A Latent Topic Analysis and Visualization Framework for Category-Level Target Promotion in the Supermarket

Abstract

AbstractDeciding when and which products to recommend to whom is always an essential issue for retailers. In this study, we propose a mixed framework with two components to capture customer buying behavior and its changes over time and visualize these results to better help retailers choose and target products strategically for marketing. In this framework, a topic model is first used to extract customer’s purchase behavior instead of association rules or K-means as mainly used in market field. To automatically choose the optimal number of topics, we implement an approach proposed by Koltcov et al. on point-of-sale (POS) data in the supermarket. Meanwhile, to grasp the change of topics over time, we divided monthly POS data in half and applied the topic model with Renyi entropy separately. The results suggest that splitting data might be a better way to understand customer behavior. Second, we consider how to develop an effective way to visualize the results of the topic model, which is essential, because in a supermarket context, simply knowing which product categories are included under which topics is not enough to support how a supermarket promotes their products. To address this, we design a three-layer visualization approach to better interpret the topic model results and to help retailers design target promotion strategies. The design of visualization was overlooked by studies related to the use of topic models on supermarket data. Finally, to demonstrate the usefulness of our proposed framework, we conduct a simple scenario-based analysis between our framework and other models, such as Latent Dirichlet Allocation (LDA) and the Dynamic Topic Model (DTM). The results show that for most periods, our proposed framework outperforms LDA and DTM.