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 Artificial Intelligence
and Machine Learning
in Business Management
 Artificial Intelligence
and Machine Learning in
Business Management

Concepts, Challenges, and Case Studies

Edited by
Sandeep Kumar Panda
Vaibhav Mishra
R. Balamurali
Ahmed A. Elngar
First edition published 2022
by CRC Press
6000 Broken Sound Parkway NW, Suite 300, Boca Raton, FL 33487-2742
and by CRC Press
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
© 2022 Taylor & Francis Group, LLC
CRC Press is an imprint of Taylor & Francis Group, LLC
Reasonable efforts have been made to publish reliable data and information, but the author and publisher
cannot assume responsibility for the validity of all materials or the consequences of their use. The authors
and publishers have attempted to trace the copyright holders of all material reproduced in this publication and
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Library of Congress Cataloging‑in‑Publication Data
Names: Panda, Sandeep Kumar, 1985- editor.
Title: Artificial intelligence and machine learning in business management
: concepts, challenges, and case studies / edited by Sandeep Kumar
Panda, Vaibhav Mishra, R. Balamurali, Ahmed A. Elngar.
Description: First edition. | Boca Raton : CRC Press, 2021. | Includes
bibliographical references and index. | Summary: "The focus of this book
is to introduce Artificial Intelligence (AI) and Machine Learning (ML)
technologies into the context of Business Management. With the maturing
use of AI or ML in the field of business intelligence, this book
examines several projects with innovative uses of AI beyond data
organization and access. It follows the Predictive Modeling Toolkit for
providing new insight on how to use improved AI tools in the field of
business. Taking a multidisciplinary approach for using AI, this book
provides a single comprehensive reference resource for undergraduate,
graduate, business professionals, and related disciplines"-- Provided by
publisher.
Identifiers: LCCN 2021031675 (print) | LCCN 2021031676 (ebook) | ISBN
9780367645557 (hardback) | ISBN 9780367645564 (paperback) | ISBN
9781003125129 (ebook)
Subjects: LCSH: Management--Technological innovations. | Artificial
intelligence--Industrial applications,
Classification: LCC HD30.2 .A775 2021 (print) | LCC HD30.2 (ebook) | DDC
658--dc23
LC record available at https://lccn.loc.gov/2021031675
LC ebook record available at https://lccn.loc.gov/2021031676
ISBN: 978-0-367-64555-7 (hbk)
ISBN: 978-0-367-64556-4 (pbk)
ISBN: 978-1-003-12512-9 (ebk)
DOI: 10.1201/9781003125129
Typeset in Times
by SPi Technologies India Pvt Ltd (Straive)
Dedicated to my sisters, Sushri Susmita, Sujata, Bhaina Sukanta, nephew Surya
Datta, wife Itishree (Leena), son, Jay Jagdish, and late father, Jaya Gopal Panda,
and late mother, Pranati Panda.
Sandeep Kumar Panda

Dedicated to my father, Ravindra Kumar Mishra, my mother, Shakuntala Mishra,

and other members of my family and friends.
Vaibhav Mishra

Dedicated to the Almighty Lord (God Father Shiva) and all Divine Brothers and
Sisters of Brahma Kumaris World Spiritual University, Mt. Abu, Raj.
R. Balamurali

Dedicated to my parents, to my love, Eman - your smile brings happiness to my life,

and also to my kids, Farida, Seif, and Malek.
Ahmed A. Elngar
Contents
Preface........................................................................................................................ix
Acknowledgements..................................................................................................xiii
Contributors������������������������������������������������������������������������������������������������������������� xv
Editors���������������������������������������������������������������������������������������������������������������������xix

Chapter 1 Artificial Intelligence in Marketing....................................................... 1

Rachita Kashyap and Rishi Dwesar

Chapter 2 Consumer Insights through Retail Analytics....................................... 15

Farrah Zeba and Musarrat Shaheen

Chapter 3 Multi-Agent Paradigm for B2C E-Commerce.................................... 29

Bireshwar Dass Mazumdar and Shubhagata Roy

Chapter 4 Artificial Intelligence and Machine Learning: Discovering

New Ways of Doing Banking Business............................................... 53
Puspalata Mahapatra and Sarita Kumari Singh

Chapter 5 Analysis and Comparison of Credit Card Fraud Detection

Using Machine Learning..................................................................... 81
Saloni and Minakhi Rout

Chapter 6 Artificial Intelligence for All: Machine Learning and

Healthcare: Challenges and Perspectives in India............................... 95
Sanghmitra Patnaik and Parthasarathi Pattnayak

Chapter 7 Demystifying the Capabilities of Machine Learning and

Artificial Intelligence for Personalized Care..................................... 115
Vaidik Bhatt and P. Sashikala

Chapter 8 Artificial Intelligence and the 4th Industrial Revolution................... 127

Alok Kumar Sahai and Namita Rath

vii
viiiContents

Chapter 9 AI-Based Evaluation to Assist Students Studying

through Online Systems.................................................................... 145
Nidhi Shukla, K. S. Perianayagam, and Anand Sinha

Chapter 10 Investigating Artificial Intelligence Usage for Revolution

in E-Learning during COVID-19...................................................... 171
Pooja Rani and Rachna Agrawal

Chapter 11 Employee Churn Management Using AI.......................................... 179

Sujata Priyambada Dash, Pradosh Kumar Gantayat,
and Sambit Mohanty

Chapter 12 Machine Learning: Beginning of a New Era in the

Dominance of Statistical Methods of Forecasting............................ 195
Vijay Shankar Pandey

Chapter 13 Recurrent Neural Network-Based Long Short-Term

Memory Deep Neural Network Model for Forex Prediction............ 205
Minakhi Rout, Dhiraj Bhattarai, and Ajay Kumar Jena

Chapter 14 Ethical Issues Surrounding AI Applications...................................... 223

Vidushi Pandey

Chapter 15 Semantic Data Extraction Using Video Analysis:

An AI Analytical Perspective............................................................ 237
Subasish Mohapatra, Aditi Bansal, and
Subhadarshini Mohanty
Index....................................................................................................................... 257
Preface
The focus of this book is to introduce Artificial Intelligence (AI) and Machine
Learning (ML) technologies in the context of Business Management. The advent of
AI & ML technologies has the potential to deeply impact the traditional ways of man-
aging businesses. The book consists of the introduction of Artificial Intelligence and
its relationship with other technologies. The reader will also get to know the impact
and challenges associated with this. The remaining few chapters will cover the impacts
of AI and ML in various fields of business and management like operations manage-
ment, marketing management, human resource management, finance and strategy.
The chapters of the book will give insights into the implementation and impact of AI
& ML to business leaders, managers and technology developers and implementers.
With the maturing use of Artificial Intelligence or Machine Learning in the field
of business intelligence, this book examines a number of projects with innovative
uses of AI beyond data organization and access. It follows the Predictive Modelling
Toolkit for providing new insight on how to use improved AI tools in the field of
business. It explores cultural heritage values and risk assessments for mitigation and
conservation and discusses on-­shore and off-­shore technological capabilities and
spatial tools for addressing marketing strategy change and change in retail, insurance
and healthcare system etc. Taking a multidisciplinary approach for using AI, this
book provides a single comprehensive resource for undergraduate, graduate, busi-
ness professionals and related disciplines.
Nowadays, AI improves a lot in the area of supply chain to track the product, to
provide intelligence in insurance field, to finance field etc. In this regard, the tradi-
tional approach of teaching and learning is not meeting the requirement in the poli-
cies of Industry 4.0 revolution. Hence, we edited this book to minimize the gap
between academia and Industry.

The book is organized into 15 chapters:

Chapter 1, Artificial Intelligence in Marketing, discusses how AI help to the mar-

keting people to better understand the speech (recognition) by applying techniques
like text mining, with latest advancement in programming it has made modelling of
direct marketing responses and predicting churn using classification trees and train-
ing machines to better understand customer needs etc.
Chapter 2, Consumer Insights through Retail Analytics, describes an in depth
understanding on how Indian retail companies such as ‘Shoppers Stop’ and ‘Future
Group’ are exclusively using customers’ purchases and other transaction data to pre-
dict their future purchase behaviour and design product placement strategies.
Chapter 3, Multi-­Agent Paradigm for B2C E-­Commerce, discusses the business
applications of KBS, CBR, ANN, GA and MAS along with negotiation, customer
relationship management and customer orientation. From computational point of
view, agent characteristics, multi-­agent system paradigm and its communication pro-
tocol also been discussed. Lastly, the chapter describes the Belief-­Desire-­Intention
(BDI) architecture for mental state and other cognitive parameters such as
ix
xPreface

preference, commitment, and capability required for computation of trust in any AI

based e-­business system to formalize the internal architecture of complex agents.
Chapter 4, Artificial Intelligence and Machine Learning: Discovering New Way of
Doing Banking Business, illustrates the impact of AI and ML application on finance
with the principal focus on Banking sector, how AI affects customers, maintains the
customer relationship, influences business performance and finally how AI will
change future of Banking sector. Artificial Intelligence (AI) is one of the front digital
transformation strategies that can spread in the area of finance today.
Chapter 5, Analysis and Comparison of Credit Card Fraud Detection Using
Machine Learning, discusses fraud detection technique to protect or prevent the
cardholder from huge losses. To determine the fraud transaction various deep learn-
ing architecture like Long Short-­Term Memory (LSTM), Gated Recurrent Units
(GRU), Convolutional Neural Network (CNN), and Multilayer Perceptron (MLP)
have been used.
Chapter 6, Artificial Intelligence for All: Machine Learning and Healthcare:
Challenges and Perspectives in India, deliberates on the healthcare sector as its main
thrust area to study the application of Machine Learning. The role of ML is to help
the common people to access healthcare facilities without any constraints.
Chapter 7, Demystifying the Capabilities of Machine Learning and Artificial
Intelligence for Personalized Care, discusses Machine Learning enabled Artificial
Intelligence, which detects the abnormality at an early stage, where physician, as
well as patient, can be alarmed earlier about a future disease or health conditions,
enabling early intervention to provide early treatment along with personalized rec-
ommendation and how physicians, as well as patients, look at these technologies
along with small case studies.
Chapter 8, Artificial Intelligence and the 4th Industrial Revolution, focuses on
briefly understanding the threats of governance over data privacy, net ethics and
cybersecurity issues and underscores the need for broader cyber laws and policymak-
ing in the future. The transformative impact of Artificial Intelligence, Machine
Learning and embedded technology will shape the new economy and market space.
How will the economies, markets, ecosystems and organizations react and respond in
this ever-­expanding yet interconnected world remains to be seen.
Chapter 9, AI-Based Evaluation to Assist Students Studying through Online
Systems, focuses on the AI techniques used to grade the performance of students in
an Online Learning Environment and provides a feedback to improve the Learning
Process. A simple implementation based on Markov Decision Process is present to
understand this approach.
Chapter 10, Investigating Artificial Intelligence Usage for Revolution in
E-­Learning during COVID-­19, examines the portrayal of AI in E-­learning during
COVID-­19 and apart from discovering the role of AI during this pandemic. The study
has also investigated the future of AI in E-­learning post COVID-­19.
Chapter 11, Employee Churn Management Using AI, describes an AI model
which can help the Human Resource Management to anticipate which representative
can leave the association in not-so-distant future by investigating the past informa-
tional index of the association in a significant manner.
Preface xi

Chapter 12, Machine Learning: Beginning of New Era in the Dominance of

Statistical Methods of Forecasting, briefly covers the popular empirical studies cov-
ering statistical and ML (AI) methods used for the purpose of forecasting and their
outcomes and suggestions for the future scope of study.
Chapter 13, Recurrent Neural Network-Based Long Short-­Term Memory Deep
Neural Network Model for Forex Prediction, provides the historical data of different
countries on a daily basis that are compared separately using Back-­propagation
Neural Network (BPNN), Functional Link Artificial Neural Network (FLANN) and
LSTMs. Comparing daily exchange rate prediction of these three models, LSTMs
model outperformed with maximum accuracy with faster convergence.
Chapter 14, Ethical Issues Surrounding AI Applications, highlights ethical issues
and approaches that are currently being undertaken to address in the different domain.
Chapter 15, Semantic Data Extraction Using Video Analysis: An AI Analytical
Perspective, deliberates on extracting vehicle numbers off of vehicles from a CCTV
captured video through four steps, including conversion of video to a continuous
image sequence, image segmentation, character segmentation and character recogni-
tion, with preprocessing at every stage to improve the quality of input data available
for the next step. In the era of the growing complexity of problems along with the
increasing functionalities offered by video analytics, this can be the most basic and
generic solution supporting many applications.
Acknowledgements
First and foremost, we would like to thank the Almighty Lord. In the process of put-
ting this book together we realized how gifted we are. You have given us the power
to believe in our passion and pursue our dreams. We could never have done this
without the faith we have in you, the Almighty.
We would like to express our thanks to many people who have helped during the
preparation of this first edition.
We thank all the authors who spent their valuable time, knowledge, insights and
ideas by contributing various chapters in the book. We also thank all authors for their
kind co-­operation extended during the various stages of processing the document.
We thank Mr Kanugonda Lokesh Reddy, M.Tech, for formatting the book chap-
ters by placing the figures at appropriate places.
We thank the IFHE (The ICFAI Foundation for Higher Education) Management
and Advisor, Director, Dean, and Faculty Colleagues of IcfaITech (Faculty of Science
and Technology) and IBS (Icfai Business School) for providing the necessary infra-
structure, platform, ambience, encouragement, suggestions and moral support which
helped us in shaping the book nicely and completing the task in an effective way.
We are very much grateful and thankful to CRC Press, Taylor & Francis for pro-
viding the opportunity to edit the book Artificial Intelligence and Machine Learning
in Business Management: Concepts, Challenges, and Case Studies. In this regard
special thanks go to Keith Povey Editorial Services Ltd for much improvement of the
English language and syntax. We strongly believe that the book will have a positive
impact on the readers.
Last, but not least, we would like to thank all the prospective readers of the book.
It has been written with you in the mind. We welcome suggestions, tips for improve-
ments, criticisms and appreciation. Your invaluable inputs are very much required for
our future endeavours.

