The world of association

While Bayesian inference and statistical distributions are formidable topics and well worth the ink and mental exertion, when it comes to forecasting and customer modelling, my mind wanders from thoughts of aggregation versus innovation to queens gambit and then to thinking fast and slow. 

Half an hour of commentary on Petrosian vs. Kasparov and barely sweating on treadmill it is back to Kahneman. 

All businesses are based either on aggregation of goods and service or innovating a product or service. If a business is not innovating, it has to constantly aggregate to grow. Entering in to new geographies, trying to find new customers, expanding into new lines of goods, increasing share of wallet, acquisitions are all hallmark of collection based growth. Recently the nature of aggregation has changed. Things that were impossible to aggregate are now easily collected, shared,  regurgitated and with speed of dispersion that is extremely complex to measure or predict. Hard goods, soft thoughts and connections of all sorts, available for gathering. The innovation in gathering and packaging is an old art for businesses, but everything that was available before lacked scale due limitation of the medium is now easily created, destroyed, recreated and most importantly, connected. Scaling and aggregation of connections has opened up and disrupted established business norms. The change of medium is a paradigm shift.

Association analysis gives us the prediction, what goods have a higher chance of being bought with other goods. With basket analysis you can see the relation of product A with product B that only exists in the need of the buyer. There may be no other viable attribute relationship between the two products. Target' diapers and beer is probably the most famous example and next to it is Amazon's recommendation engine.

But products are predictable and easy to identify with availability of historical evidence. A lot more fascinating happening is the same concept in human mind. Priming, where words are associated in our mind, unbeknownst to us, with other words. The triggering of one word might act as a carrot to lure into mind the associated words. Even more curious is the discovery that word affiliations actually have physical implications.  Unfortunately or fortunately(I really am not so cozy with the idea of letting others into my minds thesaurus ) these associations are harder to measure. Nonetheless experiments have shown these associations exist and people tend to act predictably with mere stimuli of a word or an image. No wonder despite the obviousness of sales lures and ubquity of marketing slogans they still work.