Internal Relationships
Introduction An organization has to manage relationships across a broad spectrum of stakeholders. One of such stakeholders is the employees of the company. This is referred to as internal market. The gamut of employee is usually covered under human resource management. But internal relationship management also looks at how they impact the external consumer market. […]
Importance of Customer Relationship Management (CRM)
Customer Relationship management is the strongest and the most efficient approach in maintaining and creating relationships with customers. Customer relationship management is not only pure business but also ideate strong personal bonding within people. Development of this type of bonding drives the business to new levels of success. Once this personal and emotional linkage is […]
Steps in Advertising Process
“Mass demand has been created almost entirely through the development of Advertising” Calvin Coolidge in the New York Public Library. For the development of advertising and to get best results one need to follow the advertising process step by step. The following are the steps involved in the process of advertising: Step 1 – Briefing: […]
International Sourcing is the Backbone of International Retailing
In the current times International Retailing industry is largely characterised by international sourcing. Though one might argue that for centuries countries have been engaged in sourcing materials from different countries, international sourcing as in the retail trade has grown and changed over a period of time. In the initial stages, the impetus for retailing of […]
The Future of Shopping Malls
The word shopping mall brings to mind certain specific kinds of images. For instance, as soon as the word mall is used, people start imagining a huge retail space filled with name brand departmental stores. Consumers have become used to these kinds of malls for the past 50 years. Also, in the initial years, both […]
Factor Analysis is a data reduction technique. Given a large number of attributes, factor analysis identifies a few underlying dimensions by grouping the attributes based on the correlation between the attributes. For example, price of a product, the cost after sales service, and maintenance expense can be identified as a part of single dimension: Total Cost
Attributes such as Insomnia, Nausea and Suicidal Tendency can be collectively described by a single term: Depression. Here three variables/attributes have been represented by a single factor.
Factor analysis is usually more meaningful when it is followed by subsequent procedures such as clustering. Following are some of the applications of this method:
While factor analysis is used in several fields such as psychometrics, psychology, physical sciences, etc, we will focus on the topic relevant in this module: marketing research. The procedure for utilizing factor analysis in a typical marketing research study is as follows:
Industry examples requiring usage of this tool
For this method to be valid, certain assumptions must hold true:
| Var1 | Var2 | Var3 |
| 1 | 2 | 3 |
| 2 | 4 | 6 |
| 3 | 6 | 9 |
| 4 | 8 | 12 |
Each variable must be unique. Var2 and Var3 can be reduced to Var1 by dividing them by numbers 2 and 3 respectively. Since they are basically the same data sets, they cannot be used for forming factors.
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