Market basket analysisMarket basket analysis identifies customers purchasing habits. It provides insight into the combination of products within a customers 'basket'. The term 'basket' normally applies to a single order. However, the analysis can be applied to other variations. We often compare all orders associated with a single customer. Ultimately, the purchasing insights provide the potential to create cross sell propositions:
Developing this understanding enables businesses to promote their most profitable products. It can also encourage customers to buy items that might have otherwise been overlooked or missed. Market basket analysis delivers the "Amazon effect" to your business. When you place an order on Amazon, a list of potentially interesting products (based on a profile of what other "similar" customers have ordered) is presented. They are seeking to encourage purchase of additional items and thereby increase average basket value. The following, often quoted, example illustrates the benefits of understanding purchasing habits. Beer and nappies
What did the supermarket do with this knowledge?
Implementing market basket analysisThis type of analysis is certainly not the exclusive domain of the supermarkets. Information required:
Unlike your sales system that shows which products customers purchased line-by-line, market basket analysis requires data to be reformatted, creating market basket records. To find out more about implementation please read David Willis' article 'How to implement Market Basket Analysis'. Gaining value from Market Basket AnalysisMany of Information Drivers clients are interested in what their customers have purchased and in what combination. They use this information to direct on-line and off-line propositions. Would you like to understand your customer purchasing habits? Could market basket analysis be applied to your business and or website? A website implementation is an ideal candidate. Just like Amazon, you could use your website data to drive propositions, advert and product placement. Would some guidance with implementing market basket analysis be useful? If that's a 'Yes', get in touch to arrange an informal discussion call David Willis directly on: 07956 650 404 or send him an email: david.willis@information-drivers.com. Not ready yet? Perhaps you would you be interested in the results? Please view the results of our Business Opportunity Assessment. |
Phone: 07956 650 404 contact@information-drivers.comHello and thank you for visiting Information Drivers, I'm David Willis and this is my consultancy. I've been helping businesses improve their sales and marketing performance for over 20 years. To find out how to improve your organisations performance read my Data Blog. "Our implementation was fully supported by Information Drivers – from initial scoping, implementation, and training, through to ‘go-live’ and beyond. Very good technical and marketing knowledge from our consultants has put us in a strong position to translate valuable data into business benefits." ~ Neil Jones, formerly Project Manager, The Consortium Insight Music is a on-line music retailer, part of the EMI Group. It creates music compilations for the European mail order market. Insight Music planned for expansion of sales and direct marketing to support the retail market. We integrated their European customer data into a single reliable marketing database. With data centralised, we delivered sales analysis and support for direct marketing. |