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Research Methodology - Factor Analysis And Conjoint Analysis

Application Of Factor Analysis - Factor Analysis And Conjoint Analysis

   Posted On :  27.05.2018 08:52 pm

As pointed out earlier, a real life situation is highly complex and it consists of several variables.

Application Of Factor Analysis:
 

1. Model Building For New Product Development:

 
As pointed out earlier, a real life situation is highly complex and it consists of several variables. A model for the real life situation can be built by incorporating as many features of the situation as possible. But then, with a multitude of features, it is very difficult to build such a highly idealistic model. A practical way is to identify the important variables and incorporate them in the model. Factor analysis seeks to identify those variables which are highly correlated among themselves and find a common factor which can be taken as a representative of those variables. Based on the factor loading, some of variables can be merged together to give a common factor and then a model can be built by incorporating such factors. Identification of the most common features of a product preferred by the consumers will be helpful in the development of new products.

2. Model Building For Consumers:

 
Another application of factor analysis is to carry out a similar exercise for the respondents instead of the variables themselves. Using the factor loading, the respondents in a research survey can be sorted out into various groups in such a way that the respondents in a group have more or less homogeneous opinions on the topics of the survey. Thus a model can be constructed on the groups of consumers. The results emanating from such an exercise will guide the management in evolving appropriate strategies towards market segmentation.

 

Tags : Research Methodology - Factor Analysis And Conjoint Analysis
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