Market Basket Analysis is one of the key techniques used by large retailers to uncover associations between items. It works by looking for combinations of items that occur together frequently in transactions. To put it another way, it allows retailers to identify relationships between the items that people buy.
Association Rules are widely used to analyze retail basket or transaction data, and are intended to identify strong rules discovered in transaction data using measures of interestingness, based on the concept of strong rules.
Insight 360 has implemented a ready made product, Maestro Insights- Market basket analysis- to consume transactions and produce the market basket analysis in interactive dashboard ready to be consumed by the business team to design right mix and packaging. In addition to calculating the association, the confidence and the support it allows tracking the associations over the time and drill down to the store and the channel.
The association rule is expressed as {X} => {Y} example: {731, 721} => {711}
N = number of all items in customers transactions at cashier
Frequency: Count of transactions that contain an item
Support: the percentage of transactions that contain an item(s) of interest
Confidence: the percentage of of transactions which contain {X} that also contain {Y}
Lift: how strong this association compared to pure random