Conjoint Analysis – Meaning, Usage and its Limitations
February 12, 2025
Introduction Samsung is a global conglomerate that operates in the “White Goods” market or the market for consumer appliances and gadgets. The company that is a South Korean family owned business has global aspirations and as the recent expansion into newer markets has shown, Samsung is not content with operating in some markets in the […]
The new age youth comprise a major chunk of potential market for the international fashion retailers and hence they tend to focus exclusively on this segment. Marketers have further divided the youth into kids, pre-teens, tweens and teens depending upon the age groups. Marketing and advertising aims to build brand awareness as well as promote […]
The core function of the marketing department is to understand and satisfy consumer need, wants and desire. Consumer behaviour captures all the aspect of purchase, utility and disposal of products and services. In groups and organization are considered within the framework of consumer. Failing to understand consumer behaviour is the recipe for disaster as some […]
The Benefits of CRM Solutions There are many benefits of CRM or Customer Relationship Management software. They include automation of the upstream and the downstream sales and marketing processes. Further, by implementing a CRM solution, businesses can integrate their routine and administrative tasks associated with cold calling, customer management, and pre-sales as well as after […]
AT&T Universal Card Services entered the credit card market at a time when the market was mature and there were numerous retail banking companies dealing with credit cards. In such a situation, the company chose to introduce their credit card with a competitive edge over competition. Against a market where in customers were paying huge […]
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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