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    How does clustering and market basket analysis match the option package problem?

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    Retro Motors is considering offering predefined options combination packages (trim levels) for its cars rather than letting customers select individual options. The company wants to determine what the most desirable options packages are. Sven Jorgensen, Retro data analyst, has been looking at options packages and working with clustering as a data mining technique.

    Market Basket Analysis (MBA) would be appropriate for the problem and agrees to send you an e-mail containing a brief analysis of the problem.

    How does clustering and market basket analysis match the option package problem?

    Please see the attached file.

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    Solution Preview

    First of all let's explain the general characteristics of market basket analysis (mba). MBA gives us clues in order to understand customer behavior in different situations. Its purpose is to determine what types of products customers purchase together. When we know that Retro customers who buy one product are likely to buy another, it is possible for us to market the products together, or to make the purchasers of one product the target prospects for another. By targeting Retro customers who are already known to be likely buyers of specific products, the effectiveness of marketing can be significantly increased by determining and offering most desirable options packages with MBA.

    The probability that our customer will buy an item (itemset) is known as the support for the rule. If a customer purchases certain group of itemsets we ...

    Solution Summary

    First, the solution explains what a market basket analysis (mba) is and how it can be applied to the problem. Possible results from using the strategy are included. This solution is 570 words.