Here's some tips on how to make it happen, including how real-time retail analytics matter more than anything in today's more challenging retail...
Market Basket Analysis And Consumer Behavior: Detecting The Expected, And Unexpected
Here's a look at how market basket analysis can assist in identifying consumer behavior trends, both expected and unexpected.
If you've never used market basket analysis or other analytics tools in your business, then you're probably very dependent on assumptions about why people buy certain things. To really understand the purchasing decisions of your consumers, it is necessary to rely on broad data analysis to form shopper profiles based on actual purchase histories. However, it's just as important to conduct market basket studies on an ongoing and regular basis to ensure these shopper profiles evolve just as your clientele does.
Using market basket analysis and similar analytics tools can also provide a more insightful view of why some products sell better than others. The key is to detect the expected and the unexpected in what your loyal consumers typically buy based on historical purchases, but it is also important to identify emerging trends being established by new consumers.
Once you are able to access the details, you'll discover new insight into who is shopping in your stores, and how they choose what goes on their shopping list. Some of these insights could include regional variances in how products sell, shopping behaviors heavily influenced by lifestyle choices, and even how demographic factors such as age, gender, and family size can influence purchasing decisions.
Proving The Expected
It's never safe to assume everything is going to stay the same in relation to product sales, and it goes the same for assuming how consumer behavior is going to evolve. However, while there are some things that are safe to assume, it should also be proven in the data to be true. What do your customers typically buy and why?
There are things that naturally go together such as a peanut butter and jelly, or hot dogs and hot dog buns. You've even probably seen it yourself with displays of S'mores items all together in one area of the grocery store. These are well known strategies to take advantage of consumer tendencies and understanding what people might be putting in their shopping carts.
But what about the unexpected - items that normally wouldn't go together? Only an advanced market basket analysis tool can give you the insights you need into emerging product combinations.
Finding And Analyzing The Unexpected
Do you notice when customers start buying unexpected product combinations? Without a capable data management platform combined with market basket analysis tools, you will not only miss these unexpected trends, you will also miss out on the opportunity to take advantage of these insights by creating joint promotions or cross-merchandising of displays.
Here are some unexpected, and highly correlated trends found using iControl's retail analytics software:
- Hamburger and tomatoes
- Beef and pasta
- Chicken breast and pasta
Why are people buying these together? Identifying them is one thing, understanding the reason they happened is another.
Without the analytics to first help you determine these trends, it's going to be impossible to consider the underlying "why" of these consumer behaviors. You'll be able to dig in deeper to understand the purchasing habits of your consumers and better predict B2B strategy and trends, as well as plan your promotions surrounding these predictions.
If you've figured out the expected and unexpected combinations, what about additional factors behind consumer behavior? Sometimes it's due to regional or geographic influences, as well as specific shopper types.
Why Region Matters
You may have stores spread throughout the country, and it's a challenge to find out why certain products sell in specific regions without the help of advanced analytics. Market basket analysis can tell you a lot about sales in different regions, since sales vary widely depending on the location.
A good example is the sales of ketchup in southern Illinois. Did you know ketchup sales are dramatically higher there in May? Evidence of how important ketchup is there can be seen from the famous sale of a giant water tower made into the guise of a ketchup bottle.
Knowing this will open up other doors to consider these factors. Maybe southern Illinois has a regional barbecue contest every year, which is why ketchup sales spike at this time.
Without analytic tools, retailers aren't able to identify these trends and be able to proactively plan or promote for the upcoming changes in demand.
Analyzing the Type of People Behind Buying Behavior
We all know consumers have different tastes, though do you really know what type of personalities your loyal customers have? You may realize they buy a specific brand of cereal in your store, yet what does this say about what else they're likely to purchase?
For example, market basket analysis can help determine whether someone who buys cereal is also a convenience type of shopper who looks for items like lunchables or box dinners that help to save time.
In addition, you can better identify your health-conscious consumers who will typically buy healthier options in the store such as fruit and yogurt, and market to them with more relevant offers and promotions.
iControl's retail analytics tools are designed for retailers with a superior market basket analysis, along with other top-tier analytic systems. There is more psychology involved in retail than you may have thought, and it can be an extremely crucial factor in your success as a retailer.
Contact us to find out more about how we can you gain valuable insights needed in order to successfully plan for upcoming trends based on consumer behavior.