Market basket analysis (MBA) is a technique to predict future purchase decisions of customers. It studies customers buying patterns and preferences on what he would prefer to buy along with the items in his cart. For example, if 3 out of 5 times a customer customer buys Bread it is likely that he would buy Butter along with it. Predicting a customer who would buy Bread will also buy Butter most of the times is a result of pattern studies which is part of Market Basket Analysis.
Benefits:
Market Basket Analysis studies Customers purchase pattern and help retailer to identify the products each individual customer prefer. Based on which retailer sends in the coupons that suits customer purchasing pattern.
It also helps retailers to identify the group of products that can be sold together with higher probability. Retailers can prefer to change the layout in the store, so that the products with higher probability are placed close to each other, which in turn will result in more sales.
It also helps retailers to create marketing messages which would have higher impact and attract each customer based on their personal preferences.
Based on the present customer purchases , MBA also predicts what is going on customers life and predict future purchases. One of such incident in 2012 was, Target store in US has sent a girl containing coupons for baby clothes and cribs who was in her high school. The tricky part is her father wasn't aware of the situation and has run into Target store to question on how they can send baby clothes coupons to her daughter.
For full article on this incident please follow the link: https://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/#716436a46668
I have done a simple example on Market Basket Analysis to check how this works with the simple data set in Tableau.
Following my report I have found some amusing results:
Paper is brought along with binders most of the time resulting in profit ration is 26.69 % to retailer.
Another pair of products that are brought often are Furnishings and Binders but with a profit ratio of 0.25%
Lastly , it also shows that Machines and Supplies are probably the poor possible combination that can be brought together.
You can play with the report and discover more here: https://public.tableau.com/profile/navyasree.potluri5017#!/vizhome/MarketBasketAnalysis_15619785330200/BasketAnalysis
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