Suppose you work at Costco or another major, national, big-box store, and you do

Question

Suppose you work at Costco or another major, national, big-box store, and you do a marketbasket analysis and identify the 25 pairs of items in the store that have the highest lift and the 25 pairs of items that have the lowest lift. What would you do with this knowledge? Costco (or your big-box store) doesn’t have salespeople, so up-selling is not an option. What else might you do with information about these items’ lift? Consider advertising, pricing, item location in stores, and any other factor that you might adjust. Do you think the lift calculations are valid for all stores in the United States (or other country)? Why or why not? Are the 50 pairs of products with the highest lift and lowest lift the best place to focus your attention? What other 50 pairs of products might you want to consider? Explain.

Explanation / Answer

A market basket analysis is used to determine the products which are doing good and which are not meeting the expectations. Highest lift products are those which are bought by the customers very frequently whereas lowest lift products are the ones which are least bought by the customers. The reasons for highest and lowest lift are as mentioned below:

Highest lift:

Demand is high because of the quality of the product.

Price feasibility can also be the reason.

Product may be a fast-moving consumer good due to which a product is bough very often.

Product may have an attractive look because of which the customers might get into buying the same.

Lowest lift:

Poor quality of product.

Less demand

Not-so attractive looking.

A unbalanced shelf placement may keep a good product away from the eyes of customers as a result of which they may not buy it.

The knowledge of lowest and highest lift can help a person to determine what strategies need to be implemented to improve the sales of product which are doing well and what strategies should be developed to improve the sales of product that are not being sold as expected.

The following things can be done to improve the sales:

Shelf placement can be changed in the store. The highest selling product can be placed along with the low selling product. It is because the person will more frequently see the low selling product and may end up in in buying the same.

The low selling product can be placed in the store where the people visits more. The products can be displayed in plethora to attract more customers. More customers can be attracted if a product is made the center of attraction in the display.

Various schemes such as combo selling can be done to increase the sales of low selling product. For example, product X can be sold in combination with product Y at a lower than the usual rate.

Advertising can be done via newspapers, hoardings, and other mediums such as catalogue, magazines and pamphlets etc.

Some other things that can be done with the help of derived knowledge are:

The products with highest lift can be procured in more quantities to improve the profits.

The low selling products can be modified in terms of their features, prices, packaging etc.

Yes, the lift calculations are valid for all the states in U.S. it is because, a same strategy with minor changes can work for all the products which belong to a same category. Doing so will lead to enhancement in the outputs.

Yes, the 50 pairs should be focus the attention because they are the major factors which contribute to a business and at the same time acts as a hurdle in the business process.

Other pairs that can be considered are the ones which are sold in intermediate ranges. This is because doing so will lead to a major change in the revenue of the store.

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