Factor Analysis: Dr. R. Ravanan
Factor Analysis: Dr. R. Ravanan
Factor Analysis: Dr. R. Ravanan
Dr. R. RAVANAN
Associate Professor
Department of Statistics
Presidency College
Chennai 600 005
Introduction
• Factor analysis is a statistical techniques to study the
inter-relationships among the variables in an effort to
find a new set of factors, fever in number than the
original variables so that the factors are common
among the original variables.
• There is difference between factor analysis and
principal component analysis.
• In principal component analysis the components are
so selected that they can explain maximum variation
in the original data set.
• In factor analysis a small number of common factors
are extracted so that these common factors are
sufficient to study the relationships of original
variables.
Aims of Factor Analysis
• Factor analysis helps the researcher to reduce the number of variables to
be analyzed, thereby making the analysis easier.
• For example, Consider a market researcher at a credit card company who
wants to evaluate the credit card usage and behaviour of customers, using
various variables. The variables include age, gender, marital status, income
level, education, employment status, credit history and family background.
• Analysis based on a wide range of variables can be tedious and time
consuming.
• Using Factor Analysis, the researcher can reduce the large number of
variables into a few dimensions called factors that summarize the available
data.
• Its aims at grouping the original input variables into factors which
underlying the input variables.
• For example, age, gender, marital status can be combined under a factor
called demographic characteristics. The income level, education,
employment status can be combined under a factor called socio-economic
status. The credit card and family background can be combined under
factor called background status.
Benefits of Factor Analysis
• To identify the hidden dimensions or construct which
may not be apparent from direct analysis
2. The worked out example in the chapter will help clarify the use of Factor
Analysis in Marketing Research
Twenty 2-wheeler users were surveyed about their perceptions and image
attributes of the vehicles they owned. Ten questions were asked to each of
them, all answered on a scale of 1 to 7 (1= completely agree, 7= completely
disagree).