Next Generation Market Basket Analysis
August 19th, 2010Market basket analysis, or MBA, has been a staple of retail marketers and merchandisers for decades. In a nutshell, MBA allows retailers to see what line items and promotions a customer’s “market basket” (or invoice) contains, and then look at trends across regions, categories, customer types, or other attributes. Basic MBA will tell a grocer, for example, that if there are cookies in a basket, there is usually also milk. Conversely, it will also show that if there is milk in a basket, there is no correlation with cookies also being in the basket. The grocer can then infer that cookies drive sales of milk, but that milk does not drive sales of cookies.
That is great, basic information and has been the extent of retail MBA for years. But that’s where the traditional value of MBA starts to fade and where the complexity of the SQL queries starts to increase dramatically. Retailers are thirsting for more customer insights and the next generation of market basket analysis, where multi-attribute, finer-grained questions can increase profits, better target customers, and exploit both the masses and the long tail of customer purchases and demographics.
If a marketer wants to put together a promotion directed at woodworkers, they might want to know which customers frequently purchase sandpaper and saw blades together, have purchased premium hardwood in the past 90 days, and have purchased paint products in the past six months. They can also look at customers who have purchased wood stain in the past 30 days, and then look at the purchases of those same customers for the preceding 90 days to determine what leads to a purchase of high-profit stain. However, with traditional business intelligence tools, this type of analysis becomes an exercise in patience, requiring complex queries and days if not weeks of time to actually get the insights. And it’s still not “advanced” MBA. It’s these types of questions – easy to ask, difficult to answer – that have retailers yearning for a better solution.
Going much further, the explosion of data collection systems, potential customer interaction points, and channels has dramatically increased the potential marketing opportunity available to retailers – but the available analytics technology has not been able to keep up. A decade ago, it was fine to just perform simple MBA on your point-of-sale data. Five years ago, maybe you looked at both POS and e-commerce data (probably separately). Now, you’re wondering how to integrate all of your channel data, pull mobile and social data in, and really uncover who your customers are, why they are doing what they do, and which attributes are important for your specific business or campaign.
Quantivo’s advanced market basket analysis is specifically built to answer these types of questions and combine all types of customer data easily, quickly, and with existing resources. Yes, the utopia of integrating social, POS, e-commerce, customer service, and mobile data is possible, but most retailers simply want to improve their market basket proficiency:
- Want to increase lift? Quantivo helps you uncover how items sell over time, how frequently, to whom, via which channels, on which payment mode, by which delivery mode, and on what days.
- Want to increase impulse sales? Quantivo helps you classify shopping trips based on items purchased, time of day, and frequency so that you can merchandise for dinner shoppers, wedding attendees, home remodelers, or other “trip-specific” customers.
- Want to maximize margins and optimize discounts? Quantivo helps you identify the “purchasing threshold” for specific customers, items, or segments so that you know what will get customers to visit and purchase more often.
- Want to better plan store layouts? Quantivo lets you accurately understand and exploit store-specific opportunities by comparing locations with different characteristics with normalized behavioral metrics.
It’s our design that makes Quantivo so well-suited to helping you advance your market basket analysis capabilities. Our focus on patterns and associations is ideal for purchase analysis. Our innovative database was designed for modern data and today’s multi-channel, on- and off-line customers. Our entire solution was designed to take advantage of today’s modern technologies to offer incredible analytics speed, a fast and painless deployment, and a budget-friendly price.
What do you think? Let us know.







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