Introduction-

Classification
of multivariate
techniques
Multivariate Analysis

Many statistical techniques focus on just one or two

variables

Multivariate analysis (MVA) techniques allow more than

two variables to be analysed at once

Multivariate analysis is a term which is used for algorithms

that have the ability to analyze multiple variables.
EXAMPLE
• Consider a researcher who is trying to understand the factors which
influence the use of self-service banking.
• After conducting an exhaustive review of literature, the researchers
narrowed down technology acceptance model in order to study the
factors which influence self-service banking. Therefore, using this
model he defines that he wants to study effect of technology
discomfort, perceived risk, perceived ease of use and perceived
usefulness on the adoption of self-service banking by a consumer.
• The number of independent and dependent variables being studied
by the researcher is more than two.
Classification of Multivariate Techniques

• Selection of the appropriate multivariate technique depends upon-

• a) Are the variables divided into independent and dependent classification?
• b) If Yes, how many variables are treated as dependents in a single analysis?
• c) How are the variables, both dependent and independent measured?
• Multivariate analysis technique can be classified into two broad categories viz., This
classification depends upon the question: are the involved variables dependent on each
other or not?
• If the answer is yes: We have Dependence methods.
If the answer is no: We have Interdependence methods.
 INTERDEPENDENCE AND
DEPENDENCE
• Interdependence, refers to a fundamental where we can say that the variables influence the
amount of variance in each other to a varying extent.
• For example in certain cases perceived ease of use influences perceived usefulness and vice
versa. Therefore there is a mutual interaction between these two variables and this is called
as interdependence.
• Dependence, refers to a fundamental way we can say that the variables can be categorised
into dependent and independent variables and the study tries to find the relationship or the
influence of independent variables on dependent variable.
• For example a simple regression analysis to find the effect of perceived usefulness, perceived
ease of use, perceived risk and technology discomfort on the adoption of self-service
banking is an dependence analysis.
• The techniques which try and find out interdependence are called as
interdependence techniques. These kind of techniques are used in order to
provide some sort of structure to the dataset.
• For example, the factor analysis and cluster analysis are the most common
interdependence techniques which are applied on metric data.
• The techniques which try and find out the effect of independent variables on
dependent variable are referred to as dependence techniques.
• Dependence techniques further can be classified on basis of the number of
dependent variables. If there is only one dependent variable and metric data
then multiple regression analysis and algorithms based on regression analysis
can be used.
• If several dependent variables are to be analyzed and researcher can move
towards Canonical correlational analysis or multivariate analysis of variance
(MANOVA). If a researcher wants to study multiple relationships of dependent
and independent variables then techniques like structural equation modelling
can be used
Types of
Multivariat
e Analysis
Techniques
 Principal
Component • Principal component analysis, or PCA, is a dimensionality
reduction method that is often used to reduce the
And dimensionality of large data sets, by transforming a large
set of variables into a smaller one that still contains most of
Common the information in the large set.
• The technique basically helps to extract a common
Factor underlying factor on basis of interdependence or
commonality of variance among the variables with minimal
Analysis loss of information. It is important to note that whenever
any sort of data condensation technique is applied there is
a loss of sensitivity of the data.
• It is up to the researcher to determine what is more
important for this study i.e. sensitivity of the data or an in-
depth analysis (which might be compromised due to large
number of variables).
 • For example, a researcher wants to study what are the
various components of a print advertisement. Therefore,
he collects data regarding various components present in a
print advertisement i.e. brand-name, trademark, copyright,
model, model details, backdrop, product, adjectives used
etc. he in total has 58 such components for which he has
collected data for more than 1000 advertisements.
Therefore. researcher lands up with 58,000 data points.
Analysis of data across 58 that components in detail is very
difficult.
EXAMPLE • Therefore, for the ease of data analysis the researcher can
reduce the 58 components on basis of factor analysis.
Factor analysis on basis of Covarinace will cluster the
components into Factors. For the present for example two
factors were generated for 58 components i.e. information
cues and attractiveness use. This made an in-depth analysis
as well as conversion of data into information by the
researcher easier.
 • Multiple regression is a statistical technique that can be used to analyze
Multiple the relationship between a single dependent variable and several
independent variables.
Regression • The objective of multiple regression analysis is to use the independent
variables whose values are known to predict the value of the single
Analysis dependent value. Each predictor value is weighed, the weights denoting
their relative contribution to the overall prediction.

• Here Y is the dependent variable, and X1,…,Xn are the n independent

variables. In calculating the weights, a, b 1,…,bn, regression analysis
ensures maximal prediction of the dependent variable from the set of
independent variables. This is usually done by least squares estimation.
Multiple Discriminant Analysis And
Logistic Regression
• In order to study the effect of multiple independent variables (which are
metric in nature) on one dependent variable (which is categorical in
nature) then the appropriate technique would be multiple discriminant
analysis. In this scenario multiple regression would not work as it assumes
all data to be in metric scale. Therefore, when the total sample can be
divided into groups or classes and the primary objective is to understand
the group differences based on multiple independent variables than the
technique used is discriminant analysis.
• For example, if researcher wants to study the difference in the perception
of perceived ease of use, perceived usefulness, technology discomfort and
perceived risk across users and non-users of self-service banking, then
discriminant analysis would be an appropriate technique to be used.
Logistic Regression

• Logistic regression-based algorithms and

models are used to predict relationships
amongst multiple independent variables
and dependent variable which might be
nonmetric. It is a nonparametric option
to multiple regression.
Canonical
Correlation Analysis

