Machine Learning for Business Analytics, 2nd Edition

15 ASSOCIATION RULES AND COLLABORATIVE FILTERING

In this chapter, we describe the unsupervised learning methods of association rules (also called “affinity analysis” and “market basket analysis”) and collaborative filtering. Both methods are popular in marketing for cross‐selling products associated with an item that a consumer is considering.

In association rules, the goal is to identify item clusters in transaction‐type databases. Association rule discovery in marketing is termed “market basket analysis” and is aimed at discovering which groups of products tend to be purchased together. These items can then be displayed together, offered in post‐transaction coupons, or recommended in online shopping. We describe the two‐stage process of rule generation and then assessment of rule strength to choose a subset. We look at the popular rule‐generating Apriori algorithm and then criteria for judging the strength of rules.

In collaborative filtering, the goal is to provide personalized recommendations that leverage user‐level information. User‐based collaborative filtering starts with a user and then finds users who have purchased a similar set of items or ranked items in a similar fashion and makes a recommendation to the initial user based on what the similar users purchased or liked. Item‐based collaborative filtering starts with an item being considered by a user and then locates other items that tend to be co‐purchased with that first item. We explain the technique and the ...