Market Basket Analysis
Imagine you work for a retailer that sells dozens of products and your boss comes to you and asks the following questions:
- What products are purchased together most frequently?
- How should the products be organized and positioned in the store?
- How do we identify the best products to discount via coupons?
You might reasonably respond with complete bewilderment, as those questions are very diverse and do not immediately seem answerable using a single algorithm and dataset. However, the answer to all those questions and many more is market basket analysis. The general idea behind market basket analysis is to identify and quantify which items, or groups of items, are purchased together frequently enough to drive insight into customer behavior and product relationships.
Before we dive into the analytics, it is worth defining the term market basket. A market basket is a permanent set of products in an economic system. Permanent does not...
