Artificial Intelligence (AI) is no longer a technology reserved for large corporations. Free and low-cost generative tools such as ChatGPT and Canva AI now allow even a single-counter shop to write promotional messages, design posters and reply to customers within minutes. This study, “Role of Artificial Intelligence in Digital Marketing: Challenges and Future Prospects for Small and Medium Indian Businesses,” examines how far this opportunity has actually reached small retailers in a semi-urban market and what stands in the way of wider use. Primary data were collected through a structured field survey of 30 shop owners in Mangrulpir town (Washim district, Maharashtra) covering general stores, clothing shops, medical stores, an agri-input dealer and service businesses. The findings show a strong digital base: every respondent uses WhatsApp, Instagram or Facebook for business and accepts UPI payments, and 90% have heard of AI content tools. However, only 63.3% have actually used an AI tool, mainly ChatGPT for promotional text and Canva AI for creatives. Awareness of AI was significantly associated with its use (Fisher’s exact p = 0.041), and medical stores showed significantly lower adoption than other trades (p = 0.012), largely due to concern about incorrect information. Lack of knowledge (53.3%) emerged as the single biggest barrier, followed by lack of time, language and cost; firm age and size showed no significant relationship with adoption. The paper proposes a four-stage “Aware–Assisted–Routine– Data-led” roadmap and recommends local-language, hands-on training as the most practical way to convert AI awareness into everyday marketing practice.

Nikita Raghuwanshi, Dr. Nitin Ganorkar, "Role of Artificial Intelligence in Digital Marketing: Challenges and Future Prospects for Small and Medium Indian Businesses" International Journal of Scientific Research and Engineering Development, V9(5): Page(1032-1045) September - October 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.