Increasing Marketing Effectiveness and Improving Sales with the Help of Market Basket Analysis

Dec 4, 2018

Anticipating Customer Behavior with Market Basket Analysis

Ever wondered how online applications know what items to suggest before and after you make a purchase? Well, the trick behind this is an aspect of affinity analysis that helps leverage sales through a data modeling technique known as market basket analysis. Market basket analysis offers detailed insights into transactional datasets which turns out to be useful for product recommendations. This technique relies on the theory that if a customer purchases a certain group of products they are more likely to buy another set of items. By identifying product combinations that frequently co-occur in transactions, the retail industry players can uncover associations between customers and their purchase patterns. Retailers can leverage the data obtained from market basket analysis and develop new pricing models to improve revenue.

Client’s Profile

The client is a well-known player in the food retail industry in Europe, with over 300+ stores located globally.

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Project Background and Solution Offered

The food retail industry is a highly fragmented one facing significant challenges that need to be addressed immediately. As customer needs and preferences sway with the time- change tends to be a continuous process in the retail industry. To keep track of the changing customer needs retailers today need several analytic tools at their disposal, and one among them is ‘Market Basket Analysis.’ The client, a food retail company was looking at adopting one such technique that would help them track customer purchasing behaviors to predict their purchasing patterns, given a contemplated purchase or previous purchase history.

The food retail industry client faced several challenges in making crucial business decisions regarding- products promotions, product placements, displays, target messaging, and store segmentation. To find an effective solution for such challenges the food retail industry client wanted to leverage Quantzig’s expertise in market basket analysis. The market basket analysis solutions offered in-depth insights into how purchases of products correlate with customer needs, thereby helping the client identify unique cross-sell and up-sell propositions.

Value Delivered to the Client

The food retail industry client did not have the necessary data management system in place to support market basket analysis. This prompted our experts to leverage transaction-level customer data to devise a data model that supports market basket analysis. This process included the development of ETL processes for incremental data loads and the database design necessary to support the various hierarchies of customer data. The devised model supported market basket analysis at the week, store and product level. 

Furthermore, our solutions offered a new, highly scalable, and reliable system that enabled the retail industry client to enhance marketing effectiveness and identify advertisement opportunities for products with high affinity. Also, with the help of market basket analysis, the client was able to better judge the overall effectiveness of the marketing campaigns, which in turn resulted in a 7% decrease in the company’s marketing budget.

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