xiii
Contributors
Rachna Agrawal Pradosh Kumar Gantayat
Associate Professor Department of CSE
Department of Management Studies DRIEMS Autonomous Engineering
J. C. Bose University of Science and College
Technology Tangi Cuttack Odisha, India
YMCA, Faridabad, Haryana
Ajay Kumar Jena
Vaidik Bhatt School of Computer Engineering
Department of Operations & IT, ICFAI Kalinga Institute of Industrial
Business School (IBS), Hyderabad, Technology (Deemed to be
The ICFAI Foundation for Higher University)
Education (IFHE) (Deemed to be Bhubaneswar, Odisha
university u/s 3 of the UGC act
1956) Rachita Kashyap
Marketing and Strategy Department,
Aditi Bansal IBS
Department of Computer Science and IFHE University
Engineering Hyderabad, India
College of Engineering and Technology
Bhubaneswar, Odisha, India Dr Puspalata Mahapatra
School of Computer Engineering
Dhiraj Bhattarai Kalinga Institute of Industrial
School of Computer Engineering Technology (Deemed to be
Kalinga Institute of Industrial University)
Technology (Deemed to be Bhubaneswar, Odisha, India
University)
Bhubaneswar, Odisha, India Bireshwar Dass Mazumdar
Department of CSE
Sujata Priyambada Dash IERT Allahabad
Department of Management Allahabad, India
Birla Institute of Technology
Mesra, Ranchi, India Sambit Mohanty
Software Developer CTSC
Rishi Dwesar Hydrabad, India
Marketing and Strategy Department,
IBS Subhadarshini Mohanty
IFHE University Department of Computer Science and
Hyderabad, India Engineering
College of Engineering and Technology,
Bhubaneswar, Odisha, India

xv
xviContributors

Subasish Mohapatra Minakhi Rout

Department of Computer Science and School of Computer Engineering
Engineering Kalinga Institute of Industrial Technology
College of Engineering and (Deemed to be University)
Technology, Bhubaneswar, Bhubaneswar, Odisha, India
Odisha, India
Shubhagata Roy
Vidushi Pandey Department of Operations & IT
Department of Information Systems IBS Hyderabad
Indian Institute of Management IFHE, Hyderabad, India
Kozhikode, Kerala, India
P. Sashikala
Vijay Shankar Pandey Department of Operations & IT, ICFAI
Assistant professor Business School (IBS), Hyderabad,
Institute of Management Sciences The ICFAI Foundation for Higher
University of Lucknow Education (IFHE) (Deemed to be
Lucknow, India university u/s 3 of the UGC act 1956)

Sanghmitra Patnaik Alok Kumar Sahai

KIIT Deemed to be University Faculty of Management Studies
Odisha, India Sri Sri University
Cuttack, India
Parthasarathi Pattnayak
Saloni
School of Computer Applications
School of Computer Engineering
KIIT Deemed to be University
Kalinga Institute of Industrial Technology
Odisha, India
(Deemed to be University)
Bhubaneswar, Odisha, India
K. S. Perianayagam
Chief Technology Officer Musarrat Shaheen
Sahara Net Corp Ltd. Assistant Professor, Dept. of Human
Lucknow, India Resource, ICFAI Business
School (IBS) Hyderabad, IFHE
Pooja Rani (Deemed to be University)
Research Scholar
Department of Management Nidhi Shukla
Studies Institute of Management
J.C. Bose University of Science and Commerce and Economics
Technology Department of Shri Ramswaroop
YMCA, Faridabad, Haryana Memorial University
Lucknow, India
Namita Rath
Faculty of Management Studies Anand Sinha
Sri Sri University Sahara Net Corp Ltd.
Cuttack, India Lucknow, India
Contributors xvii

Sarita Kumari Singh Farrah Zeba

School of Computer Engineering Assistant Professor
Kalinga Institute of Industrial Department of Marketing and Strategy
Technology (Deemed to be ICFAI Business School (IBS)
University) Hyderabad
Bhubaneswar, Odisha, India IFHE (Deemed to be University)
Editors
Dr Sandeep Kumar Panda is currently working as an
Associate Professor in the Department of Data Science and
Artificial Intelligence, IcfaiTech (Faculty of Science and
Technology) at ICFAI Foundation for Higher Education
(deemed to be University), Hyderabad, Telangana, India. His
research interests include Cryptography & Security, Blockchain
Technology, Internet of Things, Artificial Intelligence and
Cloud Computing. He has published many papers in interna-
tional journals and in international conferences of repute. He
received “Research and Innovation of the Year Award” hosted
by WIEF and EduSkills under the Banner of MSME, Govt. of India and DST, Govt. of India
at New Delhi on January 2020. He has seventeen Indian patents in his credit. His professional
affiliations are MIEEE, MACM and LMIAENG.

Dr Vaibhav Mishra is currently working as an Assistant

Professor at the IBS Hyderabad, IFHE University, India. He has
completed his engineering in computer science from Uttar
Pradesh Technical University, India. Subsequently, he com-
pleted a MBA and PhD from the Indian Institute of Information
Technology (IIIT), Allahabad, India. During his PhD, Dr Mishra
got the MHRD scholarship. He has a few certificates in his
account like Six Sigma (Quality Management) – ‘Green Belt’
from KPMG, ISO 20000-­1:2005 (IT Service Management, lead
auditor) from BSI, R-­Programming-­Practical Approach from IIT Kanpur. He has published
research articles in international journals of repute (indexed in SCOPUS and ABDC), such as
International Journal of Bank Marketing (A), International Journal of Electronic Business (C),
etc. He has also reviewed the journal articles for various journals like Information & Management
Elsevier (ABDC-­A*), International Journal of Indian Culture and Business Management–
Inderscienece, International Journal of Sustainability in Higher Education, etc. His areas of
interest are Management Information System, Database Management System, cryptocurrency,
cloud computing, E-­commerce, ERP Systems, Quality Management and Data Mining.

Dr R. Balamurali is currently working as an Assistant

Professor & Coordinator in the Department of Computer
Science and Engineering, Faculty of Science and Technology
at The ICFAI Foundation for Higher Education, Hyderabad,
India. His research interests include Energy Efficiency in
Wireless Sensor Networks, Wireless Body Area Networks,
IoT, AI and Deep Learning. Dr Balamurali is a life member of
Indian Society for Technical Education (ISTE). He received
his B.E. Degree in Computer Science and Engineering from
PET College of Engineering, India in 2002. He completed
M.Tech. in Information Technology from Satyabhama
University, Chennai, India in 2008 and the Ph.D. in Computer
Science and Engineering with specialization in Wireless Sensor Networks form SRM

xix
xxEditors

University, Chennai, India in 2017. From June, 2017 to June, 2018, he worked as a Post-­
Doctoral Fellow at Bennett University, Greater Noida, India. He has published research arti-
cles in international journals and Conferences of repute.

Dr Ahmed A. Elngar, He is Assistant Professor of Computer

Science, Chair of Scientific Innovation Research Group
(SIRG) Director of Technological and Informatics Studies
Center Managing Editor of Journal of Cybersecurity and
Information Management (JCIM), Beni-­ Suef University,
Faculty of Computers & Artificial Intelligence, Egypt. Dr
Elngar is the Founder and Head of Scientific Innovation
Research Group (SIRG) and Assistant Professor of Computer
Science at the Faculty of Computers and Information, Beni-­
Suef University. Dr Elngar is a Director of the Technological
and Informatics Studies Center (TISC), Faculty of Computers
and Information, Beni-­ Suef University. He is a Managing
Editor: Journal of Cybersecurity and Information Management (JCIM) Dr Elngar has more
than 25 scientific research papers published in prestigious international journals and over 5
books covering such diverse topics as data mining, intelligent systems, social networks and
smart environment. Research works and publications. Dr Elngar is a collaborative researcher
He is a member in Egyptian Mathematical Society (EMS) and International Rough Set Society
(IRSS). His other research areas include Internet of Things (IoT), Network Security, Intrusion
Detection, Machine Learning, Data Mining, Artificial Intelligence. Big Data, Authentication,
Cryptology, Healthcare Systems, Automation Systems. He is an Editor and Reviewer of many
international journal around the world. Dr Elngar won several awards including the “Young
Researcher in Computer Science Engineering”, from Global Outreach Education Summit and
Awards 2019, on 31 January 2019 (Thursday) at Delhi, India. Also, he awards “Best Young
Researcher Award (Male) (Below 40 years)”, Global Education and Corporate Leadership
Awards (GECL-­2018), Plot No-­8, Shivaji Park, Alwar, Rajasthan-­301001, India. Also, He
have an Intellectual Property Rights called “ElDahshan Authentication Protocol”, Information
Technology Industry Development Agency (ITIDA), Technical Report, 2016. Dr Elngar’s
great many activities in community and environmental service include organizing 12 work-
shops hosted by a large number of universities in almost all governorates of Egypt. He is
involved in a workshop on smartphones’ technologies and their role in the development of
visually impaired skills in various walks of life.
 1 Artificial Intelligence
in Marketing
Rachita Kashyap and Rishi Dwesar
Marketing and Strategy Department, IBS, IFHE University,
Hyderabad

CONTENTS
1.1 Introduction������������������������������������������������������������������������������������������������������� 1
1.2 AI, ML and Data Science���������������������������������������������������������������������������������� 2
1.3 AI and Marketing���������������������������������������������������������������������������������������������� 3
1.4 Benefits and Detriments of Using AI in Marketing������������������������������������������ 5
1.4.1 Benefits�������������������������������������������������������������������������������������������������� 5
1.4.2 Detriments���������������������������������������������������������������������������������������������� 5
1.4.2.1 Amazon Go (Caselet)�������������������������������������������������������������� 6
1.4.2.2 Technical Working of Amazon Go������������������������������������������ 6
1.4.2.3 Issues Related to Amazon Go Technology������������������������������ 7
1.5 Marketing Plan and AI’s Potential�������������������������������������������������������������������� 9
1.6 Future�������������������������������������������������������������������������������������������������������������� 11
References���������������������������������������������������������������������������������������������������������������� 13

1.1 INTRODUCTION
During the early days of AI in the 1950s, scientists were asking questions like “Can
machines think?” and were looking into deep, complex issues of mechanizing emo-
tional intelligence. However, in today’s world of Amazon’s Alexa, Apple’s Siri,
Google Assistant etc. machines have become far more capable, yet AI still has a long
way to go. In simple terms, AI can be explained as human intelligence exhibited by
machines and can be broadly classified into Artificial Narrow Intelligence (e.g.,
smart speaker, self-driving car, AI in farming and factories) and Artificial General
Intelligence (machines can do anything a human can do). The benchmark for AI is to
be as good as human intelligence, and to possess ability to reason, see and commu-
nicate like humans do. Though capability of AI has improved by leaps and bounds
over the years, it is still far off from that benchmark in comparison to human intelli-
gence. Nevertheless, recent advancements in the field of AI reflect a very promising
future.
AI is Machine Learning (ML) driven. ML deals with training a computer to per-
form specific tasks and functions automatically. Usually, these tasks are exhaustive,
repetitive and often too complex for humans to do efficiently. Machines can learn

DOI: 10.1201/9781003125129-1 1
2 Artificial Intelligence and Machine Learning in Business Management

through supervised, unsupervised and reinforced learning. In supervised learning,

several input and output sets are provided to the machine. Through this approach,
data is fed to an algorithm and the machine tries to recognize the relationship between
the input and the output. When the machine has stopped learning – in other words,
has learned optimally – the learned model can predict the value or the class of new
data points. For example, a system can be trained to differentiate between a kangaroo
and a koala. By feeding the system with dozens of images of both animals, the sys-
tem will learn about the features which distinguish each and so improve its predic-
tion. In unsupervised learning, data is analyzed without trying to make any predictions.
It is focused on learning and understanding the underlying structural properties and
associations in between the observed data. This kind of learning can be used in
detecting outliers, classifying and segmenting customers and the market. In rein-
forcement ML, the system does not have historical data to draw conclusions upon;
instead, the algorithm learns by taking different actions and evaluating their suc-
cesses and failures. Reinforcement learning is used by Facebook in advertising on its
platform. The system tests the advertisements on full spectrum when it is flighted for
the first time. With time, and when sales rise, Facebook’s algorithms analyze the data
available, and it then shows the advertisements to certain sets of customers, in certain
geographical locations, at certain times of the day and using certain on-screen
placements.

1.2 AI, ML AND DATA SCIENCE

We often see AI, ML and data science in use together, and they are considered to be
lucrative career options today. Data science can be defined as a broad field of study
which pertains to data systems and processes which are aimed at maintaining datas-
ets and deriving meaning from them. With the advent of technology and the Internet,
today almost all organizations generate a large volume of data through their daily
transactions, and it becomes problematic for these organizations to monitor, store,
organize and extract important information from this data. Data scientists use a com-
bination of tools, algorithms, applications and principles to extract useful informa-
tion from various random data clusters, and then use this information to guide
business processes to reach organization goals. The information extracted can be
used to study ongoing data trends in any field of business and is helpful in presenting
business forecasts and setting courses of action based on insights found and infer-
ences made. The best example of ML is Netflix suggesting movies to the customers
based on their movie-viewing behaviour and Amazon recommending books based on
the past purchases of customers on the website. With the help of ML, marketers can
provide customers with customized content as well as suggest other products that
they may wish to purchase.
ML is a field of study that gives computers an ability to learn without being
explicitly programmed, whereas data science deals with extracting knowledge from
data. Deep learning is a big artificial neural network which mimics the network of
neurons in a human brain. It is a subset of ML and is called “deep learning” because
it uses deep neural networks for learning. The machine uses different layers to learn
from the data and the depth of the model is represented by the number of layers in the
Artificial Intelligence in Marketing 3

FIGURE 1.1 Relationship between AI, ML and data science.

model. Deep learning is a new term used within the world of AI. Refer to Figure 1.1
Relationship between AI, ML and Deep Learning.
The relationship between AI, ML and data science is given in Figure 1.1.

1.3 AI AND MARKETING

In one century, human civilization has developed by leaps and bounds in terms of
technology, healthcare, economy and in every possible materialistic dimension. In
the years to come we are likely to witness replacement of human-driven cars to self-
driving cars, doctors operating remotely through robotic surgical devices, nanotech
self-cleaning clothing, 3D printers facilitating instant delivery of goods, meaning
manufacturing time can be brought down, implantable communication devices
replacing mobile phones, and many other technical advancements. It would come as
little surprise if all advertising and marketing tasks were to be managed wholly by
computational systems. Currently, marketers use a lot of technology, but in the com-
ing decades, AI and ML methods will take the marketing game to a new level.
Practitioners and academicians have anticipated that AI will change marketing
strategies and customer behaviours. According to a survey conducted by Salesforce,
AI will be the technology most adopted by marketers in the coming years. With the
help of AI, business processes are being automated and so machines are then able to
perform preset tasks with higher accuracy and far less human intervention, such as
4 Artificial Intelligence and Machine Learning in Business Management

transferring data, sending promotional mail to existing as well as potential customers,

updating customer files, replacing lost ATM cards, reading documents to extract key
points using natural language processing etc. With the help of AI, companies can gain
insights from the vast amount of transaction and customer data which will include not
only numeric data type, but also text, images, audio recordings of customers convers-
ing with the customer care service provider, facial expressions, and even voice tones.
By employing AI in daily functioning, companies can better predict customer choices,
deploy appropriate digital marketing strategies or anticipate potential credit fraud.
Marketing bots are one of the most popular forms of automation right now. A bot
is basically a piece of software which can be programmed to carry out a specific set
of actions on its own. Bots are usually cheap to setup, and easy to program and run.
Bot-powered commerce is our modern-day manifested destiny and is the future of
marketing. For example, in order to purchase a bulb for your newly bought reading
lamp, you need to visit different websites, scroll through a number of pages, fill out
forms regarding your shipping address, give payment information and so on. But if
there is a bot, you just need to tell it to find a bulb for your reading lamp, and it will
guide you through different bulb hues, voltages, etc. and then place the order for you.
Behind the screen, the bot leads you through a concatenation of questions in order to
better understand your intent, and deliver the right information to you. AI bots can
provide both customer as well as sales support services, are available 24/7, have very
low error rates, and their deployment can be scaled up or down according to demands.
Here are a few functions that a bot can perform which can be beneficial to any
business:

1. Assist website visitors looking for answers about products.

2.Help in conducting marketing research.
3.Qualify leads.
4.Help in tracking individual team members’ work and keep the whole team
updated with each other’s work.
5. Personalizing advertisements for customers.

