The Effect of Artificial Intelligence Marketing on Customer Loyalty: The Mediating Role of Brand Awareness and Brand Image in an SME Functional Snack Product

Abstract

The rise of artificial intelligence (AI)-driven marketing
offers small and medium enterprises (SMEs) an opportunity to
manage customer relationships more precisely, yet evidence on
how AI marketing shapes customer loyalty in Indonesian food
SMEs remains limited and inconsistent. This study examines the
effect of AI marketing on customer loyalty, both directly and
through the mediation of brand awareness and brand image,
using Kalfis Mackerel Fish-Bone Sticks as the case product. An
explanatory quantitative design was applied to 200 purposively
selected customers who had been exposed to the brand's
Instagram promotion. Data were collected through a five-point
Likert questionnaire and analyzed using Partial Least Squares
Structural Equation Modeling (PLS-SEM). AI marketing
positively and significantly affected brand awareness (β = 0.577),
brand image (β = 0.440), and customer loyalty (β = 0.409). Brand
awareness (β = 0.186) and brand image (β = 0.323) also
strengthened loyalty and partially mediated the effect of AI
marketing (indirect β = 0.107 and 0.142, respectively). The model
explained 54.3% of the variance in customer loyalty (Q² = 0.362).
These findings position AI marketing as an antecedent of
customer-based brand equity in small businesses and suggest
that intelligent marketing investment is more productive when
directed at building brand assets rather than pursuing short-term
transactions.

Keywords: Artificial Intelligence marketing; brand awareness;
brand image; customer loyalty; PLS-SEM; SMEs.