Retail Industry Glossary: Market Basket Analysis


Market Basket Analysis is an algorithm that examines a long list of transactions in order to determine which items are most frequently purchased together. It takes its name from the idea of a person in a supermarket throwing all of their items into a shopping cart (a "market basket"). The results can be useful to any company that sells products, whether it's in a store, a catalog, or directly to the customer.

Market Basket Analysis is used to determine which products sell together. As such, the input to a Market Basket Analysis is normally a list of sales transactions, where each column represents a product and each row represents either a sale or a customer, depending on whether the goal of the analysis is to find which items sell together at the same time, or to the same person. The cells of the data normally contain only 1 (bought product) or 0 (did not buy product) values, though PolyAnalyst can work with other data in the cells, such as quantity or revenue. 


This information will enable the retailer to understand the buyer's needs and rewrite the store's layout accordingly, develop cross-promotional programs, or even capture new buyers.

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