With all the descriptions suggested above, AI offers the potential to reduce the costs
incurred and increase revenues. Revenues can be increased by making informed and
improved marketing decisions (e.g., product recommendations, competitive pricing,
personalized promotion, enhancing customer engagement). The costs may decline
due to automation of simple marketing tasks and free up human agents to handle
more complex marketing tasks.
There is a misconception that AI is replacing humans in their jobs, but firms can
use AI to amplify their employees’ capabilities. For example, Stitch Fix, a leading
clothing and service provider, use AI bots in assisting their employees to provide a
better service to their customers. With the help of AI, stylists identify the best cloth-
ing styles for their customers by integrating all the data provided by the customers
while expressing their preferences, general style trends, handwritten notes, Pinterest
boards and preferences of other customers in the same segment. Ginni Rometty
(CEO of IBM), in his media interactions has often indicated that AI would not lead
to a world of man “versus” machine but rather a world of man “plus” machines [1].
Artificial Intelligence in Marketing 5

1.4 BENEFITS AND DETRIMENTS OF USING AI IN MARKETING

1.4.1 Benefits
A) Personalization and relevant messages
AI fuelled predictive analytics can help companies by tapping the right cus-
tomer base and analyzing their browsing history, and then showing appropriate
advertisements to the right set of people. This can help companies understand
their customer preferences better and then make appropriate recommenda-
tions. This is being used widely by Amazon and Netflix, saving billions by
keeping customers hooked to their services and avoiding cancellation of ser-
vices. As a marketer, AI gives you much power in terms of developing certain
data points which lets you guide your customers to the right product.
B) Streamlining the marketing efforts
Through deep learning AI can study consumer behaviour patterns and predict
which segment of customers are likely to make a certain kind of purchase. This
can help businesses in targeting the customer base more accurately without
wasting time and money on less probable leads.
C) Cost saving
According to various research surveys conducted worldwide, around 85% of
the interactions between brands and customers are going to happen online. As
compared to other advertising mediums like prime time tele advertisements,
print advertisements, billboards etc. online advertising is cheaper as well as
more precise in targeting the right set of customers with the aid of AI.

1.4.2 Detriments
A) Human control is still required
AI cannot function without human intervention, as it lacks the creativity, flex-
ibility and imagination which makes humans the epicentre of the marketing
world. Humans have various tastes, preferences, experiences etc. which enable
them to make better decisions than machines, which are run on algorithms
comprising from formulas, statistics, commands etc.
B) Algorithms can be wrong
Due to bad data AI can develop biases. For example, automatically preferring
and shortlisting CVs of white males over people belonging to other ethnicities,
genders, colours etc. because previously most of the successful people in those
positions were white males. And this makes AI infer that white males are better
suited for those positions over other people.
C) Automated chat boxes and machine answering calls is not always the
solution
Many people, especially those of older generations, are not comfortable talk-
ing with machines instead of human customer care agents. And moreover, we
all know how exasperating it can be when we have an urgent matter at hand,
and are looking for solutions from a robot. Therefore, chatbots should be
installed by businesses only after careful research on their customer segment
and product offerings.
6 Artificial Intelligence and Machine Learning in Business Management

1.4.2.1 Amazon Go (Caselet)
Amazon.com, Inc was founded by Jeff Bezos in 1994 under the name Cadabara
(1994–95). It started as an online marketplace for books but later ventured into sell-
ing furniture, electronics, apparel, food, toys, jewellery, software etc. It is considered
one of the Big Four technology companies (alongside Google, Apple and Facebook)
and presently focuses on e‑commerce, AI, digital streaming and cloud computing. In
2018 Amazon announced its two‑day delivery service, Amazon Prime, which today
has 10 million subscribers worldwide. Prime Video, Amazon Music, Audible and
Twitch are subsidiaries of Amazon through which downloads are distributed, and
audiobooks, videos and music are streamed. Amazon distributes various products
and services through Amazon Fresh, Amazon Studios, Amazon Wireless, Kindle
Store etc. Amazon has acquired around 40 subsidiaries including Zappos, Goodreads,
Amazon Robotics, IMDb, Amazon Maritime, Ring, Whole Food Markets etc.
Amazon Go opened its first store in 2018 in Seattle. It is a chain of convenience
stores, with 26 sites across the US, and a further ten planned to open across the
United Kingdom as of 2020. Amazon Go is not just any other grocery store: it is a
store enabled with ‘Just Walk Out’ technology, where the customers can simply enter
the store, grab whatever they need and leave, eliminating checkout lines. In order to
get started with the shopping, shoppers need to have an Amazon account, a smart-
phone and the free Amazon Go app. As the shoppers enter the store, they need to scan
a barcode within the app on their smartphone at the entrance turnstiles, keep their
phones with them, and then grab whatever they need before leaving the store. Amazon
has applied the technology used by self-driving cars (AI, ML, Image recognition,
array of fusion sensors, deep learning, computer vision, bigdata on how humans shop
etc.) to create the shopping experience in Amazon Go stores. From the moment shop-
pers enter the store, they are recognized and tracked with the help of sensors and
cameras installed all over the store. The technology automatically detects the prod-
ucts taken from or returned to the shelves. It keeps a track of the products in the vir-
tual cart, and once the shopping is complete and the shopper exits the store, Amazon
charges them from their Amazon account and emails a receipt to the customer.

1.4.2.2 Technical Working of Amazon Go

Firstly, the data is acquired through several sensors in order to enable awareness of
which products have been picked up from the aisle or the shelves. Some examples of
the type of sensors are weight measurement, pressure detectors, dimensional mea-
surements of the products. Secondly, several deep learning algorithms are used to
understand what product the customer picked up or put back; which products to keep
in the virtual cart; which products the customer picked up while making a purchase
decision; how much time did the customer take to make a decision; which products
are getting sold faster and where to place these products for easy access. And finally,
when the customer passes a transition point on exiting the store, a bill is generated
for the items present in the virtual cart, which is the result of the automated analysis
done by intelligent machines working behind the curtain.
After the success of Amazon Go stores, many retailers had shown interest in this
technology which is an amalgam of complex system of sensors, cameras and soft-
ware that tracks each and every activity and movement of the shoppers inside the
store. The Amazon Go tech bundle has been put on sale in the market. ‘Just Walk
Artificial Intelligence in Marketing 7

Out’ technology can be installed in the pre-existing retail stores undergoing renova-
tion as well as new stores under construction and requires only few weeks for the
entire setup procedure. The brand has gone a step further by creating a new website
dedicated to ‘Just Walk Out’ technology and covers all the technology related aspects
like sales offers, most frequently asked questions about their new business line etc.
The site does not cover the pricing info, but covers a variety of package related info
like hardware required, software solutions etc. Amazon provides 24/7 customer sup-
port via phone or mail [2].

1.4.2.3 Issues Related to Amazon Go Technology

Amazon Go uses computer imagery and a sensor fusion tech bundle to record and
analyze customer actions, and gives accurate results accordingly. But what if the
customer wears a mask? Wearing a mask is a necessity during the prevailing pan-
demic conditions. Will Amazon Go be able to identify the customer correctly?
The number of products in Amazon Go might increase, and what if the customer
does not return the lifted product to the shelf from where it was picked up? Will the
customer be charged for the product? What if the customer consumes the product in
the store itself (e.g., a juice bottle or candy in a box) and puts back the empty product
packaging on the shelf. Can the sensors, cameras and image processing software
identify such instances? What if a family with kids enter the store? How will the
products picked up by the kids be charged? And it has been observed that if there are
more than 20 customers in the store at a time, the software crashes; how will Amazon
handle these issues? The technology is still growing and has a long way to go.
Amazon Go Stores: This is What Future Looks like is given in Figure 1.2. Figure 1.3
shows a cashier-less store that lets customers pick up the products and walk out of the
store where as Figure 1.4 represent Amazon Go Cashier less convenience store.
Figure 1.5 indicates an Employee stocking the shelves in a cashier less store.

FIGURE 1.2 Amazon Go Stores: This is What Future Looks like.

8 Artificial Intelligence and Machine Learning in Business Management

FIGURE 1.3 A cashier-less store that lets customers pick up the products and walk out of the
store [1].

FIGURE 1.4 Amazon Go Cashier less convenience store [2,3].

FIGURE 1.5 An Employee stocking the shelves in a cashier less store [5].
Artificial Intelligence in Marketing 9

1.5 MARKETING PLAN AND AI’S POTENTIAL

Applications of AI are very broad in nature. With the help of AI abilities to detect and
extrapolate hidden patterns in data, marketers can identify opportunities as well as
threats, and act on them in real time. Following are the ways in which we can lever-
age AI’s potential across different stages of a marketing plan.

Stage 1: Analyzing the Current Situation

This stage involves the analysis of macroenvironmental factors. The organiza-
tion develops an understanding of the current and future business environ-
ments by analyzing the current situation and understanding the business
environment [6]. Marketers use tools like SWOT (Strengths Weaknesses
Opportunities Threats) analysis for getting the in-depth understating of the
targeted market. With the help of AI assisted features like social listening,
getting data-driven information on purchasing patterns, product demand
and customer satisfaction can assess and estimate demand, market trend and
respective customer sentiment. With the help of ML, an AI backed con-
sumer research agency investigated the online consumer discussions and
suggested that a brand should not just focus on itself while analyzing the
online forums but also other competitor brands [4]. This can bring an under-
standing on competitors’ behaviour and help in gauging the respective tar-
get segments reactions.
Stage 2: Understanding Markets and Customers
This stage involves the analysis of microenvironmental factors. The organiza-
tions try to develop understanding related to consumer behaviour, including
factors affecting their loyalty, attitude, purchasing patterns, product cate-
gory demand and also the market share demand. AI can assist the marketers
in processing the vast data available through their social media accounts,
mobile activity, web searches and contact centre interactions [5]. For exam-
ple, at the Consumers Electronics Show held in Las Vegas, 2019, Neurodata
Labs and Promobot (a robotics manufacturer) demonstrated a multimodal
emotion detection, for the purpose of customer experience management [6].
This AI‑enabled system uses a combination of eye movement, heart rate,
voice, body gestures and facial expressions in order to determine custom-
ers’ emotional states [6]. Rosbank is using this technology in their call cen-
tre, and collects information like changes in voice volume, number of
pauses in speech, conversion time etc. and then converts it into customer
satisfaction metric [7].
Stage 3: Segmenting, Targeting and Positioning
This stage involves extensive consumer research on certain criteria that may
enable marketers to communicate messages very precisely and develop
products according to the targeted customers’ requirements. AI can assist
managers in predicting the customers intent as well as gain more insights
for better recommendation through tailored promotions. For example, mar-
keting firm Adgorithms have a platform named Albert, that was responsible
10 Artificial Intelligence and Machine Learning in Business Management

for 40% of Harley Davidson’s motorbikes sales during 2016. [8]. Despite
certain advantages of AI in segmenting and targeting stage, it can also lead
to discrimination as whom to offer products and services further leading to
unintended illegal price discrimination [9].
Stage 4: Planning Direction, Objectives and Marketing Support
This stage involves development of short-term objectives, long term goals, for-
mulation of future strategies and customer service (Campbell et al., 2020).
AI can assist marketers by integrating chatbots on websites, apps and social
media channels to encourage sales (Wood, 2011). According to Salesforce
(2019) [10] 24% of businesses in the US use AI-aided customer services,
and 54% are looking for ways in which their customer services teams can
use AI. They have also forecasted that the use of AI applications in the cus-
tomer service sector would see 143% growth between 2019 and 2021. In
previous research it was found that the majority of customers prefer talking
to a human over a chatbot, but AI can still provide the back-end support to
the agents. AI can better match the customers with the agents according to
their specialization.
Stage 5: Developing a Product Strategy
This stage involves development and selection of the products to be offered by
the brand involving decisions related to the features, quality, design and
customization of products. Insights on the target customer and positioning
can be used by marketers for developing successful products. In this stage,
AI can assist in customization of the products and assisting in product deliv-
ery and logistics [6]. For example, Samsung is taking AI assistance in
understanding what their existing and potential customers are saying about
them. This helps Samsung in improving their products and appropriately
designing their campaigns [11]. Likewise, Nike is also using AI-enabled
clustering algorithms, and data collected from various geographical loca-
tions through its apps to manage their collection, to enable a concept of
which products should be displayed together to develop.
Stage 6: Developing Pricing Strategy
This stage involves understanding the target customers’ price sensitivity, com-
petitors’ pricing strategies and accordingly deciding on how much to charge
for their offering in order to maximize profits. In this stage AI can assist the
firm in tracking the buying trends and accordingly enabling the dynamic
pricing (e.g., surge pricing) and detecting price related anomalies (e.g., non-
profitable customers, cases of fraud and pricing errors) [12]. For example,
Airbnb employees use AI and ML algorithms to suggest to customers in
settings options what pricing to set for each date by analyzing the data on
seasonal changes, location, special property attributes and local events [13].
Stage 7: Developing Channels and Logistics Strategy
This stage involves developing strategies related to logistics or channels that
include deciding on whole distribution channels, retail channels and direct
distribution channels. AI can help managers in optimizing and predicting
Artificial Intelligence in Marketing 11

the distribution, inventory, store display and layout. For example, Afresh
uses AI‑assisted management of stock and inventory [6], as does Browzzin,
a social commerce app that transforms the posted pictures into shoppable
content [14]. These types of platform technologies enable consumers to take
pictures anywhere and then make these items in the images shoppable.
Stage 8: Developing Marketing Communication and Influence Strategy
In this stage a firm develops a communication strategy in order to create and
enhance the brand’s image in the customers mind by informing them about
their offerings and benefits related to it. AI can help marketers in this stage
by targeting the advertisements to the right customers by analyzing their
search history as well as real-time data obtained from the point of purchase.
Brands with the help of AI can place interactive advertisements in the vid-
eos depending on the content of the videos [15]. For example, LEGO used
interactive advertisements by training and feeding AI systems with the
knowledge of wide range of LEGO product offerings [16].
Stage 9: Planning Metrics and Implementation Control
The final stage involves monitoring the performance metrics of the previous
development stages, identifying the problems and taking corrective actions
in order to increase the efficiency. The most important aspect of this stage is
identifying the anomalies in the metrics and deciding on how to respond to
them. In this stage AI can replace humans as it has the capability to collect
and analyze vast amounts of data obtained from real-time environment sales
as well as available historical data. AI can also be used in assessing the per-
formance of the online features and advertisements and continuously pro-
viding customers with the relevant content [6].

