Chapter 9, Problem 9.5UYK

Explanation of Solution

Use of knowledge about Lift for major national big-box stores:

• Market basket analysis is used to find the pattern of items bought by the customers and predict the future purchase decisions of the customers.
• It determines how the customers buy goods together and the seller needs to know this pattern as more cross selling opportunity can be created.
• A lift compares products and shows the relative increase or decrease in base probability of one product when other products are purchased.
• If one can know all the items that have a high lift then he or she can take advantage of that knowledge.
• The store can have lucrative offers and discount on one item with the added knowledge that the probability of sale of the related item also increases by a lot.
• The store put the items together physically or sells both the items in a combo package knowing that most likely both the items will be purchased together.

For example:

One can place a particular brands conditioner along with the same brands shampoo as a combo package knowing the probability that if a customer purchases shampoo, he or she is most likely to buy conditioner of the same brand...