Definition of Market Basket Analysis
A data mining technique used to understand the purchase behavior of customers by finding associations between different products.
Explanation of Market Basket Analysis
Market basket analysis is a data mining technique used to identify patterns and relationships between products purchased together. This analysis helps businesses understand customer behavior and preferences, enabling them to make informed decisions about product placement, promotions, and cross-selling strategies. For example, a supermarket might use market basket analysis to discover that customers who buy bread also frequently purchase butter, prompting the store to place these items near each other. The analysis involves examining transaction data to find associations and correlations between items in a shopping cart. Market basket analysis provides insights into customer purchasing habits, allowing businesses to optimize their inventory, improve product recommendations, and increase sales. By understanding which products are commonly bought together, companies can create more effective marketing and merchandising strategies. The goal is to enhance the shopping experience, boost sales, and improve customer satisfaction by offering relevant and convenient product combinations.