Market basket analysis measures the strength of association between complementary products purchased together. Market basket reveals how customers respond to promotions, notably price changes on related items. It’s not just about what products sell, but what they’re selling with. And how profitable they are when sold in combinations.
Market Basket Analysis — Benefits
Market basket analysis transforms customer behaviors into actionable insights. Metrics such as support, confidence and lift help retailers determine product placement and promotion optimization. These metrics empower marketers to deploy tactics around assortment, media views and rewards. Marketers capitalize on these data-driven insights to anticipate behaviors, engage customers, reward loyalty and retain loyal customers longer.
Creating tailored discounts according to customers’ needs and preferences is a great way to increase sales. By tailoring discounts to individual customers on products in which they have interest, companies build trust with the customer and increase the bottom line. — MarketingProfs, Nov 2015
By examining market basket affinities along with product promotions, marketers move beyond just analyzing sales. They learn how and why customers buy particular product mixes.
Market Basket Analysis — Challenges
Consumers are unforgiving of poorly targeted, one-size fits-all marketing. They expect marketers to know what they want next. And the tempo by which marketers must respond to customers is dizzying. Marketers today must quickly engage and reward customers with compelling offers before check-out.
Consumers have long stopped responding to in-your-face marketing. …today’s consumers have no trust, no time, and no patience for traditional marketing tactics. — Forbes, Oct 2015
Market basket analysis is not rocket science. But, the data management and data mining are complex and are beyond the abilities of all reporting tools and most business analysts. Market basket analysis requires transaction detail over a time period long enough to consider trends, and includes complex joins with customer and product data.
Marketers have a multitude of platforms, tools, and technologies available to them. It’s difficult to master these technologies, let alone use them effectively enough to quickly react to changing consumer and competitor behaviors. — Forbes, Nov 2015
With increased data volumes, data complexities and data velocities, marketers are sprinting to anticipate customer needs. Many CMOs are frustrated by the latency of in-house analytics and by the efforts required to access and manage data. Plus, in-house reporting tools don’t meet today’s deep-dive requirements.
Market Basket Analysis — IDP
At IDP, we understand that your data is challenging and that you have limited resources.
We remove the requirement that business analysts manage large data volumes or complex data structures — bridging the gap between data management and analytics. So analysts focus, not on data, but on making recommendations from the analytics.
At IDP, we manage large data volumes with complex structures. We integrate disparate data sources and build rock-solid analytical data sets. And we always collaborate with marketing to generate analytics that produce marketable results.