What is the purpose of market basket analysis?

The purpose of market basket analysis is to identify combinations of items that occur together more frequently in transactions. This analytical technique is used primarily in retail to understand customer purchasing behavior. By examining which products are often bought together, businesses can make informed decisions about product placement, bundling, and promotional strategies. For example, if data indicates that customers frequently purchase bread and butter in the same transaction, a store might choose to place these items near each other or offer them at a discounted combined price.

This insight into consumer purchasing patterns can significantly enhance marketing strategies and improve overall sales performance, which makes it a vital tool in the field of data analytics and marketing. Understanding the associations between different items allows retailers to not only optimize inventory and layout but also enhance customer satisfaction by creating more relevant offerings.