Data Mining Techniques: For Marketing, Sales, and Customer Relationship Management, Third Edition

Chapter 15

Market Basket Analysis and Association Rules

To understand the fundamental ideas of market basket analysis, conjure an image of a shopping cart filled with various products purchased by someone on a quick trip to the supermarket. The basket contains an assortment of items; for example, orange juice, bananas, soft drinks, window cleaner, and detergent. One basket tells you about what one customer purchased at one time. A complete list of purchases made by all customers provides much more information. A loyalty card makes it possible to tie together purchases by a single customer (or household) over time. No wonder that retailers and consumer goods manufacturers are interested in market basket analysis. The contents of those baskets describe the most important part of a retailing business — what merchandise customers are buying and when.

Market basket analysis is much more than just the contents of shopping carts. It is also about how characteristics of customers — such as demographics and geography — affect their purchases. It is also about what customers do not purchase, and why. If customers purchase baking powder, but no flour, what are they baking? If customers purchase a mobile phone, but no case, are you missing an opportunity? It is also about key drivers of purchases; for example, the gourmet mustard that seems to lie on a shelf collecting dust until a customer buys that particular brand of special gourmet mustard in a shopping excursion that includes hundreds ...