Quantzig, a leading analytics advisory firm that delivers customized analytics solutions, has announced the completion of their new article on the benefits of market basket analysis. The recent advancements in the field of data analytics have opened up a world of new opportunities for players in the food and beverage sector. Businesses capable of identifying these opportunities have succeeded in improving sales and operational efficiency. This article lists four benefits of market basket analysis that can help food industry players to drive profitable growth by analyzing the purchase patterns of its customers.
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Market basket analysis is an advanced analytics technique that leverages data mining and statistical techniques to increase sales by understanding customer purchasing patterns. It can be used effectively to increase the overall spending from the customer by bundling frequently purchased items at a discounted price. At Quantzig, we believe that leveraging market basket analysis can help food and beverage companies to gain a front-liner advantage in today’s complex business world, which is why our analysts have listed the top four benefits from a business standpoint.
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Four Benefits of Market Basket Analysis
1. Customize promotions
Market basket analysis enables food and beverage companies to analyze the purchase behavior of individual customers to estimate with relative certainty what items they are more likely to purchase next. Today, many online retailers use market basket analysis to analyze purchase behavior of each individual. Such retailers can estimate with certainty what items the individual may purchase at a specific time.
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2. Identify sales influencers
All items in a retail store have some relationship with each other – be it strong or weak. In most cases, the sale of one item is driven by the increase or decrease in the sale of other items. Leveraging market basket analysis can help retailers to study the purchasing trend of a certain SKU. This way marketers can understand the influence of such activities on the overall sales.
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3. Set the right prices
Market basket analysis can help you identify the optimal price of products by comparing the prices to identify which SKU’s are more preferred amongst certain customers. Without market basket analysis retailers would usually markdown on coffee on certain days, assuming coffee will be sold at certain times. However, market basket analysis can point out that whenever a customer buys milk, they end up purchasing coffee as well. So, whenever the sale of milk and coffee is expected to rise, retailers can mark down the price of cookies to increase the sales volume.
Our market basket analysis solutions leverage advanced algorithms and association rules to predict the likelihood of products being bought together. Learn more about the role of market basket analysis in retail.
4. Improve storefront assortment
The department system is a common assortment format adopted by leading players in the retail sector, where goods are categorized as per department and sorted. Market basket analysis helps retailers to identify items that have a close affinity to each other even if they fall into different categories. Businesses can leverage such insights and place the items with higher affinity close to each other to increase the sale.
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Quantzig is a global analytics and advisory firm with offices in the US, UK, Canada, China, and India. For more than 15 years, we have assisted our clients across the globe with end-to-end data modeling capabilities to leverage analytics for prudent decision making. Today, our firm consists of 120+ clients, including 45 Fortune 500 companies. For more information on our engagement policies and pricing plans, visit: https://www.quantzig.com/request-for-proposal