and researchers, including Elon Musk,
Sam Altman, Greg Brockman, Ilya Sutskever, and
Wojciech Zaremba. The organization’s goal is to
promote and advance the development of artificial
intelligence in a responsible and safe manner.
Since its founding, OpenAI has made significant
contributions to the field of AI research and has
developed numerous influential technologies and
techniques. OpenAI introduced the original GPT
model in 2018, and since then, has released several
updates and improvements to the model, including
GPT-2 and GPT-3. These updated versions of the
model have been released in the years following the
initial release of GPT.
• ChatGPT can explain complex concepts.
• ChatGPT can provide summaries of text by identifying
the most important points and presenting them in a concise
manner.
• ChatGPT can provide translations for text from one
language to another.
• ChatGPT can write code in various programming
languages.
• ChatGPT can provide explanations and step-by-step
solutions for some mathematical problems.
• It can create texts, for example, scholastic articles, film
script, song lyrics, and so on.
• It can generate resumes and cover letters.
• It can create recipes based on ingredients, cuisine, and
dietary preferences.
Replika
Replika is a personal chatbot companion powered by
artificial intelligence. Replika is the AI for anyone
who wants a friend with no judgment, drama, or
social anxiety involved. Users can form an actual
emotional connection, share a laugh, or chat about
anything they would like. Each Replika is unique,
just like each person who downloads it. Reacting to
AI’s messages will help these smart agents learn the
best way to hold a conversation with users.
• Replika can engage in natural and engaging conversations
with users, answering questions, making small talk, and
discussing a wide range of topics.
• Replika offers emotional support to users who may feel
overwhelmed or anxious, listening to their concerns and
providing encouragement, compassion, and understanding.
• Replika provides tailored advice and guidance based
on users’ unique needs, offering suggestions and
recommendations on topics like career, relationships, and
personal growth.
• Replika helps users set and track their goals, offering
support and motivation to achieve them, as well as
personalized feedback and encouragement to stay on track.
• Replika can be a virtual friend, mentor, or even a romantic
partner, with the type of relationship being up to the user.
• Replika offers personality tests and conversations to help
users learn more about themselves, gaining insights into their
characteristics and personal traits.
• Replika offers various enjoyable activities such as playing
games, sharing memes, exchanging selfies, and role-playing,
ensuring users have a good time with their AI companion.
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Chatbots in Digital Marketing
REDUCING CUSTOMER SERVICE COSTS AND
INCREASING SALES RATE WITH CHATBOTS
Chatbots can be categorized as either internal or external, with numerous organizations
employing both types to enhance internal operations, increase employee satisfaction,
cut costs, and elevate customer experiences (Forbes, 2022). Internal chatbots are
tailored for use within a specific organization, mainly serving to answer employee
questions, supply information on company policies and procedures, and help
employees with various tasks and processes. Conversely, external chatbots cater to
a company’s customers or clients, frequently handling customer service duties such
as addressing product or service inquiries, enabling order placement, and resolving
technical issues. Generally, internal chatbots facilitate communication and improve
efficiency within a company, while external chatbots improve customer experiences,
assist clients, and promote brand loyalty.
Internal chatbots are typically implemented within a company’s internal network
or intranet and are solely accessible to employees. External chatbots, in contrast,
are available to anyone with internet access and can be located on a company’s
website, mobile app, or social media channels. Both types of chatbots have advanced
significantly and now possess the capability to handle complex conversations and
tasks, allowing businesses to better meet customer demands and adjust to market
changes. Modern chatbots can execute a wide range of functions related to internal
and external activities, such as aiding employees, addressing customer questions,
processing orders, discerning customer needs, and providing personalized service.
Chatbots are increasingly employed in various forms to support numerous business
activities, particularly in customer service and sales. The quality of customer service
is crucial for customer satisfaction and loyalty in any business (Kumar and Ganesh,
2013; Kasiri et al., 2017). Because they include highly individualized client contacts
and qualified customer service professionals, customer service and sales activities
need substantial resources (Flstad et al., 2018). Accessible and effective service is
made possible while preserving cost effectiveness through clever automation of
customer service and sales procedures. A growing number of businesses are making
substantial use of chatbots to interact with clients on company websites, social media
platforms, and messaging applications in today’s cutthroat business environment
(Sands et al., 2021; Van Pinxteren et al., 2020). Chatbots are an excellent choice for
businesses looking to improve customer service and sales efforts since they allow for
tailored customer interactions, offer easily accessible service, and keep costs in check.
