Chapter 9, Problem 9.22MML

Explanation of Solution

Retailer’s role:

As a retailer, one’s role in the organization is to provide ideas on how to increase sales. This is achieved by market analysis which can be done by RFM approach.

Usage of RFM and market-basket approach to increase sales:

RFM Approach:

RFM approach deals with Recently (R), Frequency (F), and Money (M) which states that,

• How recently customers purchased goods
• How often do the customers purchase goods
• How much they spend on goods

By getting these details, it is possible to examine what the customers are actually looking for.

• With these details, the organization can segment the customers like promising customers, loyal customers, recent customers, and so on...