Hot Topics in Analytics

### What is Market Basket Analysis ?

It is a mathematical modelling technique based upon the theory that if a customer buy a certain group of items, they are likely to buy another group of items.

### What is the use of Market Basket Analysis ?

It is used to analyse the customer purchasing behavior & helps in increasing the sales and maintain inventory by focusing on the point of sales transaction data.

• Allows us to identify patterns in customer purchases.
• MBA uses the information to:
• Identify who customers are (not by name)
• Understand why they make certain purchases
• Gain insight about its merchandise (products):
• Fast and slow movers
• Products which are purchased together
• Products which might benefit from promotion
• Take action:
• Store layouts
• Which products to put on specials, promote, coupons…
• Ideally, we would like to answer questions like
• What products tend to be bought together?
• What products may benefit from promotion?
• What are the best cross‐selling opportunities?

#### Example:

• One basket tells about what one customer purchased at one time.

• A loyalty card makes it possible to tie together purchases by a single customer (or household) over time.

### Apriori Algorithm:

It is a level wise, breadth first algorithm which counts transaction to find frequent item sets & them derive association rules from them.

The following measures are used to evaluate the strength of association. Suppose, we are interested in the association between two events A and B:

• Support = (Number of Rows having both A & B)/(Total Number of Rows)
• Confidence = (Number of Rows having both A & B)/(Total Number of Rows with A)
• Expected Confidence = (Number of Rows having B)/(Total Number of Rows)
• Lift Confidence/(Expected Confidence)

### Analysis done for given data using Market Basket Analysis:

We had a data containing the purchasing behavior of the customer in which we did the following analysis:

### Analysis 1: Top 5 related product:

Here we can know customers buying lhs products may also buy rhs products for example customers buying Instant food products & soda also buy Hamburger meat, people buying flour & baking powder also buy sugar, etc.

### Analysis 2: Top 25 most frequently purchased items:

• By this we can analyse that if a customer is buying Other Vegetables, rolls/buns, yogurt, root vegetables & tropical fruits then with that they prefer buying Milk mostly.

### Analysis 4: Those who took particular product (‘milk’) also took:

• By this we can analyse that if a customer is buying Milk with that they prefer Other Vegetables, rolls/buns, yogurt, root vegetables & tropical fruits.