The emergence of these smart interactive bots has changed the way online
customers interact with businesses regarding products and services. Chatbots have
many advantages for businesses as well as online customers. Chatbots offer an
alternative to human services representatives for online businesses to interact with
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their customers, advertise new products, and assist customers with their various
inquiries (Chen et al., 2021). Chatbots help the business reduce the costs associated
with daily routine activities. These smart bots automate daily tasks, including
everything from answering FAQs to creating orders. Customers’ questions and
requests can be answered on a 24-hour basis using a chatbot and they can be set up
to serve in multiple languages so that clients can get appropriate support no matter
what language they speak. They can welcome website visitors, assist them in their
purchasing decisions, and increase sales rates by helping customers find what they
are looking for. According to a report by Juniper Research, the amount of consumer
retail spending via chatbots is expected to reach $142 billion by 2024. This represents
a significant increase from the $2.8 billion in spending observed in 2019.
By acting as virtual assistants, chatbots can increase customer engagement
by making customers’ experiences with online services more interactive. These
intelligent bots enable to implement conversational marketing which is an approach
in which real-time conversations are used to engage site visitors to quickly move
them forward in their purchasing journey. Chatbots also help reduce the bounce rate
of e-commerce sites. Bounce rate refers to the percentage of customers who stop
browsing immediately after opening the first page of an e-commerce site. Also,
chatbots attract customers’ attention and allow them to navigate the e-commerce
system more, which improves the SEO of the website.
Chatbots can be utilized at every stage of the customer journey, from the pre-
purchase phase to the post-purchase phase. For instance, during the pre-purchase
phase, chatbots can use predictive modeling and learning algorithms to instantly
match a customer’s inquiry to the most suitable products available (Forrest and
Hoanca, 2015). During the purchase phase, chatbots can redirect customers to
shopping platforms or provide them with promotional deals (Luo et al., 2019). In
the post-purchase phase, customers may continue to interact with chatbots to track
the delivery process or receive after-sales service (Sotolongo and Copulsky, 2018).
Overall, chatbots can provide a seamless and convenient customer experience by
assisting customers at every stage of the journey.
The study by Wang et al. (2022) highlight the positive relationship between
the use of chatbots inside and outside the organization and improving business
agility. Operationally, internal agility includes the ability of a firm to quickly and
effectively reorganize, reallocate resources, and change strategies in the face of new
challenges or opportunities. On the other side, external agility is concerned with a
company’s capacity to quickly adjust to changes in the external business environment,
such as customer needs, market conditions, competitors, regulations, and other
potential factors affecting the company’s performance and success. Internally and
internationally, chatbots can improve corporate agility. By automating activities,
providing employees with up-to-date information, and freeing up human resources to
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Chatbots in Digital Marketing
focus on more complex and strategic responsibilities, they can enhance communication
and efficiency on the inside. Chatbots can also improve staff engagement and
productivity while reducing response times and errors. On the surface, chatbots can
improve the customer experience by offering individualized service, responding to
consumer questions in real-time, and ensuring round-the-clock accessibility. This can
result in increased customer satisfaction, loyalty, and retention. Furthermore, chatbots
can assist businesses in obtaining valuable customer and market information and
insights, which can be applied to enhance products and services and make informed
business decisions. By employing chatbots, businesses can amplify both internal
and external agility by rapidly adapting to shifting circumstances, streamlining
operations, seizing new opportunities, catering to customer needs, reducing risks, and
ultimately boosting customer satisfaction and loyalty. The study by Wang et al. (2022)
revealed that both routine and innovative use of chatbots can boost business agility.
Companies should not only require marketing employees to integrate chatbots into
standardized marketing processes but also encourage them to experiment with new
chatbot applications to gain fresh customer insights. To capitalize on the potential of
chatbots, companies should integrate them into standard customer service processes,
such as answering frequently asked questions and collecting feedback to identify
customer needs and market changes. Companies can also encourage employees to
use chatbots creatively to gain further insights from chatbot interactions, enhancing
customer experiences and satisfaction.
AI-enabled chatbots can communicate with customers in a way that resembles
human interaction. These AI algorithms enable chatbots to interpret client questions
and requests and provide relevant responses. Modern AI-based chatbots can therefore
deliver effective and efficient customer care by rapidly attending to clients’ demands
and concerns. These chatbots can help businesses become more agile internally,
which can increase their ability to serve customers. These digital assistants enable
companies to swiftly modify their operations to match the changing needs of their
customers, resulting in more effective and responsive customer service (Chuang,
2020).
