Business Cases

Machine Learning on Retail

Part I
1. Demand Forecasting
2. Customer Segmentation
3. Customer Targeting
4. Product Bundling
5. Order Recommendation
Demand Forecasting
Business Case #1
Step 5 Step 6

Action Success Criteria

If the Stock won’t sufficient for next Minimize the occurrence of

certain periods demand, then we understock and overstock
do restocking phenomenon

Step 7 Step *

Threshold Assumption

Stock Amount less than next certain Forecasting in time unit, it can be
time unit demand adjust to another time frame.
Step 1 Step 2

Business Problem Statement Define Data - Unit Analysis

How much demand on the

several periods ahead, so we can Time Unit (week/month/other)
restock properly ?

Step 3 Step 4

Define Data - Variable Define Data - Label

Unit, Volume, Weight, Demand in Demand over time in certain period

previous period
Customer Segmentation
Business Case #2
Step 1 Step 2

Business Problem Statement Define Data - Unit Analysis

What is the characteristics of our Customer ID

customer ?

Step 3 Step 4

Define Data - Variable Define Data - Label

Frequency, Recency, Monetary No-label (Unsupervised)

Step 5 Step 6

Action Success Criteria

To subset customer for better Get interpretable customer

promotion targeting archetype

Expected Output :
Customer Targeting
Business Case #3
Step 1 Step 2

Business Problem Statement Define Data - Unit Analysis

How to target promotion or offer to

potential customer based on Customer ID
previous customer ?

Step 3 Step 4

Define Data - Variable Define Data - Label

Frequency, Recency, Monetary Customer Loyalty Level

(Previous Customer)
Step 5 Step 6

Action Success Criteria

Offer Product Promotion to the Maximize the Return On Investment

Selected Customer

Step 7

Threshold

Top 10% Customer with highest

response rate
Product Bundling
Business Case #4
Step 1 Step 2

Business Problem Statement Define Data - Unit Analysis

What kind of product that Customer

might to buy ? Ascendant-Descendant pair

Step 3 Step 4

Define Data - Variable Define Data - Label

Product pair, Order ID, Frequency No-label (Unsupervised)

Step 5 Step 6

Action Success Criteria

Offer Product Recommendation Customer buy the offered product

to Customer if lift score below
certain number

Step 7

Threshold

Lift score below certain number

Order Recommendation
Business Case #5
Step 1 Step 2

Business Problem Statement Define Data - Unit Analysis

What kind of product that Customer

might to buy ? Ascendant-Descendant pair

Step 3 Step 4

Define Data - Variable Define Data - Label

Product pair, Order ID, Frequency No-label (Unsupervised)

Step 5 Step 6

Action Success Criteria

Offer Product Recommendation Customer buy the offered product

to Customer if lift score below
certain number

Step 7

Threshold

Lift score below certain number