1.6 FUTURE
According to a report by Statista [17], ML and AI are among the most effectual digi-
tal marketing techniques used by the businesses today. In 2016 AI saw an 43% adop-
tion rate which increased to 88% in 2019 as marketers have realized the true potential
of the AI that it helps them to create better solutions for marketing related problems.
AI improves the marketing approach and helps marketers in gaining deeper insights
into their customer’s ideations.
Following are some ways in which AI can disrupt the coming future of marketing:

1. Advertising Networks
With the advent of technology, the size of the electronic devices is getting
smaller with the passing days. On average, a person owns six connected
devices, yet the advertising for that one person on their various screens remains
incompetent. Most of the time users are bombarded with irrelevant disjointed
advertisements across all the screens they are using as accidental taps or clicks
are also taken into consideration. This void in personalization of advertise-
ments can be filled by AI. It has the capacity to anonymously analyze the user
data in order to target the advertisement more accurately and thus increasing
12 Artificial Intelligence and Machine Learning in Business Management

the ROI on advertisements can be increased exponentially. Google is already

using AI fuelled personalized advertisement targeting on its platform.
2. Email Marketing
Businesses can rely on AI for personalized email marketing as it might help
them in analyzing the customer behaviour and their preferences. It can
empower the businesses in making a better connection with their audiences,
and in turn, up their revenues. In its nascent stage, only AI can process and
analyze several thousand customer touch points and effectively predict the best
time of day to send emails. This knowledge, along with personalized content,
can further drive more effective clicks. Potent and effective tools like Boomtrain
and Persado are currently using AI for devising better email marketing cam-
paigns. With the help of supervised ML algorithms can also be used to train the
spam filters in identifying the unwanted mails [18].
3. Content Generation
In the current scenario AI is not in a position to write articles and create web
content without human intervention, but to a certain extent it can still generate
the content for websites to draw visitors. Blank forms and templates are used
for entering the keywords and data in order to generate unique and customer
targeted content with the help of ML algorithms. The content generated
through AI is as impeccable as the professionally generated content. Reputed
polishers like Forbes and Washington Post [19] are using AI powered tools like
Quill and Wordsmith to increase clicks and also generate content for their web-
sites. It shall not be long before the way marketers generate content will change
forever.
4. Content Curation
In addition to content generation, AI can also organize the content according to
customer preferences and then present the customized personalized content to
the customers visiting the website. Amazon does use this technique by giving
recommendations like ‘people who bought xyz also bought abc’. This helps
Amazon in selling more products. AI tools such as List.ly and Curata are being
used by businesses for content curation.
5. Voice Searching
According to Statista, 42% of the worldwide population voice searched the
Internet instead of typing words related to the information they were looking
for. Amazon’s Alexa, Microsoft’s Cortana, Apple’s Siri and Google assistant
has made the use of AI in voice recognition extremely popular. However, there
is still a long way to go as the marketers still need to figure out how to identify
keywords for personalized product recommendations within natural conversa-
tional language.
6. User Experience
In various research studies conducted it has been found that the use of technol-
ogy helps in enhancing the customer experience; for example, AI driven tech-
nologies such as providing recommendations according to the customer’s
location, type of screen being used by the customer, their tastes and demo-
graphics. This can further accentuate customer’s experience while interacting
with the brands. Academic research indicates that if the customer enjoys their
Artificial Intelligence in Marketing 13

experience with the website increases their probability of staying longer on the
website and also increases the conversion rate of browsing into purchases.
Uizard and Mockplus are two of the tools that help business in improving cus-
tomer experience [3,20–30].
7. Web Design
Designing a website easier than ever, and as such empowers small and/or new
businesses with less capital to have their own website and make their presence
felt in the market. This further enables customers to choose as there will be
more players in the market.

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 2 Consumer Insights
through Retail Analytics
Farrah Zeba
Department of Marketing and Strategy, ICFAI Business
School (IBS) Hyderabad, IFHE (deemed-to-be-university),
Telangana

Musarrat Shaheen
Department of Human Resource, ICFAI Business School
(IBS) Hyderabad, IFHE (deemed-to-be-university), Telangana

CONTENTS
2.1 Introduction����������������������������������������������������������������������������������������������������� 15
2.2 What Value Does Analytics Bring to Retail?�������������������������������������������������� 16
2.3 Types of Customer Data Used in Retail Analytics������������������������������������������ 16
2.4 Application of Consumer Data – Retail Analytics������������������������������������������ 17
2.5 Analytics in Retail Industry – How It Works�������������������������������������������������� 18
2.6 Metrics in Retail Industry�������������������������������������������������������������������������������20
2.7 Analytics in Practice in Renowned Retail Organizations������������������������������� 21
2.8 Challenges and Pitfall – Retail Analytics�������������������������������������������������������� 23
2.9 Way Ahead������������������������������������������������������������������������������������������������������ 25
2.10 Discussion Questions�������������������������������������������������������������������������������������� 26
References���������������������������������������������������������������������������������������������������������������� 26

2.1 INTRODUCTION
There is an urban legend, which goes like this: Not long ago, there was a large super-
market chain, which discovered something very unusual in its customers’ buying
patterns. To their utter surprise they found a statistically significant correlation
between two unrelated items: beer and diapers. They could not come to terms with
how an increase in the sales of diapers could lead to a significant increase in the sales
of beer as well. Members of the thinktank at of the chain rattled their heads and after
much deliberation extrapolated that the reason for this strange association was that it
was quite likely that, as it being a Friday night, fathers were stopping off at the retail
chain to buy diapers for their babies, and since they could no longer go down to the
pub on usual Friday night like before parenthood, might be mitigate this by buying

DOI: 10.1201/9781003125129-2 15
16 Artificial Intelligence and Machine Learning in Business Management

beer along with the diapers. As a result of this finding, the supermarket chain had a
‘eureka’ moment and decided to place the diapers next to the beer shelves in the
store. This allegedly resulted in the astronomical increase in both the sales of beer
and diapers [1,2].
This strange beer and diaper association story, for no particular reason, is widely
believed to be from the big retail chain Walmart [2]. Though there are many varia-
tions of this fable, the underlying tenet is that a supermarket discovered that custom-
ers ‘who buy diapers also tend to buy beer’. This insight leads to a very important
question: how did the supermarket determine that such a relationship could exist
between two unrelated products? And the answer is retail analytics. The beer and
diaper correlation, though a legend, arguably heralded the pervasive use of the
customer transactions data of a supermarket to uncover unusual, unknown and quirky
nuggets about customers [3]. Such a correlation is only possible when data-driven
analytics is conducted in retail stores. Consumers’ purchase behaviours are captured
and used to predict future consumer purchases.

2.2 WHAT VALUE DOES ANALYTICS BRING TO RETAIL?

The science of analyzing raw data so as to draw conclusion from mass of information
in the form of trends and metrics is termed as “data analytics”. In practice, data
analytics is an umbrella term that covers divergent aspects of data analysis.
The process of employing analytical tools for analyzing business trends, and
calculating metrics to comprehend retail business decisions is termed as “Retail
Analytics”. Retail is the upcoming business domains for analytics because of its
prolific data and numerous optimization problems such as optimal prices, dis-
counts, recommendations and stock levels which can be solved by deploying ana-
lytical techniques. Especially when the retail industry is facing new challenges
like uncertainty in economy, digital competition, and emergence of customers
being well informed and increasingly demanding. This opens a new opportunity
for retailers who can accurately anticipate the customers’ wants and needs by
offering the right product, in the right place, at the right time and for the right
price.

2.3 TYPES OF CUSTOMER DATA USED IN RETAIL ANALYTICS

“Customer data can be collected in three ways: by directly asking customers, by
indirectly tracking customers, and by appending other sources of customer data to
your own”, said Hanham. “A robust business strategy needs all three”. For simplicity,
the retail consumer data can be categorized in four domains ([4–9]; and [10]).

a) Personal data: This category includes personally identifiable information

such as name, age, gender, address, IP address, browser cookies and others.
b) Engagement data: This type of data encompasses the way consumer interact
with retailer’s physical store visits, its website and mobile apps, also compa-
ny’s social media pages, and other digital footprints of the company.
Consumer Insights through Retail Analytics 17

c) Behavioural data: Under this category data pertaining to consumers’

transactional details, such as buying history, trail and usage information,
repeated purchases and some qualitative data like mouse movement
information.
d) Attitudinal data: This data type is related to consumer metrics of customer
satisfaction, criteria of purchases, product desirability and customer loyalty.

2.4 APPLICATION OF CONSUMER DATA – RETAIL ANALYTICS

There are several ways by which retail companies can use the consumer data that
they collect so as to draw business relevant consumer insights:

i. Enhancing Customer Experience: Consumer data offers an avenue to the

retail organizations to get a better understanding of their customer needs as to
not only meet their customers' expectations. But also gain a competitive advan-
tage by exceeding the customer expectations based on the consumer insight
they gained from retail analytics. For example, by analyzing customer behav-
iour along with reviews and feedback, companies can gain agility in fine tun-
ing their physical as well as digital presence of their goods, or services or
brand to better align the current competitive landscape.
ii. Crafting effective marketing strategy: Data which is contextualized can aid
the retail companies in extrapolating how their consumers are engaging as well
as responding to their marketing campaigns, and thus in the process that will
be able to personalize the marketing strategy as per the target market needs.
The predictive power of retail analytics can empower the retail firms for the
effectiveness of the current marketing strategies in meeting not only present
needs of the consumers, but also be ready for all possible future needs of their
current as well as potential consumers.
iii. Transformation of data into cash flow: Increasingly, companies who are
using retail analytics to make their business decisions are the ones turning out
to be more profitable that those who do not. Consequently, data service provid-
ers who deal in buying and selling information on customers are tremendous
boost in their business operations. Thus, the businesses that capture large
amounts of data, transforms it into valuable consumer insights and then sell it
represent opportunities for new revenue streams.
iv. Securing More Data: In this case consumer data is often used as a means
of securing information which are highly sensitive in nature. For instance,
increasingly most of the retail banks are using cutting edge technology like
voice recognition data to authorize a user to access their financial informa-
tion so as to safeguard them for fraudulent attempts to steal their sensitive
information. Thus, with growing sophistication in data capture and analyt-
ics technologies, the retail organizations will have to up their game by
finding novel and comparatively more effective ways to collect and con-
textualize data on each and every interaction point with their customers
(Table 2.1).
18 Artificial Intelligence and Machine Learning in Business Management

TABLE 2.1
Data Privacy and Retail Analytics
As per DW, the Supreme Court in 2017 reiterated that the Indian constitution guarantee a fundamental
right to privacy for every citizen. Thus, the Indian government is to introduce Personal Data
Protection (PDP) legislation. The bill is expected to materialize and become functional by early 2021.
“The draft PDP law was based broadly on the same principles as the European Union's General Data
Protection Regulation (GDPR)”, said Anirudh Burman, associate fellow at the Carnegie Endowment
for International Peace India in New Delhi. Thus, it is insistent that retail analysts adhere to these
principles which comprise of protective laws for storing consumer data, asking for the user’s consent
before using private information, periodic audits for companies and rules for reporting breaches.
Further the retail analyst should also be cognizant about the fact that, the PDP also includes setting
up a Data Privacy Authority (DPA) to “maintain, monitor frameworks, firms and penalties to
companies”.

Source: MFD (n.d.)

2.5 ANALYTICS IN RETAIL INDUSTRY – HOW IT WORKS

It has been seen that retailers who have knowledge of customers make analytically
smarter strategic decisions about their investments in the area of merchandising and
inventory management (Anonymous, n.d.). Analytics also enabled them to imple-
ment these organizational-level strategies in individual-level offers. Rakesh Biyani,
CEO (retail), Future Group concurred, “Retail analytics are very important to ensure
the ‘right product, at the right time in the right store’. We have used retail analytics
to optimize our supply chain as well.” [11]. The aim for ‘sweet spot’ where customer
behaviour unites with what the retailer and its suppliers need to accomplish. Prior to
opening a Shoppers Stop store at South City Mall in Kolkata, this company also
identified this ‘sweet spot’ by studying the buying patterns of ‘First Citizens’ resid-
ing in South Kolkata and shopping at the Elgin Road Forum store. It indicated that
these customers who have these memberships were among those who shop for acces-
sories more frequently that other apparel. Based on this insight, Shoppers Stop dedi-
cated a much larger space to the beauty section at the new store. Bhatia also added,
“To target better, we have also classified our database into segments – value, pre-
mium and bridge-to-luxury shoppers (BTL), and groups based on cultural and occu-
pational affinity.” [11]. However, selecting the right analytics for the business
problem is becoming a problem in itself. Analytics marketplace is teeming with ven-
dors with extensive paraphernalia to confuse retailers with similar sounding solu-
tions. Prudent retailers should be cognizant of practical and significant differences in
employing analytic techniques, providing variants of insights and resulting in spe-
cific business benefits. It is a known fact that ‘one-size-for-all’ doesn’t fit for all types
of business requirements. For an analytics investment to yield substantial return it is
quintessential to deploy the right technique that had been selected to accomplish the
business goals (refer to Table 2.2).
In essence, it is now apparent that most of the competitive retailers are increasing
response rates and revenues, by using models driven by retail analytics to figure out
timely, customized and relevant offers to customers. Analytics provide a scientific
Consumer Insights through Retail Analytics 19

TABLE 2.2
Analytics Techniques According to the Business Objectives and Purpose
Analytics
Techniques Works For Suitable For Benefits
Collaborating Infer customer behaviour For the purchase Facilitates limited
Filtering on the basis of behaviours of the differentiation when no
similarities, for instance first-time customers. historical data on
people who bought A customer purchase
and B together. behaviour is available.
Clustering Group customers on the Creating broad customer Facilitates data driven
Algorithms basis of their similar segments for customer differentiation at
historical behaviour promotional a large scale to guide or
pattern. programmes and justify business
strategic planning. investments in store
design, merchandising
and others.
Helps in generalizing lifts
response rates over
traditional query-based
segmentation.
Regression The future behaviours on Prediction of customer Allows predicting response
Models the basis of identified behaviours and allow rates (with the double
customer attributes. designing marketing and effects) and enhances
personalized treatment. conversion rate.
Time-to- The time when specific Predicting the time period Enhances response rate and
Event customer behaviour is when customers are enables strategy.
Models likely to occur. most likely to buy. development for boost in
sales by predicting best
time of sales.
Uplift The particular behaviours Determining the Cost-benefit analysis for
Models or actions of retailers worthiness of the the retailers. Helps in
which is likely to bring investment for a avoiding offers and
a change in the particular action. discounts on products
forecasted customer which the customer will
behaviour. buy anyway.
Decision Mathematical mapping of Improves and helps in the Helps in selecting the best
Models the numerous predictive complex decisions. offers, while keeping in
models’ outcomes with Also, captures key view all retailers and
the other decision- results drivers including suppliers’ objectives, for
making elements such constraints for use with each customer.
as a range of possible an optimization engine.
retailers’ actions and
customer responses.

means of realizing the long-standing exhortation of customer-centricity. As such, it

equips retailers to cater to unique preferences of each customer based on insights into
their desires, preferences and future behaviours. Having said that, the next big ques-
tion is whether there are rules of thumb for analytics in retail. The answer: Not
exactly! Nevertheless, there exist a few critical steps, such as those outlined by
experts in three retail analytics: studying customer’s attitudes and behaviours,
20 Artificial Intelligence and Machine Learning in Business Management

analysis of transactional data and predictive modelling [12]. In the first instance,
retailers try to track several parameters of their premium customers including their
locations, lifestyle, socio-economic background and age. Secondly, transactional
data sheds light on areas such as layout planning and shelf placement proximities to
home in on the right location of merchandise to maximize sales. The third area is
probably the toughest and yet extremely critical – predictive modelling. Using this,
retailers could get an idea of how customers’ upgrade their purchase behaviour, cat-
egories they might be interested in the future as per changes in lifestyle. It also will
help them taking up decisions to set up future stores on the bias of the future lifestyle
of consumers in a catchment area.

