Week 10 Factor Analysis
Week 10 Factor Analysis
Check Questionnaire
Edit
Code
Transcribe
Clean Data
Gender
Row
Internet Usage Male Female Total
Light (1) 5 10 15
Heavy (2) 10 5 15
Column Total 15 15
Purchase of Fashion Clothing by Sex
& Marital Status
Sex
Purchase of
Fashion Clothing Male Female
Binary
For example:
▪ Do the various segments differ in terms of their volume of
product consumption?
▪ Do the brand evaluations of groups exposed to different
commercials vary?
▪ What is the effect of consumers' familiarity with the store
(measured as high, medium, and low) on preference for the
store?
One-Way ANOVA:
Effect of In-Store Promotion on Store Sales
N-Way Analysis of Variance
▪ Basic Concept
▪ Factor Analysis Model
▪ Statistics Associated with Factor Analysis
▪ Conducting Factor Analysis
▪ Applications of Common Factor Analysis
Factor Analysis
Football Baseball
Evening at home
Factor 1
Go to a party
Home is best place
Plays
Movies
Football Baseball
Evening at home
Factor 1
Go to a party
Home is best place
Plays
Movies
The psychographic factors identified may be used as independent variables in explaining
the differences between loyal and nonloyal consumers. Instead of the seven correlated
psychographic variables, we can use the two uncorrelated factors, i.e., homebody versus
socialite, and sports versus movies/plays, in subsequent analysis.
Factor Analysis
Football Baseball
Evening at home
Factor 1
Go to a party
Home is best place
Plays
Movies
a few of the original lifestyle statements that correlate highly with the identified factors
may be used as independent variables to explain the differences between the loyal and
nonloyal users. we can select home is best place and football as independent variables,
and drop the other five variables to avoid problems due to multicollinearity
Applications in Marketing Research
where
Xi = i th standardized variable
Aij = standardized multiple regression coefficient of variable i on common factor j
F = common factor
Vi = standardized regression coefficient of variable i on unique factor I
Ui = the unique factor for variable I
m = number of common factors
Factor Analysis Model
Fi = estimate of i th factor
Wi = weight or factor score coefficient
k = number of variables
Statistics Associated with
Factor Analysis
▪ Bartlett's test of sphericity. Bartlett's test of
sphericity is a test statistic used to examine the
hypothesis that the variables are uncorrelated in
the population. In other words, the population
correlation matrix is an identity matrix; each
variable correlates perfectly with itself (r = 1) but
has no correlation with the other variables (r = 0).
▪ Correlation matrix. A correlation matrix is a
lower triangle matrix showing the simple
correlations, r, between all possible pairs of
variables included in the analysis. The diagonal
elements, which are all 1, are usually omitted.
Statistics Associated with
Factor Analysis
Rotation of Factors
Interpretation of Factors
Analyze>Data Reduction>Factor …
SPSS Windows:
Principal Components
1. Select ANALYZE from the SPSS menu bar.
2. Click DATA REDUCTION and then FACTOR.
3. Move “Prevents Cavities [v1],” “Shiny Teeth [v2],” “Strengthen Gums [v3],”
“Freshens Breath [v4],” “Tooth Decay Unimportant [v5],” and “Attractive
Teeth [v6]” into the VARIABLES box
4. Click on DESCRIPTIVES. In the pop-up window, in the STATISTICS box check
INITIAL SOLUTION. In the CORRELATION MATRIX box, check KMO AND
BARTLETT’S TEST OF SPHERICITY and also check REPRODUCED. Click
CONTINUE.
5. Click on EXTRACTION. In the pop-up window, for METHOD select PRINCIPAL
COMPONENTS (default). In the ANALYZE box, check CORRELATION MATRIX.
In the EXTRACT box, check EIGEN VALUE OVER 1(default). In the DISPLAY
box, check UNROTATED FACTOR SOLUTION. Click CONTINUE.
6. Click on ROTATION. In the METHOD box, check VARIMAX. In the DISPLAY
box, check ROTATED SOLUTION. Click CONTINUE.
7. Click on SCORES. In the pop-up window, check DISPLAY FACTOR SCORE
COEFFICIENT MATRIX. Click CONTINUE.
8. Click OK.
Conducting Factor Analysis:
Construct the Correlation Matrix
Variables V1 V2 V3 V4 V5 V6
V1 1.000
V2 -0.530 1.000
2.5
2.0
Eigenvalue
1.5
1.0
0.5
0.0
1 2 3 4 5 6
Component Number
Conducting Factor Analysis:
Determine the Number of Factors
Factors Factors
Variables 1 2 Variables 1 2
1 X 1 X
2 X X 2 X
3 X 3 X
4 X X 4 X
5 X X 5 X
6 X 6 X
(a) (b)
High Loadings High Loadings
Before Rotation After Rotation
Conducting Factor Analysis:
Interpret Factors
1.0 V4 V6
V2 V1 0.962 -2.66E-02
V2 -5.72E-02 0.848
0.5
V3 0.934 -0.146
V1
0.0 V4 -9.83E-02 0.854
V5 V3
V5 -0.933 -8.40E-02
-0.5
V6 8.337E-02 0.885
-1.0
Communalities
Bartlett test of sphericity
Variables Initial Extraction
V1 0.859 0.928 • Approx. Chi-Square = 111.314
V2 0.480 0.562 • df = 15
V3 0.814 0.836 • Significance = 0.00000
V4 0.543 0.600
V5 0.763 0.789 • Kaiser-Meyer-Olkin measure of
V6 0.587 0.723 sampling adequacy = 0.660
Initial Eigenvalues
Factor Eigenvalue % of variance Cumulat. %
1 2.731 45.520 45.520
2 2.218 36.969 82.488
3 0.442 7.360 89.848
4 0.341 5.688 95.536
5 0.183 3.044 98.580
6 0.085 1.420 100.000
Results of
Common Factor Analysis
Extraction Sums of Squared Loadings
Factor Eigenvalue % of variance Cumulat. %
1 2.570 42.837 42.837
2 1.868 31.126 73.964
Factor Matrix
Variables Factor 1 Factor 2
V1 0.949 0.168
V2 -0.206 0.720
V3 0.914 0.038
V4 -0.246 0.734
V5 -0.850 -0.259
V6 -0.101 0.844