A combined approach for segment-specific market basket analysis

13 years 4 months ago

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Market baskets arise from consumers' shopping trips and include items from multiple categories that are frequently chosen interdependently from each other. Explanatory models of multicategory choice behavior explicitly allow for such category purchase dependencies. They typically estimate own and across-category effects of marketing-mix variables on purchase incidences for a predefined set of product categories. Because of analytical restrictions, however, multicategory choice models can only handle a small number of categories. Hence, for large retail assortments, the issue emerges of how to determine the composition of shopping baskets with a meaningful selection of categories. Traditionally, this is resolved by managerial intuition. In this article, we combine multicategory choice models with a data-driven approach for basket selection. The proposed procedure also accounts for customer heterogeneity and thus can serve as a viable tool for designing target marketing programs. A...

Yasemin Boztug, Thomas Reutterer

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