In conclusion, chatbots have turned into a crucial part of many businesses,
enhancing productivity, optimizing communication, lowering expenses, and
improving customer experience. Chatbots can free up significant time and resources
to be used on more difficult tasks that require human interaction by automating
mundane chores. In customer service and sales, where they may help customers
make purchasing decisions, provide individualized assistance, and boost sales,
chatbots have shown to be especially helpful. The promise of chatbots goes beyond
interactions with customers, as internal chatbots can also assist businesses in
improving internal processes and raising staff satisfaction. Chatbot capabilities are
anticipated to be significantly improved by the continued development of artificial
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intelligence, making them a more important tool for companies looking to stay
competitive and adjust to market changes.
ENHANCING CUSTOMER EXPERIENCE
WITH AI-BASED CHATBOTS
While customers become more dependent on digital platforms to fulfill their diverse
demands, chatbots are becoming increasingly important in business (Selamat &
Windasari, 2021). Chatbots have started to replace the role of human agents to interact
and build connections with customers. Rather than simply navigating e-commerce
sites, customers can interact with the chatbot and receive personalized support.
With the help of chatbots, customers can find suitable products or information about
products with less time and effort. Data that chatbots collect from their interactions
with customers can help gain important insights in improving the customer experience
or identifying potential customer needs.
In several studies, participants who had previously used chatbots reported
several benefits of these intelligent agents in customer service. Prominent among
the reported benefits are efficient assistance with simple requests, no waiting in
line for help by customer service personnel, and 24/7 availability (Følstad et al.,
2018; Chen et al., 2021). These studies also found that customer service provided
by chatbots is seen as relaxed, as the customer can take the time needed to process
feedback and formulate their questions. Another reported benefit is about non-
judgmental nature of chatbots which makes it less embarrassing to ask questions
about simple issues. Numerous other studies have demonstrated that chatbots can
increase productivity and convenience. In order to help customers identify their
needs, these virtual assistants can, for instance, offer difficult information in a way
that is simplified and frequently interact more effectively (Brandtzaeg & Følstad,
2017; Følstad et al., 2018; Kasilingam, 2020; Selamat & Windasari, 2021). The
research results presented above indicate that chatbots have the ability to improve
the users’ access to information and services. Chatbots can decrease the amount
of time users must wait for a human representative to respond by giving prompt
and accurate answers to user questions. Additionally, they can be programmed to
offer more thorough and full information, improving users’ ability to search for the
data they need. Overall, academic research provides ample evidence that chatbots
can be a beneficial tool for enhancing the way people get information and services.
Customers’ levels of satisfaction are closely related to the quality of the information
and services offered to them. According to research, a system’s or service’s ability
to satisfy customers greatly depends on the quality of the information and services
offered to them (Koivumäki et al., 2008; Ashfaq et al., 2020; Hsu and Lin, 2023).
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These results indicate that, regardless of particular content or platform, the quality
of information and services continues to be a significant predictor of customer
satisfaction with a system or service. Studies in the field of information systems
have shown that satisfaction is, in turn, frequently a good predictor of a person’s
decision to continue using a specific system (Koivumäki et al., 2008; Hsu and Lin,
2023). Chatbots can enhance the quality of the information and services offered to
clients, increasing their loyalty and likelihood to use the system again.
