What is Market Basket Analysis?
Market basket analysis is an analytical technique that helps in predicting customers’ future purchase decisions. Market basket analysis is one of the most commonly used techniques in retail to boost sales. It enables retailers to yield insights into the sales patterns of any product by analyzing the online browsing behavior of customers and historical sales records. The method of market basket analysis is used to improve marketing effectiveness and increase opportunities for up-sell and cross-sell significantly.
The primary objective of the market basket analysis model is to identify the next product that the customer might find interesting and worth buying. Market basket analysis works on related products that occur together frequently in transactions. It aids retailers to identify the similarities and relationships between items that customers buy.
What are the Benefits of Market Basket Analysis?
Arranging the Display of SKU
Market basket analysis helps in identifying products that have a close affinity to each other in spite of falling into different categories. This information can help retailers to place the products with higher affinity close to each other to boost sales. For instance, if chips are placed closer to a beer bottle, there is a high probability that customers may end up buying both. On the contrary, if they were placed in two extremes, then it is highly likely that the customer would just visit the store, buy beer, and leave causing loss to the sale of chips.
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Market basket analysis helps online retailers to analyze the buying behavior of every individual. Such analysis can help in estimating what items the customers may purchase at a specific time. For example, a customer who likes barbecues would most likely buy barbecue sauce and meat on weekends. So, this way retailers can customize special offers on weekends to increase the purchase frequency.
Identifying Sales Influencers
All the items in the retail store have some affinity with each other, strong or weak. Market basket analysis can help retailers to study the buying trends of a certain SKU. For example, two SKUs can reveal a strong affinity for a period of time, and sales can suddenly reduce because of several factors ranging from the introduction of the new brand, the price increase of one SKU to the unavailability of a certain brand in the SKU. This way marketers can understand the influence of such activities in the sales figure.
How Can Quantzig’s Market Basket Analysis Solutions Help Your Business?
With the immense increase in competition, there is a dire need for innovation in marketing and sales strategies to retain, attract, and achieve better customer relationships. As a result, companies in the retail and CPG industry globally are facing issues in making use of customer datasets for developing the right strategy for customer segmentation and implementing the same for each segment to improve ROI. Quantzig’s market basket analysis solutions can help retail companies to optimize digital advertising investments, successfully improve marketing ROI, identify the right media mix, devise the most profitable sales strategies, and optimize sales force to create maximum business value.
Additionally, Quantzig’s market basket analysis approach can assist in developing successful cross-channel and multi-channel retail strategies, by yielding insights into customer preferences and demands. By leveraging our customized analytics dashboard, companies can devise localized strategies to implement merchandising plans based on historic patterns, demographic segmentation, and customer buying patterns.