Question

1. How do we build a Smart Basket for a customer? Can we rank the products customers buy based on what they keep buying in different baskets and how do products appear together in different baskets?

Answer 1

Data Mining Can Help You Get build a Smart Basket for customer.

Below are the some ways:-

Basket Analysis

Sometimes called “affinity analysis,” this looks at the items that a customer bought, which could help brick-and-motar stores improve their layouts or online companies like Amazon recommend related products. The “basket” refers to what shoppers use when they are shopping.

It’s based on the assumption that you can predict future customer behavior by past performance, including purchases and preferences. And it’s not just grocery stores that can use this data. Here are a few ways it can be applied in various industries.

Sales Forecasting

This looks at when customers bought, and tries to predict when they will buy again. You could use this type of analysis to determine a strategy of planned obsolescence or figure out complimentary products to sell.

This also looks at the number of customers in your market and predicts how many will actually buy. For example, imagine if you have a coffee shop in Seattle. Here are questions you might ask:

How many people/households/businesses within a mile of your store will buy your coffee?

How many competitors are in that mile?

How many people/households/businesses in 5 miles?

How many competitors in those 5 miles?

Database Marketing:-

By examining customer purchasing patterns and looking at the demographics and psychographics of customers to build profiles, you can create products that will sell themselves.

Of course for a marketer to get any value out of a database, it must continue to grow and evolve. You feed database information from sales, surveys, subscriptions and questionnaires. And then you target customers based upon this intelligence.

Purchase records stored via a club card that you offer via incentives like 5% off purchases or accumulation of points.

Contests you run to collect additional information about where people live.

Email newsletter you use to update customers weekly, but also to send out surveys in which you collect additional information concerning new products and promotions.

Twitter account that doubles as a flash promotion tool and customer service hub where you listen to the good and bad of what your followers are saying…and then respond.

Call Detail Record Analysis:-

If your company depends upon telecommunications, then you can mine that incoming data to see use patterns, build customer profiles from these patterns and then construct a tiered pricing structure to maximize profit. Or you could build promotions that reflect your data.

Market Segmentation:-

One of the best uses of data mining is to segment your customers. And it’s pretty simple. From your data you can break down your market into meaningful segments like age, income, occupation or gender. And this works whether you are running email marketing campaigns or SEO strategies.

Segmentation can also help you understand your competition. This insight alone will help you identify that the usual suspects are not the only ones targeting the same customer money as you are.