2.6 METRICS IN RETAIL INDUSTRY

There exists several metrics to measure the sale effectiveness of the retail store which
indirectly perform as indicators to consumer foot falls [13]. Some of the popular
metrics are:

a) Customer Traffic: The number of customers visiting the store, irrespective of

whether they are purchasing or not. That the increased number of potential
customers allows retailers to predict that at least few will purchase some goods.
Also, footfall is a sign that people are interested in the items you have in your
store. The number of customers is the only metric which retailers can grow
indefinitely.
b) Retail Conversion Rate: But not all the customer who visits the store do a
purchase. One need to identify and target the customers who have pur-
chases an item from the store. This is called customer conversion ratio.
Conversion ratio largely depends on the type of retail goods one is han-
dling. According to surveys of Retail Industry the average conversion rate
for e-commerce sites is about 2%–3%. The formula to calculate customer
conversion ratio is:
#Customer conversion ratio = No of transactions/Customer traffic × 100
c) Average Sale: Average sale is nothing but the Average purchase value. That is
what amount of money in terms of rupees, dollars, pound, yen or euros on an
average a customer has spent in the store. Further is there is increase or
decrease in the amount spent. The formula to calculate average sales order
value is:
#Average sales order value = Total sales value/Number of transactions
d) Items per purchase: This is the size of an average shopping cart. That is how
many items (relative to price) on average customers are buying. That is if the
number of items bought by customer is more, but the sale value is less than it
means people are buying economically cheap items. You need to check this to
have a reasonable high sales value. Retailers can aim for more items in a shop-
ping cart with two equals three (2=3) marketing campaigns.
e) Gross margin (GM): This is the sales profit before costs. GM is the difference
between total revenue generated and the cost incurred to source the items. GM
can be calculated by deducting costs of goods from its selling price. In general,
Consumer Insights through Retail Analytics 21

the rule of thumb is to always keep the GM high enough so that one has plenty
of room to cut back when required. The formula is:

#Product price when sold = Product acquiring or making price + Gross

margin

2.7 ANALYTICS IN PRACTICE IN RENOWNED RETAIL

ORGANIZATIONS
Whether the correlation between purchase of diapers and beers was indeed a parable
or not remains debatable. But what is of significance is that not far from Walmart and
the likes, there is a growing trend of new-age Indian retailers, who are orchestrating
real success stories in the world of analytics. Analytics is changing the rules of the
game, playing a critical role in the retail business in India by furnishing retailers with
valuable insights to decide on aspects like store location, assortment of merchandise,
customer segments and loyalty programmes, communication strategies and even
reducing cannibalization of own store [14]. For instance, an internal programme of
Shoppers Stop called ‘First Insight’, which leverages its ‘First Citizen’ loyalty
database, was driven by analytics. It reflected the actual buying behaviour of the
Indian consumer based on a nine-year historical track of every stock keeping unit
(SKU), that each First Citizen consumer ever bought from there retail chain. As,
Vinay Bhatia, VP – marketing & loyalty, Shoppers Stop, who also manages the
analytics team, explained, “To benefit from this data we work on models such as
analysis of buying behaviour to support merchandise planning” [15].
The success of these endeavours of Shoppers Stop was quite evident in the
delightful experience of Ms. Suchitra, a regular Shoppers Stop customer, at one of its
Mumbai outlets. As reported by ET Bureau:

Suchitra and her friends are among the regulars at the Shoppers Stop store at
Inorbit Mall, Mumbai. More often than not, during her shopping jaunts, if she
opted for an ethnic ensemble, she’d make the trip upstairs to the first floor, to
pick out a pair of shoes to go with it. One day, as she was walking the store,
she was quite surprised to find that the footwear section had been moved to the
level below, right next to the Indian wear section. Though she had not decided
to purchase anything on that day, but due to pleasant placement she ended up
buying. Ethnic wear, shoes; this works.
[15]

The experts in their e-paper for Times of India revealed that by employing analytics,
long before, Shoppers Stop predicted the behaviour of Suchitra and other customers
like her. They illustrated this as:

To Suchitra, it seemed just a coincidence that the footwear section happened

to have been moved just where she wanted it. But coincidence, it wasn’t.
Rather, this move which is an example of an adjacency analysis conducted
by Shoppers Stop, which after sifting through 24 months of customer data;
22 Artificial Intelligence and Machine Learning in Business Management

found a pattern wherein it was found that women who buy ethnic wear (sal-
war-kameez-dupatta) tended to buy footwear as well. Based on this insight,
Shoppers Stop moved its footwear section from the first floor to the ground
floor where the ethnic wear section was located. Soon enough it found that this
translated into a 25% growth in sales.
[15]

Analytics-backed business orientation took the centre stage once in a press confer-
ence held in Bangalore at the Ritz Carlton, where Rakesh Biyani, joint Managing
Director of Future Group, India’s largest retailer, along with Atul Jalan, CEO
Manthan, the world’s leading player in analytics for the consumer industry, joyfully
shared their fruitful 10 months partnership of retail and analytics [11]. Rakesh Biyani
emphasized the importance of the inevitable alliance of retail and analytics through
this futuristic statement, he commented:

We knew every customer need was unique and we had opportunities to fine-
tune our business planning and execution. With the hyper-localized views of
customer demand that Manthan’s analytics provides, we will be able to tailor
assortments, inventory, replenishment, marketing promotions, store engage-
ment to meet the unique needs of markets and stores. By making decisions
faster and more precise, and our execution more efficient, we believe it has
the potential to realize a 7%–9% reduction in out of stocks, recover an average
5%–7% in lost sales, and achieve 10%–12% reduction in churn. All of this
would not be possible without the ability to spot and act on analytics-driven
opportunities.
[11]

Future Group tie-up with Manthan’s analytics enabled the retailer, the real-time and
actionable information in over 370 stores across 166 cities nationwide by tracking
more than 10 million customer transactions in a month of 13,000 product brands in a
network 3,000 suppliers. Further, activities of over 25 million loyal customers and
their transactions were tracked in data warehouse of Manthan’s analytics [11]. Future
Group had rolled out analytics to all decision makers across its business divisions.
Atul Jalan, CEO at Manthan said:

Making analytics-driven competencies a reality was a tremendous opportunity

for Indian retailers today. Future Group had a head start in this direction, and
some of the business results they saw in this partnership were simply outstand-
ing. Manthan’s 12-year endeavour had been focused on simplifying the sophis-
ticated technologies and statistical sciences needed in understanding customer
behaviour and realizing its potential in easy-to-use, business friendly analytical
applications.
[11]

To explain simply what retail analytics could do, and to enhance the relationship
between retailer and its customer, Rakesh Biyani, (Founder and CEO of Future
Consumer Insights through Retail Analytics 23

Group) added, “Without analytics, forecasting and tracking down consumer behav-
iour, it’s not going to be possible to run a business which keeps growing on efficiency
terms”. [16]. The founder of a retail analytics firm which works for Future Group,
Atul Jalan, commented that, “With analytics, I can at least come to you and say I see
you come here and thank you. That you buy atta, daal and chawal from us. How
come you haven't bought this from us?” Future Group is the first Indian and one of
the top 20 customers of Manthan to join with the stalwarts such as e-commerce com-
pany eBay and another dozen or so Fortune 100 companies [16].
Unlike Shoppers Stop and Future Group, most of the retailers are lagging behind
by not giving due importance to analytics as a tool, likely to be used by them in
expanding their network in the coming retail scenario. Consequently, instead of
doing a scientific assessment of the catchment areas, they end up in the rat race of
mindless retail expansion spree. As, prudently explicated by Pankaj Mishra, head
of Consumer Insight and Consumer Intelligence, Spencer’s Retail:

In our future expansion, we would do more of primary research to under-

stand market potential value of the catchment areas. Such analysis helps us in
deciding where to open, which format to go for and how many stores to open.
Consumption expenditure analysis, category-wise analysis, market potential
value analysis was also some of the research exercises undertaken before a
robust expansion strategy was drawn up.
[11]

In similar lines, Kishore Biyani advocated for monitoring demand rate at stores,
which made the group to push sales in many cases by up to 300%. He further added,
“Close monitoring on point-of-sales data coupled with quicker review of the reorder
points helped us achieve a new level of consistent sales. Analytics is also playing a
more important role in future store planning.” [11]. On June 2015, as stated in Forbes,
true to his past feats for a keen eye for consumer insight through the knowledge of
each and every customer of his stores, he revealed that his strategic thrust is to
transform Future Group (one of the largest conglomerates) from just a retail company
to an empowered analytics company. Please refer to Figure 2.1 for different types of
customer analytics [17].
Different types of customer analytics [17] is given in Figure 2.1.

2.8 CHALLENGES AND PITFALL – RETAIL ANALYTICS

In the face of exuberance all around, Himanshu Chakrawarti, COO, Landmark Retail
remarked that usage of analytics is still at its infancy. He further added, “Analytics in
Indian retail is still largely limited to studying consumers and transactions.” [11]. In
contrast, sectors like banking in India have matured more in using analytics and even
using predictive modelling. But it is heartening that Indian retailers now understand
the importance of analytics and are investing significantly in it. Landmark, the book-
store retail chain catering to music and gifts under the conglomerate Tata Group, too
has set up an internal analytics teams which are trying to understand issues like
cannibalization when opening new stores, identifying ideal locations depending on
24 Artificial Intelligence and Machine Learning in Business Management

Types of Retail Analytics

Customer Analytics Merchandising Planning

• Acquisition of customers Store Localising Marketing

• Retention of customers Analytics
• Loyalty of Consumers
• Behavioural Segmentation Market Basket Analysis

Multi-channel

Supply Chain and Demand

Marketing Analytics
Analytics
• Market Basket Analysis
Inventory Analysis
• Multi-channel Campaigns
• Marketing Mix Replenishment
• Branding Analysis

FIGURE 2.1 Analytical Solutions in Retail Industry.

the address of its regular customers, pinning down consumers who might drop out
due to changes in buying habits and come up with solutions which will facilitates
with offers and changes in merchandise.
The challenge is more for conglomerates like Future Group, who, with their recent
acquisition of retail business of Bharti Retail, are planning astronomical targets of
achieving at least Rs 1 lakh sales from its one-crore-customers. Biyani sought to push
his company in the directions of traditional international retailing giants like Target
(American) and Tesco (UK). The game changer is employing retail analytics to
predict consumer wants even before they themselves realize. His growing appetite
for knowing customer inside and out is apparent in the following illustration of one
of his customers a 38-year-old Chandrakant Dhawan (name changed):

Every month, Dhawan and his family visit the Big Bazaar outlet in Mumbai’s
Vile Parle to stock up on groceries and other household commodities. During
the festive season, his shopping basket includes a few gifts, and at the start of
the academic year, he buys stationery for his children. In all, he spends about
Rs 60,000 a year at Big Bazaar, which is owned by the Future Group. Biyani,
however, is not satisfied with Dhawan’s spends. He wants more.
[18]

Customer analytics is like a trump card. He said he wants to use this trump card to
reach an exponential growth in the coming years through a turnover of near about to
1,000 billion to which he added, “Unlike in the past, when we were chasing mindless
growth, what we want now is profitable growth. We will not grow through debt, but
through cash flows.” [19].
But to apply data science by churning crores of customer records, and then fore-
casting their behaviour is indeed no mean feat. This unfolds more of hindrances than
Consumer Insights through Retail Analytics 25

solutions, as comprehended by Jayadevan PK, ET Bureau, “Future Group’s stores

such as Food Bazaar, Big Bazaar, Home Town and Nilgiris see some 300 million
footfalls every year and the company has a database of three-crore people who are on
its loyalty programme [23,24,25]. It wants to expand this database to include
­seventy-eight-crore customers and use analytics to sell more to them” [12].

2.9 WAY AHEAD
The retail industry had undergone drastic change over the last couple of decades, and
its projected global market size is estimated to be $20,002 billion USD by 2017. The
rapid market growth is continuing but is hindered by thin margins and a hypercom-
petitive environment. Highly informed and digitally savvy customers are seeking a
more personalized shopping experience. This has also added to the pressure. Retailers
need to sift from handling simple predictable demands to varied and unique tastes by
churning terabytes of data to be able to apprehend customers’ requirements more
precisely [20]. Further, to induce today’s post-recession reluctant consumer to spend
dollars require retailers to forge relationship based on engagement, personalization
and relevancy. As a result, retail analytics is highly critical in helping retailers in
effectively collecting, analyzing and acting on both customer and organization data
in real time across all the channels they function in. With the acknowledgement of
retail analytics as an effective tool to increase customers’ share of wallet, acquiring a
higher margin, increasing cross sales and reducing wasteful investments, majority of
the retailers are still struggling to figure out the suitability of various analytical
approaches. As such, they are witnessing several bottlenecks like overwhelmingly
large number of options; inefficiency in digesting all the data fetched by multitude
point-of-sales systems, online portals and internal transaction processes [21]. Like
trajectory of retail growth, application of analytics is also likely to undergo its own
learning curve.
However, retailers like Spencer’s are scaling this learning curve with a fervent
thrust on analytics by using data analysis to improve sales in some of its underper-
forming stores. It is studying customer lapses, regular customers and occasional cus-
tomers, to understand the real pain points of the stores, and the purchase drivers of
consumers in catchment areas of their ailing stores. “From the research, we could
draw up turnaround strategies for the stores and have seen a success rate of almost
98%”, claimed Mishra [15]. For Spencer’s, it is studying underperforming stores, but
for Shoppers Stop it is about segmenting their 1.5 million First Citizen members to
identify store promotions and buyers of luxury product, and then inducing them for
repeat purchases. As Bhatia said:

The BTL and luxury segment is growing at over 60% and the frequency of
these customers’ visits is significantly higher than normal customers — about
three times the industry benchmark. So, rather than communicating to the
entire base of First Citizen members for a BTL brand communication, we now
target offers, schemes and new launches to this segment.
[15]
26 Artificial Intelligence and Machine Learning in Business Management

To make the learning curve smooth for the retailers, retail analytics consultant com-
panies like Openbravo are quite upbeat as well, as Sunando Banerjee, Channel
Business Manager for Asia Pacific & Middle East excitedly explained:

We view India as an important market with unlimited opportunities for growth,

especially in the retail segment which was projected to grow to $792.84 billion
by the end of 2017. India is the fifth largest retail destination globally. We are
excited to offer our complete commerce solution, which enables our customers
to maintain their competitiveness in this retail wave. Our breakthrough solu-
tions will enable their business to be truly agile. It will help our customers
effectively adapt to rapidly changing business challenges.
[22]

But the real challenge is not to have a team to run analytics solutions, but as compre-
hended by Devangshu Dutta, CEO of retail consultancy Third Eyesight, that imple-
menting these solutions is the real challenge, “What is harder is getting the
organization to react to the insights. If there is a short-term opportunity, but the
retailer is unable to source the goods from the supplier, it is as good as not having
thedata” [18].

