Rebranding Loyalty: The Phygital Bridge of Ethical Brand Experiences

Abstract

This paper examines the emerging paradigm of phygital brand experiences that integrate transparent artificial intelligence as a core component of brand identity rather than merely as a technological tool. The research question explores how brands can leverage immersive digital-physical environments where ethical AI behaviors, particularly privacy respect and transparency are experienced emotionally rather than communicated rationally. Through theoretical analysis and conceptual framework development, this study proposes that successful phygital loyalty strategies require a fundamental shift from AI as operational infrastructure to AI as experiential brand ambassador. The findings suggest that when consumers emotionally experience ethical AI behaviors through carefully designed touchpoints, brand loyalty transcends traditional transactional relationships to become deeply embedded emotional connections. The theoretical contribution lies in the integration of experiential marketing theory, digital ethics, and consumer psychology to create a new framework for understanding loyalty in the age of ambient computing. Practical implications include the development of design principles for creating immersive environments where ethical AI behaviors become tangible emotional experiences that strengthen brand-consumer relationships.