Market Basket Analysis: A Powerful Tool For Gaining Consumer Insight
By Jeff Moore, director of research, Revionics
With multi-channel shoppers, the need for customer analysis and the ability to predict and guide purchasing behavior has become even more critical for retailers.
Retailers have long been trying to find the “crystal ball” to tell them more about their customers — when, how, and why they purchase a product. One way that retailers have been tackling this issue is through market basket analysis, which identifies what product combinations are bought, when they were purchased, and in what sequence during the shopping episode. This allows retailers to quickly evaluate the market basket size, contents, and value, and how products reinforce one another through complementary demand, also known as affinity.
Once market basket analysis is harnessed, retailers have the ability to more accurately target customers and ensure that they have the right product, price, promotion, placement, and space allocation for optimal financial outcomes and customer satisfaction. They can also gain a better understanding of a product’s relationship to other items in the basket, how multiples and repeat purchase behavior can be impacted by price and promotion incentives, and which transactions deliver the most value.