2.10 DISCUSSION QUESTIONS
1. What value does analytics bring to retail?
2. How to zero in on actionable consumer insights?
3. Which retail analytics should be matched to which specific retail scenario?
4. What are the challenges encountered by Indian retailers in the analytics?

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5-essential-metrics/
 3 Multi-Agent Paradigm
for B2C E-Commerce
Bireshwar Dass Mazumdar
Department of CSE, IERT Allahabad, India

Shubhagata Roy
Department of Operations & IT, IBS Hyderabad, India

CONTENTS
3.1 Business Perspective��������������������������������������������������������������������������������������� 29
3.1.1 Negotiation������������������������������������������������������������������������������������������� 29
3.1.1.1 Types of Agent-to-Agent Negotiations��������������������������������� 30
3.1.1.2 Negotiation Strategies����������������������������������������������������������� 31
3.1.1.3 Negotiation Types�����������������������������������������������������������������32
3.1.2 Customer Relationship Management (CRM) and Customer
Orientation (CO)���������������������������������������������������������������������������������� 33
3.1.3 Broker and Brokering��������������������������������������������������������������������������34
3.1.4 Business Model������������������������������������������������������������������������������������ 35
3.2 Computational Perspective������������������������������������������������������������������������������ 36
3.2.1 Multi-Agent System����������������������������������������������������������������������������� 37
3.2.1.1 Agent: Definition and Characteristics����������������������������������� 37
3.2.1.2 Multi-agent Systems: Salient Features���������������������������������� 38
3.2.2 Cognitive and Social Parameters��������������������������������������������������������� 39
3.2.3 MAS Communication�������������������������������������������������������������������������� 41
3.2.4 Foundation for Intelligent Physical Agents (FIPA)������������������������������ 42
3.3 Machine Learning: Functions and Methods���������������������������������������������������� 45
3.3.1 Supervised and Unsupervised Learning����������������������������������������������� 45
3.3.2 Decision Tree (DT)������������������������������������������������������������������������������ 46
3.3.3 Neural Network������������������������������������������������������������������������������������ 46
3.3.4 Sensitivity Analysis (SA)��������������������������������������������������������������������� 47
3.3.5 Feature Selection���������������������������������������������������������������������������������� 47
3.4 Conclusion������������������������������������������������������������������������������������������������������48
References���������������������������������������������������������������������������������������������������������������� 48

3.1 BUSINESS PERSPECTIVE
3.1.1 Negotiation
A regular form of contact between agents with different goals is referred to
as negotiation. Negotiation is a method by which two or more agents, each aim-
ing to achieve an individual target or purpose, achieve a collective agreement.
DOI: 10.1201/9781003125129-3 29
Discovering Diverse Content Through
Random Scribd Documents
 Mr. Liebeler. The weekend of November 8, 9, and 10 was a long
weekend, was it not?
Mr. Paine. He was there then. I remember we didn't have a long
weekend, Bell didn't. He had another day to sit in front of the TV.
Mr. Liebeler. Was that the last weekend that you saw him then?
Mr. Paine. If that is the one prior, two weekends, yes.
Mr. Liebeler. Now, starting at November 8, 9, and 10, which was
the last time you saw him, consider when your wife showed you the
draft of the letter that we spoke of just before. Would it have been
that weekend or after that?
Mr. Paine. Well, I suppose it would be after that. They weren't in
the house when she showed it to me or at least he wasn't. I don't
remember when he wrote that letter or when we moved the
furniture.
Mr. Liebeler. You don't remember whether you saw Oswald after
you read the letter or not?
Mr. Paine. That is a good question, I can see some point to it
now. One would surmise that, and I would think it reasonable that I
would have looked at him with somewhat different point of view
after having read the letter, and I don't remember looking at him
with that different point of view, so quite possibly I didn't see him
again.
Mr. Liebeler. So we would—the conclusion would be suggested
that she showed you the letter sometime after November 8 or 9,
1963?
Mr. Paine. Yes; yes, I would guess that she, as I say, I would
come to a dinner when he was not there on either of the Tuesday or
the Wednesday and that would have been a reasonable time that
she would have shown me the letter.
Mr. Liebeler. Did you have a discussion with her about this
subject of his having gone to Mexico which was discussed in the
letter, was it not?
Mr. Paine. She thought it was a fabrication, a complete
fabrication. And she did not discuss, she gave me the letter, and as I
say I was reading some other magazine and I read the letter and
went back to my magazine. How dense people can be. But
anyway——
Mr. Liebeler. Did she——
Mr. Paine. So we did not talk about it until later, then she took the
letter back and put it in an envelope or something, she didn't want
me to see it. She was sort of irked that I didn't.
Mr. Liebeler. Look at it when she wanted you to look at it?
Mr. Paine. Pay more attention to this thing, yes. But she didn't
want me to see it again. "If you didn't see anything in it never mind
looking at it."
Mr. Liebeler. Did she tell you about any discussions she had with
Marina Oswald about Oswald's having been in Mexico?
Mr. Paine. I was under the impression that Ruth didn't know he
had been in Mexico until after the assassination and, therefore, and I
think Ruth later said, was dismayed also that Marina had been
apparently, had apparently known and deceived her in this matter.
Mr. Liebeler. Well, did Ruth mention the fact that Marina had a
little charm made out of Mexican peso.
Mr. Paine. Yes; but we didn't put that two and two together there
until the FBI came and we looked on our drill press to see if they
had used the tools in the shop to mount the sights on the gun and
we found these little metal filings and then Ruth remembered that
he had drilled out a coin to give to Marina and she never—I can't
remember whether she realized then that it was a peso or Ruth
hadn't thought that much about it until afterward.
Mr. Liebeler. And you didn't discuss that subject prior to the
assassination, with your wife?
 Mr. Paine. I didn't know about this whole thing, this medallion.
Mr. Liebeler. Did your wife mention the fact that Marina Oswald
had a record of Mexican music?
Mr. Paine. No; I didn't know that until now. I don't recall it.
Mr. Liebeler. Did your wife tell you anything about the nature of
her relationship with Marina Oswald during this period from the first
of October up to the assassination?
Mr. Paine. It all seemed perfectly reasonable to me. When Ruth
had met Marina back in the spring, I had seen that Marina Oswald—
when I met them in their apartment, Oswald had spoken very loudly
and harshly to Marina, and I thought to myself, isn't it amazing to
see a little fellow who insists on wearing the pants, strongly. And
then later on in discussions which followed the discussion which
followed, that evening at the house, our house, he would not let her
have a contrary opinion, and I also saw she was allergic to gibes,
and he would gibe frequently.
Mr. Liebeler. She was allergic to them?
Mr. Paine. It seemed to me so.
Mr. Liebeler. They affected her greatly?
Mr. Paine. Yes. This all went on in Russian, and I don't know what
he was saying. But I could see the object about which the statement
was made, and later Ruth also told me some of the things that he
had said.
But I felt that he was keeping her a vassal, and since I was more
eager to hear her opinions of Russia than his opinions of Russia, I
was eager that she should learn English, and when—Ruth told me
that Marina thought she must have to go back to the Soviet Union,
and I thought out of largesse of this country it should be possible for
her to stay here if she wanted to stay here and she quite apparently
did, she struck me as a somewhat apolitical person and yet true,
just, and conscientious, so it was agreeable to me to look forward to
financing her stay until she could make her own way here.
 It added—Ruth also wanted to learn Russian, this was a cheap
way for her to learn Russian, than to pay tutoring. And, as it
happened, it was costing me less. She didn't go out shopping so
much.
Mr. Liebeler. When she was home learning Russian from Marina?
Mr. Paine. When Marina was there to keep her company. She
would go mad with boredom, I would think. So that it—we were
somewhat saddened, or I think Ruth was, I think we shared—Ruth,
of course, didn't want to stand in the way of Marina and Lee if they
were happy together, but would have been glad to see Marina break
away and make her own way. And she was a nice companion for
Ruth.
Mr. Liebeler. Did you have any impression of how Marina and
Ruth got along together, what they did with their time during the
day, that sort of thing?
(Discussion off the record.)
Mr. Liebeler. Mr. Paine, you mentioned before these curtain rods
that were in your garage. Can you tell us approximately how many
curtain rods there were in the garage when you last saw them and
tell us when you last saw them?
Mr. Paine. I saw them quite recently, 2 weeks ago.
Mr. Liebeler. How many curtain rods were there then?
Mr. Paine. There might be as many as four.
Mr. Liebeler. Were there ever any more than that?
Mr. Paine. I don't believe so. These were normally up on the shelf
above the bench, and for some reason, they recently, I had to take
them down, or something like that.
Mr. Liebeler. Do you remember seeing them shortly before
November 22 at any time?
 Mr. Paine. They never particularly impressed themselves on my
recollection.
Mr. Liebeler. Those are all the questions I have.
 TESTIMONY OF RAYMOND
FRANKLIN KRYSTINIK
The testimony of Raymond Franklin Krystinik was taken at 9
a.m., on March 24, 1964, in the office of the U.S. attorney, 301 Post
Office Building, Bryan and Ervay Streets, Dallas, Tex., by Messrs.
Albert E. Jenner, Jr. and Wesley J. Liebeler, assistant counsel of the
President's Commission.

