Market Basket Analysis, also known as 'Association Analysis', is one of the most effective and familiar types of data analysis for marketing and retailing. It is a method which is used to identify the correlations between the pairs of items or products bought together. It is completely based upon the theory that if a person purchases a fixed group of products, he or she has possibly purchased another related group of products. The main goal of this technique is to categorize the customer purchasing behavior means how they select the items and then buy related group of products in a shopping cart.
Market Basket Analysis brings forth in-depth insights into promotional and price effectiveness. It also casts knowledge upon the customer profitability assessments. The technique helps one to examine the customer purchasing behavior and through this examination, it boosts the sales and manages the product inventory comprising the sale transaction data. For example, if a person is in a Pizza Corner, he or she is more likely to buy soft drinks at the same time. In simple words, if you put the pizza on sale, then the sales of soft drinks is likely to go up. Also known as 'Itemset', the set of items a person purchases is mentioned as 'Transaction'. With using market basket analysis tool, you can analyze the correlation between the purchases.
There are many ways where this market basket analysis can be applied. Here is the lowdown of these major ways:
To find out which are the most common products frequently purchased together by the customers, analytics in retail market basket employs various data that includes market, consumer expenditure and transactional data. As it is one of the prime and effective techniques so there is no need to have the physical appearance of the customer at the retail outlet. With this tool, one can easily study or examine the transaction (itemset) whether it is made on a phone, in person or internet. The transaction is the most vital source of information in this regard.
Retail Market Basket Analytics tries to find out the answers to the different questions such as whether the customer purchases the product or not, and if they purchased the same then what the quantity was and how much they paid on them. With this powerful tool, one can easily get the answer of these questions and can also find out the products that were sold together. It also helps to determine the products purchased by the same types of customers (people). For finding out the specific mix and placement of the products, market basket analytics is the most effective algorithms.
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