Several studies have looked at the relationship between humanizing chatbots to
make them more like human beings, or increasing consumer engagement. The use
of visual cues (such as a human-like figure), identity cues (such as a human name
or identity), and conversational cues (such as using human language, interactive
messaging, being perceived as helpful, warmth, and competence) are just a few
strategies that can be used to give chatbots human-like qualities, according to
previous research. (Araujo, 2018; Go & Sundar, 2019; Van den Broeck et al., 2019;
Roy and Naidoo, 2021; Cheng et al., 2022). According to Schuetzler et al. (2020),
human like chatbot features including perceived humanness and partner engagement
might enhance user experience. Additionally, according to Adam et al. (2020),
chatbots that display humanization, such as identity, small talk, empathy, and the
capacity to carry out simple requests, are more likely to be successful in gaining user
cooperation. In addition, Shumanov and Johnson (2021) found that consumers tend
to interact with chatbots for longer periods of time when the chatbot’s personality
aligns with their own. Their research showed that consumer personality can be
predicted during contextual interactions and that chatbots can be given a personality
through their response language. Using a chatbot with a personality that matches the
consumer’s personality had a positive effect on consumer engagement with chatbots
and purchasing outcomes in interactions involving social gain. There is another
evidence showing that giving chatbots human-like qualities can improve the quality
of chatbot interactions and create a sense of social and emotional connection (Roy
and Naidoo, 2021). This positive psychological effect of chatbot interaction can also
lead to a more favorable attitude towards the website or brand (Araujo, 2018; Go
& Sundar, 2019). In another study, Smestad and Volden (2018) conducted a study
to examine how well a chatbot’s personality matches the user’s personality affects
the user experience. They used two chatbots with different levels of personality
and measured the effect on the user experience. They found that having a chatbot
with a personality that matches the user’s personality had a positive impact on the
user’s experience with the chatbot, but this effect varied depending on the context
in which the chatbot was used, the tasks it was performing, and the group of users
it was interacting with.
Studies on the acceptability and adoption of chatbots have revealed several
factors that can shape a user’s attitude towards this technology (Rapp et al., 2021).
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These factors encompass perceived usefulness, ease of use, perceived helpfulness,
authenticity of conversation, perceived enjoyment, perceived customization, perceived
value, pleasure, arousal, dominance, brand image, and website aesthetics (Zarouali
et al., 2018; Huang et al., 2019; Sanny et al., 2020; Rese et al., 2020; Nadarzynski
et al., 2019; Völkel et al., 2020). Motivations for utilizing chatbots may also involve
seeking quick and consistent feedback, entertainment, and social or relational purposes
(Brandtzaeg and Folstad, 2017). Whang et al. (2022) demonstrated that users are
more likely to accept chatbots as sales assistants when chatbot messages are highly
personalized. Their study’s findings suggest that personalized chatbot messages boost
purchase intentions by fostering a sense of ease and product understanding, and that
incorporating real-time visual information, such as augmented reality (AR), can
further enhance chatbots’ effectiveness as sales assistants. However, concerns about
chatbots’ security, accuracy, and lack of a professional human touch and empathy
may also affect a user’s willingness to embrace this technology (Nadarzynski et al.,
2019; Völkel et al., 2020). Chatbot designers and developers must take these factors
into account to increase the likelihood of their technology being accepted by users.
In summary, chatbots are playing a larger role in businesses as customers turn
to digital platforms to meet their needs. They offer several benefits for customer
service, including efficient assistance with simple requests, no waiting in line for
help, and 24/7 availability. They are also seen as non-judgmental and can be helpful
for convenience and productivity. Chatbots have the potential to improve the quality
of information and service provided to customers, leading to increased customer
satisfaction and loyalty. Making chatbots more human-like, or anthropomorphizing
them, can also increase consumer engagement. It is also worth to state that while
chatbots can handle many routine inquiries, they may struggle with very complex or
case-specific questions. Therefore, it’s a good practice for businesses to use chatbots
in conjunction with human customer service agents to provide the best possible
experience for their customers.
ETHICAL CHALLENGES THAT CHATBOTS RAISE
New technologies bring new ethical and privacy considerations, and chatbots are
no exception. In addition to the positive outcomes of utilizing chatbots to manage
interactions between organizations and their customers, there are particular ethical
issues stemming from their characteristics that open up new ethical territories that
need to be scrutinized.
According to Murtarelli et al. (2021), chatbots can encourage users to trust them
and reveal additional personal information through their human-like qualities in
conversation. This information is then permanently stored and can be used to develop
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a comprehensive profile of the individual. This data is often not shared with the user
and combined with predictive analytics, chatbots can create significant information
asymmetry in human-machine interactions. This information disparity can result
in one party not having enough information to make informed choices, potentially
leading to negative consequences. For example, the use of chatbots within online
marketplaces for interactions with customers raises ethical concerns as they have the
potential to manipulate users through the information they have access to and their
ability to analyze patterns. This could result in an imbalance of power, where the
chatbot has more information and is able to influence the user’s perceptions, such
as their initial evaluations of products or services. This creates risks for consumers
who interact with organizations through chatbots and raises questions about the
responsibility of the organizations that use these systems.
Chatbots, as convenient as they are, can indeed pose their fair share of problems.