Mr. Liebeler. Will you rise and raise your right hand? Do you
solemnly swear that the testimony you are about to give will be the
truth, the whole truth, and nothing but the truth, so help you God?
Mr. Krystinik. I do.
Mr. Liebeler. Mr. Krystinik, I am a member of the legal staff of the
President's Commission which has been established pursuant to
Executive Order 11130, dated November 29, 1963.
Last week Mr. Rankin sent you a letter and told you that I would
be in touch with you, did he not?
Mr. Krystinik. Yes.
Mr. Liebeler. Enclosed with that letter were copies of the
Executive Order 11130, and a copy of the Joint Resolution of
Congress 137, and the rules of the Commission's procedure in taking
the testimony.
Mr. Krystinik. Yes, sir.
Mr. Liebeler. You received those documents?
 Mr. Krystinik. Yes.
Mr. Liebeler. The general nature of our inquiry is to ascertain,
evaluate and report upon the facts relating to the assassination of
President Kennedy and the subsequent violent death of Lee Harvey
Oswald.
We wish to inquire of you as to your knowledge of Oswald as a
result of your having met him, as we understand it, through Michael
Paine prior to the assassination. We also want to question you about
some of the events that occurred shortly after the assassination, and
some conversation you had with Mr. Paine at that time.
Would you state your name for the record?
Mr. Krystinik. Raymond Franklin Krystinik.
Mr. Liebeler. Where do you live?
Mr. Krystinik. 2121 Greenway Street, Arlington, Tex.
Mr. Liebeler. Where do you work?
Mr. Krystinik. Bell Helicopter Research Laboratory, located at
33006 Avenue E, East, Arlington, Tex. It is a part of Bell Helicopter
Co. Their address is Box 482, Fort Worth, Tex.
Mr. Liebeler. How long have you worked for Bell?
Mr. Krystinik. Since June 6, 1960.
Mr. Liebeler. Would you tell us briefly what your educational
background is, Mr. Krystinik?
Mr. Krystinik. I started grade school in Caldwell, Tex. I moved to
Bryan and finished grade school in the Smetana School at Bryan,
Tex. And from there to Fredericksburg. At Fredericksburg I went to
St. Mary's Catholic School and grade school, and from
Fredericksburg to Grand Prairie, Tex. I went to high school in Grand
Prairie, Tex. Graduated in 1950.
I went to work for Chance Vought Aircraft Aviation from high
school. Went into the Navy in 1952, I believe. I don't remember
exactly. I have to look it up. I was married in 1954. Got out of the
Navy in August of 1954. Started to school at Arlington State College
in September of 1954, and I graduated from Arlington State in June
of 1956.
Went to Texas A&M, I think starting in January of 1957. I
graduated from Texas A&M in June of 1960. On June 6, I went to
work for Bell Helicopter. These are just approximate dates. I think
they are just about right, but I am not right sure. If you need it, I
can give you the exact dates.
Mr. Liebeler. This is all right. What kind of work do you do for Bell
Helicopter?
Mr. Krystinik. I am a research engineer. I work in the research
group.
Mr. Liebeler. Your work relates to helicopters and their design?
Mr. Krystinik. Actually right now; no. Right now, I am working on
what I think the company could classify as a flying machine. Is that
adequate?
Mr. Liebeler. Yes. When were you born?
Mr. Krystinik. August 31, 1932.
Mr. Liebeler. Are you presently married?
Mr. Krystinik. Yes, sir.
Mr. Liebeler. Do you have any children?
Mr. Krystinik. Yes; I have three.
Mr. Liebeler. Do you know Michael Paine?
Mr. Krystinik. Yes; I do.
Mr. Liebeler. When did you meet him, approximately? And under
what circumstances?
Mr. Krystinik. Approximately in June of 1961, if I remember
correctly. I was assigned to the research group on a temporary
assignment, and at the research laboratory I met Michael and
worked with him then off and on up through now.
Mr. Liebeler. You are working with him now?
Mr. Krystinik. Yes.
Mr. Liebeler. Did there come a time when you met Lee Harvey
Oswald?
Mr. Krystinik. Yes; I did.
Mr. Liebeler. Would you tell us about that?
Mr. Krystinik. I went to a meeting of the American Civil Liberties
Union on the campus of SMU. I don't remember the date, except I
do remember it was the night after Mr. Stevenson's unhappy visit to
Dallas when the lady, I believe, swatted him with a placard.
Mr. Liebeler. That was sometime in October of 1963?
Mr. Krystinik. Yes; it was October of 1963. Oswald was at the
meeting, and Michael introduced me to him. He had told me about
the man before.
Mr. Liebeler. What had Michael Paine told you about Oswald?
Mr. Krystinik. I mean told me that at the time there was a
Russian lady living with his wife Ruth and that just exactly, I can't
remember his exact words, but there was this fellow who was an ex-
Marine who had defected to Russia. I can remember that he told me
that, that he defected to Russia, and the fellow decided it wasn't for
him and he came back to the United States. And was, in general, a
misfit and not capable of holding a good job; generally dissatisfied,
and didn't accept the responsibilities for his family, and Michael's
wife had taken Marina to help her for the time being.
That was the reference made to him prior to having met him.
Mr. Liebeler. To the best of your recollection, is that all Michael
Paine told you about Oswald?
 Mr. Krystinik. At that particular time we discussed him—during
that period of time Michael was eating supper with us on an average
of once a week, and we discussed the man as being odd, or at least
a little different. Michael said he couldn't understand the man
exactly. He commented that he shirked or ran from responsibilities.
As long as he had money and had a job, he was willing to stay
around his family and support them, but when he lost a job and
didn't have the money, he apparently took off. I can remember him
telling me that about him, and when I met him at Selecman Hall, I
didn't feel overly happy to meet the man, or that I had made an
acquaintance of value.
They were there before my wife and I came. As we walked in
and sat down, Oswald was there, and it didn't occur to me then that
he might be the man. Prior to the meeting starting, he introduced
me to him.
Michael, I am referring to—Michael introduced me. I need to
keep my chain more correct, straight. Michael introduced me to Lee
Oswald. As the meeting started, about that time—before the
meeting first there was a little bit of talk. I don't remember what the
chairman of the meeting said prior to the film starting.
They showed a film about a Senator or Congressman or
legislator, some form of public servant who was running for
reelection in Washington State, and the far right people wanted him
out in a campaign, stating that his wife had connections with the
Communist Party, and apparently she had had connections during
her college days but had severed relations with the party and had
given evidence to the FBI and an investigating team and apparently
was clean at the time, or had no connection with the party at the
time. And they showed in a film how the far right or an extremist
movement could greatly damage a citizen that was of value to the
United States. That was the essence of the film.
After the film there was discussion about the Civil Liberties and
about the film in general and about the movement in the South and
the integration movement and the talk concerning General Walker.
The first notice I made of Oswald is when he stood up and made a
remark about General Walker in reference to him not only being
anti-Catholic but anti-Semitic in regard to his comments about the
Pope. Then he made further comments that a night or two nights
before he had been at the General Walker meeting here in Dallas.
That was my first real notice of him.
Mr. Liebeler. Oswald said to the assembled group at that time
that he had been to a meeting 2 days prior at which General Walker
was present?
Mr. Krystinik. I think it was 2 days prior.
Mr. Liebeler. That meeting would have been just the night before
Mr. Stevenson came to Dallas?
Mr. Krystinik. Yes, sir; I think, or it could have been the same
night. I don't remember the exact date.
Mr. Liebeler. What did Oswald say about General Walker?
Mr. Krystinik. That was it. That was his comment about Walker,
and it struck me at the time. I mean my ears perked up when he
said Walker was anti-Catholic in reference to his comments about
the Pope. I can quote that. That is exact. I am Catholic and I wanted
to hear what he said. He didn't say what General Walker had said.
Mr. Liebeler. Did he indicate any hostility toward General Walker
either by words or by his deeds?
Mr. Krystinik. At the time it seemed like Michael had commented
to me prior that the man was a Marxist, and I have never met
anyone before that I had known to be a Communist or a Marxist or
Leninist or Red, and I was interested mainly to see what the man
looked like, how he thought and what he felt. It seemed to me, in
watching and listening to him, that rather than being violently
against General Walker, he was stirring in dirty thoughts that you
shouldn't like General Walker. He didn't say General Walker is a bad
guy. He just made comments that General Walker is anti-Semitic and
anti-Catholic, and he was spreading a little seed of thought. That
was the way it impressed me.
Mr. Liebeler. You didn't get the feeling that Oswald had any
particular violent thoughts towards General Walker?
Mr. Krystinik. I didn't at this time. I had no idea he was violent
until I heard on the radio he had shot the President.
Mr. Liebeler. Did anybody respond to Oswald's remarks about
General Walker?
Mr. Krystinik. There were other people that discussed it, and then
they discussed the bad display the people from the far right had put
on when Mr. Stevenson was in Dallas, and it was regrettable that
extremists would act like that. But any exact comment about General
Walker I really don't remember.
Mr. Liebeler. Did Oswald say anything about this Stevenson
affair?
Mr. Krystinik. I couldn't say. I don't really remember.
Mr. Liebeler. Did he tell you that he had been at the meeting at
which Stevenson had had his difficulty?
Mr. Krystinik. No, sir; he didn't tell me that. He told me, I think
just me he had mentioned, if I remember exactly, he had mentioned
to Michael and said, "I was there," in reference to the meeting of the
General Walker group.
Mr. Liebeler. Are the remarks that you have told us about, the
only remarks that Oswald made to the entire group that evening?
Mr. Krystinik. The only ones I can remember and swear that I
know was the one in reference to General Walker not only being
anti-Semitic but anti-Catholic and in regard to his comment about
the Pope.
Mr. Liebeler. Did Oswald comment on the John Birch Society as
well as General Walker?
 Mr. Krystinik. I know there was mention about him in the group.
The group commented on the John Birch Society, and I don't
remember exactly whether Oswald commented on them, too. I
would like to be of help to you, but I don't remember.
Mr. Liebeler. Just give us the best recollection you have.
Mr. Krystinik. That is it so far.
Mr. Liebeler. How did Oswald impress you when he stepped up
and addressed the group? Did he impress you as being articulate,
intelligent, or was he not that way?
Mr. Krystinik. At that particular time he just made the one
statement. After the meeting, I talked to him for about 15 minutes
primarily about economics.
Mr. Liebeler. Was anyone there besides you and Oswald?
Mr. Krystinik. Yes, sir; there was a Mr. Byrd Helligas.
Mr. Liebeler. Did he take part in the conversation with you and
Oswald?
Mr. Krystinik. Yes; a little bit, to the best of my memory. Oswald
was the fellow that impressed me, and I was paying attention to
what he was saying, and I am afraid that Mr. Helligas didn't make an
impression on me. I don't remember what he said, except he did
enter into the conversation at different times. I am afraid most of my
attention was directed to Oswald. The hair was up on the back of my
neck. I was irritated by the man a little. Not real bad, but he
bothered me some.
Mr. Liebeler. Was it what he said that bothered you, or was it his
attitude?
Mr. Krystinik. Attitude more than exactly what he said.
Mr. Liebeler. What was his attitude?
Mr. Krystinik. Well, the attitude that I felt was that he was talking
down to me. I felt like he was. That he was better than I was, to a
certain degree, and he acted as if he had complete command of the
argument and was on top all the time. I felt that a couple of
different spots in the argument I had him practically beaten and he
wouldn't accept my argument. He turned his back and would go
down a different avenue.
Mr. Liebeler. He figuratively turned his back?
Mr. Krystinik. Yes, sir; that is it.
Mr. Liebeler. Reconstruct for us, as best you can, at this point,
the discussion that you and Oswald had. Tell us as best you can
recall what he said and what you said and what the argument was
about.
Mr. Krystinik. Well, after the meeting was over we went back to
the back where they had coffee. I believe they had doughnuts, I am
not sure, but they had a table of refreshments, at least, and I am
sure there was coffee. I wasn't interested in the coffee.
Michael, my wife, and Oswald, and I, walked to the back of the
room together. I approached Oswald and commented to him that
Michael had told me about his political background a little bit, and I
understood that he had been to Russia. I asked him what he felt
communism had to offer that was better than he could find in the
United States. He kind of shrugged his shoulders and didn't make
any particular comment then.
I forget exactly the trend of talk at that particular moment, but
as we talked for just a couple of minutes, or at any rate as we
talked, I told him I had met his wife at the Paine's over in Irving and
that he had a beautiful little girl, he should be real proud of them.
And he commented, "They are nice." And that was to let it go at
that.
I forget, or I do forget now about exactly what the next few
comments were. We did start talking about communism versus
capitalism. He said that in capitalism the employer exploits the
worker. I asked him just what he meant by exploiting. He said he
takes a man's labors and makes a profit from them without actually
putting in any effort of his own. I said that wasn't true. I considered
myself to be a capitalist, or at least to be a firm believer in the
capitalistic system. At the present time I had an employer and he
paid me a fair salary and I was real glad to work for him for the
salary I got.
He commented that my employer was taking my efforts without
putting in any efforts and was reaping a profit from my efforts, and
he wanted to know if I thought that was fair or not?
And I said that I was happy. I am satisfied with what I have, and
I feel it is fair, and I used an analogy that in turn I am an employer. I
have two fellows who work for me building patterns for which I pay
them $3 an hour and they are tickled to get the $3 an hour. They
are real glad to get it. And that I make $4 an hour off of their
efforts. My profit is $1 an hour, and that I bought the machinery, I
bought the material. I have gone out and hunted up the work, and
the $1 an hour from each of those two fellows is my wage for going
out and getting the work, and my wage is comparable to my
investment.
He said, you are exploiting labor. You are not doing any work.
And he commented then, well, that is all right for you. In your
society it is not a crime to exploit the worker. He didn't say, "to
exploit the worker." He said, "In your society it is not a crime." He
was referring to exploitation of the worker, supposedly.
Mr. Liebeler. Go ahead.
Mr. Krystinik. That is really about all I remember from the
conversation itself. Oh, wait a minute, we did talk about freedom. I
asked him what about the freedom in Russia. And he said, "Well,
they don't have as much actual freedom." I have forgotten what he
said exactly in reference to where they didn't have the freedom. We
were talking about actual civil liberties themselves in the United
States versus Russia. He said the United States by far has more civil
liberties.
 I said, what do you think about the movement in the South in
reference to Mr. Kennedy? And he said he thinks that Kennedy is
doing a real fine job, a real good job, I have forgotten.
Mr. Liebeler. So far as civil rights were concerned?
Mr. Krystinik. Yes, sir. That was the only comment that was made
in reference to President Kennedy. I forget whether that was the
only time he expressed any emotion, and I have forgotten the exact
words, he is doing a real fine job, or very fine job. I can't remember
exactly what he said.
He impressed me as having a lot of big words, and my
immediate impression was he was fairly well read, but talking with
Michael later and recalling the conversation later, it was pointed out,
Michael brought it to my attention, and after I think about it I agree
with Michael, that he had available to him a lot of two-bit vocabulary
words, but not necessarily correctly used. This was a later
impression, but the immediate argument, I was interested in what
he was saying rather than how he was saying it and the way he had
gone about saying it.
Mr. Liebeler. You were particularly impressed, however, by the
emphasis that Oswald placed on his remark that President Kennedy
was doing a good job as far as civil rights were concerned?
Mr. Krystinik. At the immediate time I wasn't particularly
impressed. After the President was murdered, I felt that there was at
least an emphasis of note, if not connected. I do remember him
saying, him placing emphasis on the way he said it.
Mr. Liebeler. And the impression you received of his attitude
toward President Kennedy was one of approval and one of favor?
Mr. Krystinik. I would say yes. I don't know about President
Kennedy in general, how he felt, but in reference to the civil rights
issue, the impression I had was that he was favorably impressed by
Mr. Kennedy.
 Mr. Liebeler. Did Oswald express his attitude toward any other
government official, during the course of his conversation with you?
Mr. Krystinik. I can't really remember. I have heard Michael Paine
comment that Oswald had at one time written a letter and left it
laying around the house, and that his wife, Ruth, had found this
letter. It was in the typewriter. I can't remember exactly the details,
but that he had referred to the notorious FBI. Apparently he didn't
care for the FBI.
Mr. Liebeler. Did Michael tell you that before or after the
assassination?
Mr. Krystinik. It was after.
Mr. Liebeler. It was after?
Mr. Krystinik. Yes, sir.
Mr. Liebeler. Prior to the time of the assassination, however, you
had no feeling that Oswald had any particular hostility toward any
government official or toward the government in general? Would
that be a fair statement?
Mr. Krystinik. I can't really say because I don't know the exact
time sequence. After a little time is passed, it is hard to pin it down.
Michael and I discussed the man at length after the
assassination, and we talked about him a whole lot, so I don't really
know whether it was before or after, but I now feel that he was very
definitely against all enforcement people in general, and I don't
know exactly when this impression came to me. But if I didn't
already have this impression beforehand, I certainly had it
afterwards.
I do know that beforehand, that he didn't get along with his
employers and his fellow workers, or at least his employers, and he
wasn't able to keep a job, and he didn't have respect for his
employers, and this might possibly extend to law enforcement
officials.
 Mr. Liebeler. Do you feel that Oswald was, in general resentful of
authority? There was resentment of his employers?
Mr. Krystinik. According to Michael, talking to him, we didn't talk
about specifics, it was strictly generalities. It was 15 minutes that I
talked to him, or 15 minutes or so that I talked to him.
Mr. Liebeler. Is this meeting that you had with Oswald in the
ACLU, the only meeting you ever had with Oswald?
Mr. Krystinik. That was the only time I saw him up until I saw
him on television.
Mr. Liebeler. And your impressions are based upon your
conversation with him during that time at the ACLU meeting?
Mr. Krystinik. Based on that and what Michael and I have
discussed in reference to him.
Mr. Liebeler. In the course of the conversation with Oswald at the
ACLU meeting, did he tell you that he was a Marxist?
Mr. Krystinik. Yes. It seems to me that I commented to him that,
"You are a Communist and I am a Capitalist," and I can't remember
exactly what it was, but he corrected me and he said, "I am a
Marxist." When I addressed him as a Communist, he said, "I am a
Marxist."
Mr. Liebeler. He corrected you then when you said he was a
