What is Basket Analysis ?
What is Basket Analysis ?
What is Basket Analysis - To learn more about this author, visit Nilesh Shah's Website.
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Basket Analysis is a modelling technique based upon the theory that if you buy a certain group of items, you are more (or less) likely to buy another group of items. For example, if a couple aged between 25 and 35 buys some apparel for their own need, they will surely buy something for age group between 0 and 5.
The set of items a customer buys is referred to as an itemset, and market basket analysis seeks to find relationships between purchases.
Traditionally, the relationship will be in the form of a rule. This technique is used to uncover interesting cross-sells and related products.
The Customer here is a parent and will surely buy some articles for their kids. This is referred to as the SUPPORT for the rule. The conditional probability that a customer will purchase kids articles is referred to as the CONFIDENCE.
As a merchandiser you should look for pairs with a high confidence.
A confidence of 100% means that the products are always purchased together.
The higher the confidence means that there is probably a strong relationship between the products.
After examining the confidence look at the support. A low support means that the pair isn’t purchased a lot.
This doesn’t mean it would make a bad cross sell just that they aren’t ordered together very frequently.
Use your own judgment. Obviously if you see something with both a high confidence and high support you’ve found something interesting.
What is Basket Analysis - To learn more about this author, visit Nilesh Shah's Website.
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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