Let’s say someone uses chatbots to trick people into giving out private stuff like
their home address or bank details. This could turn really bad if such sensitive
information gets into the wrong hands.
One key drawback is that chatbots just don’t have the same human touch we do
- they lack the ability to empathize or make judgement calls like we can. They are
essentially programmed to follow a script and can’t quite factor in human emotions
or ethical questions the way we do. This is a limitation, particularly when chatbots
are interacting with us on a regular basis (Murtarelli et al., 2021).
Another important point is that chatbots can often handle quite a bit of personal
info, including things like our health and financial records. So, it’s absolutely essential
that they’re built in a way that safeguards this information and respects our privacy
(Subramanian, 2017; Følstad & Brandtzæg, 2017).
Additionally, chatbots aren’t exempt from displaying bias. The data used to train
them can make them act in biased ways. Interesting to note is a study by Zabel and
Otto (2021) that found people seem to respond better to chatbots made by designers
of their own gender. This suggests that who makes the chatbot can influence how
it is received, something to definitely keep in mind when designing these systems.
It is possible to program chatbots to spread false or misleading information to
individuals for various reasons, such as political propaganda or fraudulent advertising
(McKelvey & Dubois, 2017). For example, in order to influence the results of
an elections, chatbot can spread disinformation about a political candidate or to
promote counterfeit products or services. That is, using chatbots for persuasion can
significantly impact society, and it is possible to use machine agents to negatively
manipulate people’s opinions (Følstad and Brandtzæg, 2017). AI-powered chatbots
and robots, which can be easily anthropomorphized, have the risk of manipulation.
The use of AI systems with the purpose of targeting specific voters has had
measurable effects on election results in various countries, including the U.S.
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and the U.K. in the context of Brexit (Boine, 2021). Chatbots can behave like real
people on social media platforms to influence public opinion. When they are used
in this way, chatbots can be detrimental to individuals and society as a whole, as
they can propagate false or misleading information and manipulate people’s beliefs
and actions. The development in the area of artificial intelligence has increased the
risks of manipulating individuals. AI can generate fake content, interact with people
to obtain personal information, analyze data to profile individuals, and target them
with tailored information (Boine, 2021).
Furthermore, chatbots pose a challenge in terms of accountability, as it can be
difficult to hold them responsible for their actions or responses. Holding someone
accountable for the chatbot’s responses may not be a significant concern for most
members of the public, as long as the chatbot’s responses are not critical to their
welfare (Aoki, 2020). However, providing more information about how the chatbot
works could improve people’s trust in the chatbot and the company that provides
it. System-level accountability and algorithmic transparency could help improve
trust, but it may not be necessary if the chatbot’s responses are not very important
(Aoki, 2020).
Another ethical issue is related to the disclosure in chatbot interactions. Although
disclosing that a chatbot is being used at the beginning of a conversation might make
customers less likely to trust the chatbot, it is still important for service providers
to clearly identify whether the customer is interacting with a chatbot or a human
customer service representative (Castillo et al., 2021). Customers are increasingly
concerned about the identity of the front-line employees and may be confused if
they are not told whether they are interacting with a chatbot or a human. Service
providers are encouraged to disclose the identity of the front-line employee to avoid
any feelings of deception and mistrust (Castillo et al., 2021). Additionally, there is
a growing ethical concern about chatbot interactions, and disclosing the presence
of a chatbot may become a regulated or standard practice in the future.
There are also concerns that users might excessively rely on chatbots for help,
which could result in a decline in their ability to think critically. It is important for
automated chatbots to include safeguards to prevent users from becoming overly
dependent on them (Kretzschmar et al., 2019). The ease of access to chatbots through
a simple tap of an icon, combined with their constant availability, may increase the
risk of addictive behaviors, especially among young people in today’s information
age. To mitigate the potential negative effects of over-reliance on chatbots, it is
necessary to implement measures that encourage responsible usage.
Automated chatbots also face ethical conflicts where they have to choose between
multiple possibilities, each with ethical implications. For example, if it receives
conflicting information or requests from different users, the chatbot may find it
difficult to choose the right course of action. Chatbots may not know how to respond
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in the absence of pre-programmed responses, raising ethical issues. Since chatbots
cannot make ethical decisions on their own, it is important to develop standards and
ethical protocols to deal with such situations. To ensure that chatbots make ethical
decisions, they need to follow these principles.
