ProMax: A Profit Maximizing Recommendation System for Market Baskets

Abstract

Most data mining research has focused on developing algorithms to discover statistically significant patterns in large datasets. However, utilizing the resulting patterns in decision support is more of an art, and the utility of such patterns is often questioned. In this paper we formalize a technique that utilizes data mining concepts to recommend an optimal set of items to customers in a retail store based on the contents of their market baskets. The recommended set of items maximizes the expected profit of the store and is decided based on patterns learnt from past transactions. In addition to concepts of clustering and frequent itemsets, the proposed method also combines the idea of knapsack problems to decide on the items to recommend. We empirically compare our approach with existing methods on both real and synthetic datasets and show that our method yields better profits while being faster and simpler.