Market basket analysis

Market basket analysis

Objectives of the analysis

This case study looks at market consumer behaviour using the marketing methodology

known as market basket analysis. Market basket analysis has the objective

of individuating products, or groups of products, that tend to occur together (are

associated) in buying transactions (baskets). The knowledge obtained from a

market basket analysis can be very valuable; for instance, it can be employed by

a supermarket to reorganize its layout, taking products frequently sold together

and locating them in close proximity. But it can also be used to improve the

efficiency of a promotional campaign: products that are associated should not

be put on promotion for the same periods. By promoting just one of the associated

products, it should be possible to increase the sales of that product and get

accompanying sales increases for the associated products.

The databases usually considered in a market basket analysis consist of all

the transactions made in a certain sale period (e.g. one year) and in certain sale

locations (e.g. a chain of supermarkets). Consumers can appear more than once

in the database. In fact, consumers will appear in the database whenever they

carry out a transaction at a sales location. The objective of the analysis is to

individuate the most frequent combinations of products bought by the customers.