Communist and indicated he was not a Communist?
Mr. Krystinik. Yes.
Mr. Liebeler. Did you ask him what the difference was between
those theories?
Mr. Krystinik. No; I don't remember having asked him that.
Mr. Liebeler. And he didn't elaborate on that?
Mr. Krystinik. No.
Mr. Liebeler. Did Oswald tell you——
 Mr. Krystinik. Oh, excuse me, there was one other thing that I, at
the time when he commented on the capitalistic system exploiting
the worker, I came back at him with the idea, you mean to tell me in
Russia they don't exploit, that the State doesn't exploit the worker,
and he stated that it is worse than here. He did say that.
Mr. Liebeler. That the exploitation of the worker was worse in
Russia than it is in the United States?
Mr. Krystinik. And the State exploited the worker.
Mr. Liebeler. Did he indicate to you any desire to return to the
Soviet Union?
Mr. Krystinik. No, sir.
Mr. Liebeler. Did he indicate any desire to go to any other
country?
Mr. Krystinik. To me; no.
Mr. Liebeler. Did you know at the time you talked to Oswald that
he had been active in the Fair Play for Cuba?
Mr. Krystinik. No, sir; I never heard of the organization until I
read about it in the Dallas Morning News in reference to Oswald.
Mr. Liebeler. Did Oswald tell you he was a member of any Marxist
or Communist group?
Mr. Krystinik. No. His only comment was that, "I am a Marxist."
Mr. Liebeler. Did you have any impression as to whether he was a
member of any group, Marxist or Communist group?
Mr. Krystinik. In reference to what Michael had told me that he
defected to Russia and that he claimed himself as being a Marxist,
now I am afraid that in my mind I felt he was a Communist or a
Red, and my immediate impressions were that even though he had
nothing to offer me with which to place trust in him, I didn't trust
him and kind of considered him, I guess I looked at him really like
someone at a dog that might bite. I disliked the man. I disliked him
without him giving me personally an actual reason. I disliked him
before I met him on the basis of conversation with Michael. I disliked
him when I met him in that I felt he was talking down to me and felt
he was somewhat better than I was. He acted as he felt he had
complete command of the conversation, was leading it, and was
controlling what was going to be said, and I like to talk too.
We talked back and forth, but rather than a pleasant discussion,
it was more of an argument.
Mr. Liebeler. You got no impression at any time during the course
of your meeting with Oswald that he was an actual member of any
Communist or Marxist group?
Mr. Krystinik. I felt that he was, but that was only by saying, "I
am a Marxist." To me, that categorized him. But as to any specific
organization, I had no impression that he belonged to any specific
group.
Mr. Liebeler. Did Oswald display any anger to you during the
course of your conversation with him?
Mr. Krystinik. I can't remember, really. I don't think so.
Mr. Liebeler. Have you now told us, to the best of your
recollection, the entire conversation that occurred between you and
Oswald on that occasion?
Mr. Krystinik. Only to the best of my recollection. I am sure that
we talked more.
Mr. Liebeler. Did he mention anything to you about having been
in the Marines?
Mr. Krystinik. He didn't. Michael had told me previously that he
had been in the Marines.
Mr. Liebeler. Had Michael told you that Oswald received an
undesirable discharge from the Marine Corps?
Mr. Krystinik. Yes.
 Mr. Liebeler. But you didn't have any discussion about that with
Oswald?
Mr. Krystinik. No.
Mr. Liebeler. Did you have any discussion with Oswald about his
impressions while he was in the Soviet Union?
Mr. Krystinik. I did ask him to tell me about Russia, but then the
conversation diverged back into the economic end of the capitalism
versus communism. He commented that the work hours were long
and the pay wasn't particularly good. That was about the main
thing. It was just that long in reference to the Soviet Union and we
were back to capitalism. He didn't seem to care to talk particularly
about it.
Mr. Liebeler. His remarks about the pay and working conditions in
the Soviet Union were a general remark?
Mr. Krystinik. Just general.
Mr. Liebeler. He didn't tell you how much he was paid or what
kind of job he had?
Mr. Krystinik. Well, he didn't. Michael, I believe, told me
afterwards, if I remember correctly, that he was doing something in
an electronic firm or electrical industry.
Mr. Liebeler. But Oswald himself told you nothing about his stay
in the Soviet Union other than you have already told us?
Mr. Krystinik. Basically.
Mr. Liebeler. What happened after the meeting was over?
Mr. Krystinik. As we were going out, I commented to Michael that
we were going to have to set this boy up in business and convert
him. And he said that the only thing he approached humor, he
commented, "The money might corrupt me." I can remember that
as a quote.
Mr. Liebeler. That is what Oswald said?
 Mr. Krystinik. That is what Oswald said.
Mr. Liebeler. He said that in a joking manner?
Mr. Krystinik. In a joking manner.
Mr. Liebeler. Other than that, however, Oswald did not indicate
any particular sense of humor to you?
Mr. Krystinik. No humor. He indicated no violence. He impressed
me as being cold. You can talk to some people and say they are
warm and sincere. He impressed me as being cold and stereotyped.
He had fixed notions in his head, and I had the impression he had
his mind made up regardless of how good an argument you
presented. His mind was made up that he was not going to admit,
regardless of how strong it was.
Mr. Liebeler. Did you subsequently discuss with Michael Paine
your argument with Oswald?
Mr. Krystinik. Yes; I did.
Mr. Liebeler. Prior to the assassination?
Mr. Krystinik. Prior to the assassination.
Mr. Liebeler. Would you tell us generally what you said and what
Michael said?
Mr. Krystinik. Michael said that he knew of what was coming, so
he went on off and talked with my wife and with another fellow.
There was no point in him sticking around. He knew Oswald had a
closed mind.
He didn't say, "closed mind." Michael is a rather unusual type of
person. He is careful not to overly, severely criticize anyone or make
unkind comments about other people, even though he himself has
sensitive emotions and feels—you have talked with him. I guess you
have the same impression.
Mr. Liebeler. Is that all that you and Michael said about your
(conversation) discussion with Oswald?
 Mr. Krystinik. With reference to this conversation, I related to him
just about what Oswald had said to me. It wasn't exactly in detail. I
didn't talk about him, as long about the actual conversation, as I
have talked to you. He said that he knew how it was going to go and
there wasn't any point in his staying around. He knew how Oswald
would react.
Mr. Liebeler. He indicated to you that he had had previous similar
experiences?
Mr. Krystinik. Yes.
Mr. Liebeler. Did he tell you about this in specific detail?
Mr. Krystinik. Only that he argued with him and the man loved to
talk economics, and that at first he was very, very interesting to talk
to, but that once the man had said all that he wanted to, or all that
he was particularly interested in, it was then a repeat, and that it
was always all locked in in a small little body, that he didn't
particularly have any area for growth, that he had a certain fixed
image in his mind, and was reluctant to have it improved or
changed.
Mr. Liebeler. Did Michael indicate to you that Oswald received any
periodicals or literature concerning economic or social and political
questions of the time that you discussed?
Mr. Krystinik. Prior to the assassination, no, he didn't. I am trying
to—I forget now exactly—I have read the newspapers and I heard
so darn much about it on the radio and television, it is actually hard
to strain out exactly who said what. I know that he had gotten
Communist literature, and I can't remember whether it was from
Michael or from the news media that I heard this.
Mr. Liebeler. Can you recall any other discussions between
Michael Paine and yourself, concerning Lee Oswald that occurred
prior to the assassination?
Mr. Krystinik. No, sir; not really.
 Mr. Liebeler. The occasion that you met Oswald at the ACLU
meeting was the only time at which you ever met Oswald, is that
correct?
Mr. Krystinik. Yes.
Mr. Liebeler. You mentioned that you had met Marina Oswald and
child prior to that time.
Mr. Krystinik. Yes; Michael had bought an old blue—he had a
French Citroen automobile. At any rate, he had the two cars and he
wanted me to drive either his car home or follow him home in my
car. And he was taking the Oldsmobile to Irving and I followed him
in my car and took him back to the research laboratory and picked
up his Citroen. At any rate, when I drove the car in, he went into the
house and brought Ruth out and Marina. And all I remember is one
little girl. I didn't see the baby. The little girl came out with her
mother and Ruth introduced me to Marina. She impressed me at the
time as very sweet and very polite. I spoke as slowly and as
distinctly as I could to her in English, Texan to be exact, and she
turned to Marina—Marina turned to Ruth and spoke to her in
Russian, and I asked Ruth if I was talking too fast, and Marina said I
am talking too Texan.
At any rate, that was about it. I told her that she had a beautiful
little girl and hoped that she would like the United States. And she
commented that she did, that it was a wonderful country. That I can
remember for sure. That impressed me, because it seems that
where there is a possibility of a Russian saying something nice, it is
nice to have a compliment. At least I felt complimented.
Mr. Liebeler. Marina indicated that to you in English, is that
correct?
Mr. Krystinik. I can't remember whether it was the words, but
that was the way I took it to be. It was my thinking, yes.
Mr. Liebeler. Did Marina understand the remarks that you had
made to her in English?
 Mr. Krystinik. Apparently she followed the trend, but she turned
to Ruth for exact interpretation, and Ruth told me that I wasn't
talking too fast, just too Texan. That was Marina's comment.
At first I was talking just to Marina back and forth, and she said
just a few words, and I asked her how old the child was, and if I
remember exactly, 2 or 3. I have forgotten. But one- or two-word
answers, and I had no trouble at all understanding her up to that
point. When Ruth entered into the conversation, she turned and
relied directly and totally upon Ruth. I talked to her only about 5
minutes in all. I talked with her while Ruth was looking at the car
with Michael. I mean I talked to her rather than with her.
Mr. Liebeler. This was after Marina had given birth to the second
child. Is that correct?
Mr. Krystinik. Yes; seemed like only a week or 2 weeks.
Mr. Liebeler. Was there any discussion of Lee Oswald at that
time?
Mr. Krystinik. No, sir; his name wasn't mentioned. I hadn't met
him at that time.
Mr. Liebeler. Have you ever met Lyman Paine? That would be
Michael's father. Did you ever discuss Lyman Paine with Michael?
Mr. Krystinik. Only once. We talked about him a couple of times,
but one time Michael, just prior to Michael buying the land in Irving
for his future shop.
Mr. Liebeler. Can you tell us approximately when that was?
Mr. Krystinik. No, sir; I can't remember, but it was about a week
prior to his buying the land.
Mr. Liebeler. I see.
Mr. Krystinik. I can fix the time. He had commented that he had
been invited by his father to the west coast for the weekend.
 I know that the previous time Michael had been saving his
money to buy this land, and I feel that he didn't have enough money
at the time, and he flew out on a Friday evening, if I remember
correctly, and flew back to Dallas early Monday morning, and he was
sleepy and tired at work that day. We talked and I asked him if he
had a nice time visiting with his father, and he commented that he
had a nice time and that his father had a very nice party. And it
seemed this was somewhat of an international party. He talked
about this Negress that he had met who was extremely interesting.
Her husband had written a book on labor, and he talked mainly
about this woman and the conversation he had with her.
Mr. Liebeler. This conversation occurred at a party that Lyman
Paine had given in Los Angeles is that correct?
Mr. Krystinik. Yes; that's right. He didn't tell me in detail why he
was particularly interested. He said she was a very interesting
person, and that he had talked to a group of other people, several
other people. He said that there was a man from West or East
Germany, and I remember he said that there were some Chinese
people there, and I don't remember whether they were or were not
from the Communist bloc. I don't remember that. But he
commented on several other people that were, in my book, I would
say they were each one an extremist of some form or other at the
time—at the time that he was telling me about them. They were at
least very different than you would meet on the street. That doesn't
make them bad, don't misunderstand me. That was the impression I
had. He didn't say they were Communist or bad people or anything
like that. They were just very, very different.
Mr. Liebeler. Did Michael indicate to you that his father had been
active in the affairs of the Communist Party?
Mr. Krystinik. No; he didn't. I asked him what his father did, and
he said he was an architect, and that was the comment. It seemed
there was some mention made about a Communist or a fellow that
had communistic interests being at the party, and I asked him what
kind of people does your father associate with. He said he didn't
know really what his father does. That was his comment. He didn't
know what his father does, that he really knows that he is an
architect and that is about it. That was Michael's comment.
Mr. Liebeler. Did you ask him what kind of a man his father was?
Mr. Krystinik. No, sir; not really. I talked to him about it very
little, and I do know that just shortly after he came back from Los
Angeles, Michael did buy this plot of land and he did pay cash,
$3,000, and I had the impression that prior to his going to Los
Angeles he didn't have the money.
I had that impression because he commented that there was
time for him to pay or give—we were talking about church donations
during the coffee break one day shortly after that, and he
commented that he was really going to have to do something about
his bank account, it was time to pay his pledge dues at the Unitarian
Church and he didn't have the money in the bank, and 3 or so
weeks later he had $3,000, for a plot of land, so I am assuming, I
am not a detective, that he had gotten the money from his father or
from Art Young, who is his stepfather. One of those two persons, he
had gotten the money. He had, if I remember correctly, Art Young
was in Texas, so one of these two places he had gotten the money.
Those are the impressions I had, that he had gotten it from his
father.
Mr. Liebeler. Did you have any discussion about this with Michael?
Mr. Krystinik. No, sir; I didn't. I want to make it clear that I don't
know. These are impressions that I had.
Mr. Liebeler. Did Michael tell you that he went to Los Angeles for
the purpose of visiting his father?
Mr. Krystinik. No, sir; he didn't state it in that way. He said that
his father offered to pay for the plane ticket to the west coast, and
he thought it was a wonderful opportunity to visit his father, and this
was the discussion prior to his leaving.
 Mr. Liebeler. He was not sent to the west coast on business for
Bell Helicopter?
Mr. Krystinik. No, sir; he has been sent to Pennsylvania on Bell
Helicopter business. I am aware of that.
Mr. Liebeler. But so far as you know, he was not sent to Los
Angeles on Bell Helicopter business?
Mr. Krystinik. No, sir; so far as I feel that if he had, that he would
have told me.
Mr. Liebeler. You are a friend of Michael Paine's?
Mr. Krystinik. I would like to consider myself a friend of his, and
by my telling you things, I feel that I am still a friend of his. I think
that he is—I feel that he has absolutely nothing to hide, and in all
honesty, I don't feel that what I tell you can in any way hurt him,
and if it would hurt him, he has been going—he has been doing
something he shouldn't have been doing, and if he has, why we
need to know about it, because that is just the way I feel. I don't
feel like I am squealing on him.
Mr. Liebeler. Did Michael tell you that his father had called him
shortly after the assassination?
Mr. Krystinik. No, sir; he didn't.
Mr. Liebeler. As far as you know, the last contact Michael had
with his father is when he went to Los Angeles shortly prior to the
time he bought this tract in Irving?
Mr. Krystinik. Yes, sir; that is the last comment he made to me.
Mr. Liebeler. Where were you when you learned that fact that the
President had been shot?
Mr. Krystinik. At the research laboratory. We were listening to the
radio. We had listened to the President's speech from the Texas
Hotel parking lot in Fort Worth. I think that almost every one at the
laboratory honestly really liked President Kennedy and was all for
him. We were much interested in him whenever he did make a
speech. I believe during working hours we always listened to his
speech, and we were listening to the radio at the time. When the
first report came in, they had been talking about the motorcade
through downtown Dallas, and switched to the Market Hall, and the
commentator was talking from the Market Hall, and the first
comment there, was a report that there was shots fired at the
President. And he didn't say he had been hit.
Then there was some discussion on the radio, and then it came
through, this is official that the President of the United States has
been fired at by an assassin or an attempted assassination. And in a
little while it came through he had been hit and taken to Parkland
Hospital, and the reports were that he and Governor Connally were
both hit and both considered to be in serious condition. And it came
through that they were both alive but both in extremely critical
condition. And finally, I think it was about an hour later the report
came through the President had expired. And Michael exhibited real
outward emotion. He had his back turned and his head was down
slightly and he really cried. And I don't feel that Michael is the type
that could make crocodile tears in seriousness.
Mr. Liebeler. Was Michael with you when you first heard of the
fact that the President had been fired at?
Mr. Krystinik. Yes, sir; we were all in the lab in the office.
Mr. Liebeler. Did you eat lunch with Michael that day?
Mr. Krystinik. No, sir; I didn't. I don't think I did. I do eat with
him quite often off and on. Most of the time I stay at the lab and
drink my can of Metrecal.
Mr. Liebeler. To the best of your knowledge, you did not eat with
Michael?
Mr. Krystinik. I recall I did not that day, no.
Mr. Liebeler. But also to the best of your recollection, you were
both in the lab?
 Mr. Krystinik. We were both in the office portion of the lab.
Michael has a stereo hi-fi that he brought to the lab for use by all of
us.
Mr. Liebeler. You were there at that time when you first heard
that the President had been fired at?
Mr. Krystinik. And immediately when the first report came in that
the President had been fired at, three or four of us, I forget them,
myself, Michael Paine, Ken Sambell, and Clarke Benham all gathered
right around the radio like a bunch of ticks and stayed there.
Mr. Liebeler. Was Mr. Noel there?
Mr. Krystinik. Dave Noel, yes; I believe he was. I believe Dave
was the one that went to dinner with Michael, if I am correct.
Mr. Liebeler. He went to lunch with Michael?
Mr. Krystinik. Yes.
Mr. Liebeler. As best you can recall, you had not heard anything
about the attempted assassination prior to the time Michael and
Dave returned from lunch?
Mr. Krystinik. No; we were listening on the radio and heard the
report. As far as being shot at, I can't remember exactly whether
Michael was there when the very, very first report came in, but he
was there when the report came in. He was there when the report
came in that he had died.
Mr. Liebeler. Did you and Michael have any conversations about
the assassination?
Mr. Krystinik. Yes; we did.
Mr. Liebeler. Tell us to the best of your recollection what he said?
Mr. Krystinik. I commented, "Who in the blue-eyed world would
do a thing like that?" And if I remember right, Michael didn't make
any immediate comment at all about the assassination other than
what a terrible thing and what in the world could he gain. We
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