Market Basket Analysis, also known as a Shopping Basket Analysis, is a data analysis technique that assumes co-occurrence between choices or actions. It is based on the theory that certain items are chosen in tandem with others. This analysis method identifies which combinations of items tend to be grouped together in purchases and creates measurable relationships between them. The data derived from the analysis is quantified across metrics, called confidence or support, to determine the strength of the correlation between two items or concepts. Market Basket Analysis essentially provides insight into consumer behavior, giving businesses the opportunity to strategize and plan accordingly.
Who uses a Market Basket Analysis?
All businesses selling products or services can benefit from a Market Basket Analysis as it offers an understanding of consumer behaviors and purchasing patterns. Retailers use the data to strategically position products in a store or supermarket alongside those other products that are frequently purchased with it. Within the Telecommunication Industry, Shopping Basket Analysis is used to determine which services are being obtained together, helping to create effective service packaging offers. The Banking Industry uses it to create a customer profile that is useful for additional bank product marketing and to identify potential fraud. Market Basket Analysis in the Medical Field helps build relationships between conditions and symptoms, providing the diagnostic process with a more sound, measurable basis. As a Restaurateur, the blending of a popular main-course can be offered with a dessert that is both appealing and offering a higher margin.
