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Application Of Factor Analysis - Factor Analysis And Conjoint Analysis
Research Methodology - Factor Analysis And Conjoint Analysis
Application Of Factor Analysis - Factor Analysis And Conjoint Analysis
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As pointed out earlier, a real life situation is highly complex and it consists of several variables.
Application
Of Factor Analysis:
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.
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.
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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