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Factor Analysis

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Factor Analysis

- Benefits include: (1) a more concise representationof the marketing situation and hence communication

may be enhanced; (2) fewer questions may berequired on future surveys; and, (3) perceptual mapsbecome feasible.

- Ideally, interval data (e.g., a rating on a 7 pointscale), regarding the perceptions of consumers arerequired regarding a number of features, such asthose noted above for the bank are gathered.

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We are looking for an eigenvalue above 1.0.

Cumulative percent of variance explained.

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Expensive

Exciting

Luxury

Distinctive

Not Conservative

Not Family

Not Basic

Appeals to Others

Attractive Looking

Trend Setting

Reliable

Latest Features

Trust

What shall these components be called?

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Expensive

Exciting

Luxury

Distinctive

Not Conservative

Not Family

Not Basic

Appeals to Others

Attractive Looking

Trend Setting

Reliable

Latest Features

Trust

EXCLUSIVE TRENDY RELIABLE

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= (Expensive + Exciting + Luxury + Distinctive Conservative Family Basic)/7

= (Appeals to Others + Attractive Looking + Trend Setting)/3

= (Reliable + Latest Features + Trust)/3

EXCLUSIVE

TRENDY

RELIABLE

Calculate Component Scores

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Exclusive Trendy Reliable

Beetle 1.4 6.7 6.9

Hummer 3.9 6.2 6.7

Lotus 4.1 7.3 6.7

Minivan -1.67 4.83 6.5

Pick-Up -0.43 4.93 6.3

Not much differing on

this dimension.

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Exclusive Trendy Reliable

Beetle 1.4 6.7 6.9

Hummer 3.9 6.2 6.7

Lotus 4.1 7.3 6.7

Minivan -1.67 4.83 6.5

Pick-Up -0.43 4.93 6.3

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Vehicle by Component

-3 -2 -1 0 1 2 3 4 5 6 7 8

Beetle

Hummer

Lotus

Minivan

Pick-Up

Exclusive Trendy

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Cluster Analysis

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Cluster Analysis

A mechanism for grouping objects,

frequently used for segmentation.

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How would you group these faces?

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VacationAnyone?

No Vacation

Local

Vacation

Distant

Vacation

Relaxation

Adventure

Historical

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