Developing a Product Recommender System: Designing a Hybrid Model Using Data Mining Techniques

The rapid growth of World Wide Web has affected the nature of interactions between customers and companies enormously. One significant consequence of this phenomenon is definitely the emergence and development of e-commerce websites and online stores all over the web. In spite of its great benefits, online shopping could turn into a complicated procedure from the customer point of view. In most cases, online shoppers are faced with overload of information related different products and services; as a result, deciding which products or services best fit their needs, may become a difficult or even a time consuming process. Recommender systems help online shoppers handle the information overload problem by offering products or services in accordance with their preferences. The application of recommender systems, as a part of one-to-one marketing campaigns, would facilitate the product selection process, provide more customer satisfaction and could eventually increase the sales of e-commerce websites. This paper develops a product recommender system for the users of an online retail store by using data mining techniques. First, customers are clustered according to their “RFM” values considering their relative preferences over different product categories by means of “k-means” algorithm. Then, by applying a two-phase recommendation methodology which is based on a hybrid of “association rule mining” and “collaborative filtering” techniques, the system offers the list of recommendations to target customers at two different levels of product taxonomy, respectively “product categories” and “product items”. The experimental results show that, by alleviating data Sparsity and scalability limitations, the proposed recommender model has a better performance compared to some other similar models such as models which are developed based on the conventional collaborative filtering technique. The results of this research could be effectively used to accomplish the objectives of one-to-one marketing campaigns and develop personalized product recommendation strategies for different customer segments of E-commerce websites regarding their lifetime value.