IDEAS home Printed from https://ideas.repec.org/a/spr/compst/v28y2013i2p519-539.html
   My bibliography  Save this article

Variable selection for market basket analysis

Author

Listed:
  • Katrin Dippold
  • Harald Hruschka

Abstract

Results on cross category effects obtained by explanatory market basket analyses may be biased as studies typically investigate only a small fraction of the retail assortment (Chib et al. in Advances in econometrics, vol 16. Econometric models in marketing. JAI, Amsterdam, pp 57–92, 2002 ). We use Bayesian variable selection techniques to determine significant cross category effects in a multivariate logit model. Hence, we achieve a reduction of coefficients to be estimated which decreases computation time heavily and thus allows to consider more product categories than most previous studies. Next to the extension of numbers of categories, the second purpose of this paper is to learn about the capabilities of different variable selection algorithms in the context of market basket analysis. We present three different approaches to variable selection and find that an adaptation of a technique by Geweke (Contemporary Bayesian econometrics and statistics. Wiley, Hoboken, 2005 ) meets the requirements of market basket analysis best, namely high numbers of observations and cross category effects. For a real data set, we show (1) that only a moderate fraction of possible cross category effects are significantly different from zero (one third for our data), (2) that most of these effects indicate complementarity and (3) that the number of considered product categories influences significances of cross category effects. Copyright Springer-Verlag 2013