Ensuring good communication when interacting with people from different cultures
and levels of technological proficiency is key to designing and using chatbots To
avoid abuse or inappropriate responses, chatbots must be able to understand language
and cultural complexities are understood and interpreted. In addition, they need to
change their language and communication style to meet the needs of different people.
Training chatbots to meet user needs takes a lot of time and money. Additionally,
to make conversations as user-friendly and convenient as possible, chatbots need
to be able to respond to users with varying technological skills.
In conclusion, chatbots are increasing in popularity as communication tools
between organizations and customers; however, its use raises a number of ethical
and privacy concerns. These issues include the collection and use of personal
data, the possibility of bias and manipulation, the spread of misinformation, and
lack of accountability Chatbots need to be designed with transparency, fairness
and accountability in mind to ensure ethical use. This can be done through secure
technology, training in unbiased algorithms, and transparency to users about the
use of chatbots. While chatbots offer some benefits, it is important to consider
the ethical implications of their use to prevent negative impacts on individuals or
society as a whole.
CONCLUSION
Chatbots have changed and improved the manner of businesses in interacting
with their customers. By lowering customer service costs and increasing sales
rates, chatbots have become an important part of many organizations. AI-powered
chatbots have demonstrated the ability to enhance customer experiences by providing
personalized, time-sensitive responses to customer queries. Chatbots have emerged
as an affordable solution for businesses looking to improve customer service. By
automating simple questions, chatbots have been found to enable customer service
representatives to focus on complex issues, reducing the need for additional staff
and it can significantly reduce costs for companies. By analyzing customer data,
chatbots can recommend products or services that are likely to interest customers,
thereby increasing the chances of a sale.
AI-driven chatbots have the potential to greatly improve customer experiences.
By utilizing machine learning algorithms, chatbots can give highly personalized
responses to customer questions, resulting in increased customer satisfaction and
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loyalty. Additionally, chatbots may provide 24/7 customer support, which is very
useful for firms that operate internationally or have clients in different time zones.
Businesses can boost client retention and improve customer service by offering
ongoing help.
Advancements in the area of artificial intelligence and natural language processing
has given rise to the creation of more advanced chatbots which gives signals of a
promising future for this technology. Because machine learning algorithms continue
to progress, chatbots are equipped to become even more proficient at understanding
and responding to user inquiries. In addition, it is expected that chatbots will become
more human-like in their interactions, integrating emotions and empathy into their
replies by offering users increasingly personalized and gratifying experiences, which
will promote their adoption across diverse industries such as customer support and
healthcare. Chatbots will also become more interconnected with other technologies,
including voice assistants and smart home devices, allowing users to connect with
them through various channels. Consequently, chatbots will become a pivotal part of
the digital customer experience, delivering round-the-clock support and customized
interactions to accommodate individual users’ requirements and preferences. As more
firms and organizations implement chatbots, they will transform the way customers
engage with them, ultimately simplifying numerous aspects of everyday life.
Nonetheless, along with the numerous advantages of chatbots come ethical issues
that must be considered. A primary concern is the potential for bias in chatbot replies.
If chatbots are not designed properly, they may inadvertently discriminate against
certain customer groups. Additionally, transparency during chatbot interactions is
essential. Customers must be informed that they are conversing with a chatbot rather
than a person to avoid confusion and ensure customers feel comfortable interacting
with chatbots. Businesses should address all ethical challenges posed by chatbots.
In this way, businesses have the ability to make use of chatbots’ many advantages
while also ensuring that their use is ethical and fair.
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KEY TERMS AND DEFINITIONS
Artificial Intelligence (AI): AI encompasses the development of computer
systems capable of executing tasks that typically demand human intelligence,
including problem-solving, learning, and decision-making. AI technology involves
machine learning, natural language processing, and other sophisticated methods,
allowing computers to analyze data, make choices, and learn autonomously.
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Chatbot: A chatbot is a software usually powered by AI and crafted to simulate
human conversations using natural language processing technologies. Chatbots can
undertake a broad variety of tasks, from answering questions and offering suggestions
to addressing customer support concerns and even facilitating various transactions.
Machine Learning (ML): Machine learning is an area of artificial intelligence
that allows computer systems to learn and enhance their performance via experience,
without explicit being programmed.
Natural Language Processing (NLP): NLP is a field within computer science
and artificial intelligence that focuses on the processing and analysis of human
language. By implementing algorithms and machine learning, NLP enables machines
to comprehend and interpret natural language text and speech.