Suggested Citation

  • Katrin Dippold & Harald Hruschka, 2013. "Variable selection for market basket analysis," Computational Statistics, Springer, vol. 28(2), pages 519-539, April.
  • Handle: RePEc:spr:compst:v:28:y:2013:i:2:p:519-539
    DOI: 10.1007/s00180-012-0315-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00180-012-0315-3
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s00180-012-0315-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Boztug, Yasemin & Reutterer, Thomas, 2008. "A combined approach for segment-specific market basket analysis," European Journal of Operational Research, Elsevier, vol. 187(1), pages 294-312, May.
    2. Rakesh Niraj & V. Padmanabhan & P. B. Seetharaman, 2008. "Research Note—A Cross-Category Model of Households' Incidence and Quantity Decisions," Marketing Science, INFORMS, vol. 27(2), pages 225-235, 03-04.
    3. D. R. Cox, 1972. "The Analysis of Multivariate Binary Data," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 21(2), pages 113-120, June.
    4. Puneet Manchanda & Asim Ansari & Sunil Gupta, 1999. "The “Shopping Basket”: A Model for Multicategory Purchase Incidence Decisions," Marketing Science, INFORMS, vol. 18(2), pages 95-114.
    5. David R. Bell & James M. Lattin, 1998. "Shopping Behavior and Consumer Preference for Store Price Format: Why “Large Basket” Shoppers Prefer EDLP," Marketing Science, INFORMS, vol. 17(1), pages 66-88.
    6. Smith M. & Kohn R., 2002. "Parsimonious Covariance Matrix Estimation for Longitudinal Data," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 1141-1153, December.
    7. Roger Betancourt & David Gautschi, 1990. "Demand Complementarities, Household Production, and Retail Assortments," Marketing Science, INFORMS, vol. 9(2), pages 146-161.
    8. Yasemin Boztuğ & Lutz Hildebrandt, 2008. "Modeling Joint Purchases with a Multivariate MNL Approach," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 60(4), pages 400-422, October.
    9. Ward, Michael D. & Gleditsch, Kristian Skrede, 2002. "Location, Location, Location: An MCMC Approach to Modeling the Spatial Context of War and Peace," Political Analysis, Cambridge University Press, vol. 10(3), pages 244-260, July.
    10. S. Magnussen & R. Reeves, 2007. "Sample-based Maximum Likelihood Estimation of the Autologistic Model," Journal of Applied Statistics, Taylor & Francis Journals, vol. 34(5), pages 547-561.
    11. Sri Devi Duvvuri & Asim Ansari & Sunil Gupta, 2007. "Consumers' Price Sensitivities Across Complementary Categories," Management Science, INFORMS, vol. 53(12), pages 1933-1945, December.
    12. Groenewald, Pieter C. N. & Mokgatlhe, Lucky, 2005. "Bayesian computation for logistic regression," Computational Statistics & Data Analysis, Elsevier, vol. 48(4), pages 857-868, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ural Gökay Çiçekli & İnanç Kabasakal, 2021. "Market Basket Analysis of Basket Data with Demographics: A Case Study in E-Retailing," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 9(1), pages 1-12, June.
    2. Dippold Katrin & Hruschka Harald, 2013. "A Model of Heterogeneous Multicategory Choice for Market Basket Analysis," Review of Marketing Science, De Gruyter, vol. 11(1), pages 1-31, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dippold, Katrin & Hruschka, Harald, 2010. "Variable Selection for Market Basket Analysis," University of Regensburg Working Papers in Business, Economics and Management Information Systems 443, University of Regensburg, Department of Economics.
    2. Kim, Chul & Jun, Duk Bin & Park, Sungho, 2018. "Capturing flexible correlations in multiple-discrete choice outcomes using copulas," International Journal of Research in Marketing, Elsevier, vol. 35(1), pages 34-59.
    3. Harald Hruschka, 2017. "Multi-category purchase incidences with marketing cross effects," Review of Managerial Science, Springer, vol. 11(2), pages 443-469, March.
    4. Richards, Timothy J. & Hamilton, Stephen F. & Yonezawa, Koichi, 2018. "Retail Market Power in a Shopping Basket Model of Supermarket Competition," Journal of Retailing, Elsevier, vol. 94(3), pages 328-342.
    5. Vithala R. Rao & Gary J. Russell & Hemant Bhargava & Alan Cooke & Tim Derdenger & Hwang Kim & Nanda Kumar & Irwin Levin & Yu Ma & Nitin Mehta & John Pracejus & R. Venkatesh, 2018. "Emerging Trends in Product Bundling: Investigating Consumer Choice and Firm Behavior," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 107-120, March.
    6. Harald Hruschka, 2017. "Analyzing the dependences of multi-category purchases on interactions of marketing variables," Journal of Business Economics, Springer, vol. 87(3), pages 295-313, April.
    7. Kwak, Kyuseop & Duvvuri, Sri Devi & Russell, Gary J., 2015. "An Analysis of Assortment Choice in Grocery Retailing," Journal of Retailing, Elsevier, vol. 91(1), pages 19-33.
    8. Ma, Yu & Seetharaman, P.B. & Narasimhan, Chakravarthi, 2012. "Modeling Dependencies in Brand Choice Outcomes Across Complementary Categories," Journal of Retailing, Elsevier, vol. 88(1), pages 47-62.
    9. David A. Schweidel & Young-Hoon Park & Zainab Jamal, 2014. "A Multiactivity Latent Attrition Model for Customer Base Analysis," Marketing Science, INFORMS, vol. 33(2), pages 273-286, March.
    10. Timothy J. Richards, 2017. "Analysis of Umbrella Branding with Crowdsourced Data," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 135-150, April.
    11. Harald Hruschka, 2022. "Analyzing joint brand purchases by conditional restricted Boltzmann machines," Review of Managerial Science, Springer, vol. 16(4), pages 1117-1145, May.
    12. Kopalle, Praveen & Biswas, Dipayan & Chintagunta, Pradeep K. & Fan, Jia & Pauwels, Koen & Ratchford, Brian T. & Sills, James A., 2009. "Retailer Pricing and Competitive Effects," Journal of Retailing, Elsevier, vol. 85(1), pages 56-70.
    13. Maxim Sinitsyn, 2012. "Coordination of Price Promotions in Complementary Categories," Management Science, INFORMS, vol. 58(11), pages 2076-2094, November.
    14. Bonnet, Céline & Richards, Timothy J., 2016. "Models of Consumer Demand for Differentiated Products," TSE Working Papers 16-741, Toulouse School of Economics (TSE).
    15. Jiang, Yuanchun & Shang, Jennifer & Liu, Yezheng & May, Jerrold, 2015. "Redesigning promotion strategy for e-commerce competitiveness through pricing and recommendation," International Journal of Production Economics, Elsevier, vol. 167(C), pages 257-270.
    16. Gauri, Dinesh K. & Ratchford, Brian & Pancras, Joseph & Talukdar, Debabrata, 2017. "An Empirical Analysis of the Impact of Promotional Discounts on Store Performance," Journal of Retailing, Elsevier, vol. 93(3), pages 283-303.
    17. Rakesh Niraj & V. Padmanabhan & P. B. Seetharaman, 2008. "Research Note—A Cross-Category Model of Households' Incidence and Quantity Decisions," Marketing Science, INFORMS, vol. 27(2), pages 225-235, 03-04.
    18. Nitin Mehta, 2007. "Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis," Marketing Science, INFORMS, vol. 26(2), pages 196-217, 03-04.
    19. Puligadda, Sanjay & Ross, William T. & Chen, Jinjie & Howlett, Elizabeth, 2012. "When loyalties clash purchase behavior when a preferred brand is stocked out: The tradeoff between brand and store loyalty," Journal of Retailing and Consumer Services, Elsevier, vol. 19(6), pages 570-577.
    20. Carlo Russo & Rachael Goodhue, 2018. "Farmgate prices, retail prices, and supermarkets' pricing decisions: An integrated approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 24-43, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:compst:v:28:y:2013:i:2:p:519-539. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.