• A researcher might be faced with a

situation where he desires to find effect of
multiple independent variables on multiple
dependent variables, where both are
measured on a metric scale.
• In such circumstances a multivariate
analysis technique referred to as Canonical
Correlation analysis can be used by the
researcher. The principle behind this
particular algorithm is to develop linear
combination between the dependent and
independent variables so as to maximise
the correlation
MANOVA

• Multivariate analysis of variance, MANOVA, is a commonly

used multivariate technique. MANOVA assesses the
relationship between two or more dependent variables
and classificatory variables or factors. It is similar to
ANOVA but with the added ability to handle several
dependent variables simultaneously. It uses special
matrices to test for differences among groups.
• The uniqueness of the algorithm is that it is used to state
the relationship between those independent variables
which might be categorical in nature and multiple
dependent variables which are on metric.
• The F ratio, generalized to a ratio of the within-group
variance and total-group variance matrices, tests for
equality among treatment groups.
Conjoint Analysis:

• It is one of the emerging dependence multivariate analysis

techniques. This is a technique which is most commonly used in the
discipline of marketing as it has its applications in evaluation of
objects like new products, new services or new marketing mix is
developed by the organization. It is form of statistical analysis that
firms use in market research to understand how customers value
different components or features of their products or services.
• It is typically conducted via a specialized survey that asks
consumers to rank the importance of the specific features in
question. This technique allows the researcher to find the relative
importance of various attributes being studied. It is a technique
which makes subsets of the various levels of independent variable
being studied by the researcher and gives an evaluation in terms of
which one of those combinations is best accepted by the customers.
This is a technique which has highest applications and development
of proposed marketing mix.
Cluster Analysis

• Cluster analysis or clustering is the task of grouping a set of objects

in such a way that objects in the same group (called a cluster) are
more similar (in some sense) to each other than to those in other
groups (clusters). While doing cluster analysis, we first partition the
set of data into groups based on data similarity and then assign the
labels to the groups.

• This is one of the techniques which can be used for market

segmentation. This technique is used to develop homogenous
groups within the data. Therefore, the technique can be used for
data reduction. This particular technique involves at least three
steps. In the first step the researcher is desired to measure some
form of similarity in the sample. In the second step the researcher is
desired to partition the sample into groups and in the last step the
researcher studies the variables to determine the composition of
the groups.
Multidimensional
Scaling
• Multidimensional scaling is a visual
representation of distances or dissimilarities
between sets of objects
• For example, given a matrix of perceived
similarities between various brands of air
fresheners, MDS plots the brands on a map
such that those brands that are perceived to be
very similar to each other are placed near each
other on the map, and those brands that are
perceived to be very different from each other
are placed far away from each other on the
map.
 Structural Equation Modelling And
Confirmatory Factor Analysis
• Confirmatory factor analysis, is a variation of factor analysis. In circumstances where the structure
of the covariance, among the variables being studied, is not known to the researcher the
researcher prefers to use common factor analysis it is also referred to as exploratory factor
analysis. In this technique the researcher tries to explore the plausible structures, in the variables,
which can be developed and then accepts the best one. However, there are certain
circumstances where the researcher, based on review of literature, already knows the structure of
covariance, among the variables being studied.
• In this particular case applying an exploratory factor analysis might result in results which are
counter-productive to a predetermined structure. In these situations, the researcher is advised to
use confirmatory factor analysis, where this starting point is the structure of covariance, as
defined by the researcher. Confirmatory factor analysis, is a model-based assessment of the
proposed options. Structural equation modelling as a technique uses confirmatory factor analysis
as an data preparation and data editing step. Only when a model has converged and passed the
confirmatory factor analysis, is it ready to apply the technique of structural equation modelling.
CFA
• Confirmatory factor analysis (CFA) is a multivariate statistical procedure
that is used to test how well the measured variables represent the
number of constructs. Confirmatory factor analysis (CFA)
and exploratory factor analysis (EFA) are similar techniques, but in
exploratory factor analysis (EFA), data is simply explored and provides
information about the numbers of factors required to represent the data.
• In exploratory factor analysis, all measured variables are related to every
latent variable. But in confirmatory factor analysis (CFA), researchers can
specify the number of factors required in the data and which measured
variable is related to which latent variable. Confirmatory factor analysis
(CFA) is a tool that is used to confirm or reject the measurement theory.
SEM

• Structural equation modelling as a technique

allows development of paths/relationships for
each set of dependent variables. It is one of the
best techniques which allows a simultaneous
assessment of multiple regression equations at
the same time.
• It is important for the readers to know that a
model in which the paths re defined in terms of
covariance is referred to as confirmatory factor
analysis. While the model in which the paths
are defined in terms of regression is referred to
as measurement model and the technique is
structural equation modelling
Structural Equation Modeling (SEM)

Model
Model Specification
Specification

Estimation
Estimation

Evaluation
Evaluation of
of Fit
Fit

Respecification
Respecification of
of the
the Model
Model

Interpretation
Interpretation and
and Communication
Communication
19-22
Structural Equation Modeling (SEM)

19-23
Process of Conducting Multivariate
Analysis
Objectives of MVA
• 1) Data reduction or structural simplification: This helps data to get simplified as possible
without sacrificing valuable information. This will make interpretation easier.
• (2) Sorting and grouping: When we have multiple variables, Groups of “similar” objects or
variables are created, based upon measured characteristics.
• (3) Investigation of dependence among variables: The nature of the relationships among
variables is of interest. Are all the variables mutually independent or are one or more
variables dependent on the others?
• (4) Prediction Relationships between variables: must be determined for the purpose of
predicting the values of one or more variables based on observations on the other
variables.
• (5) Hypothesis construction and testing. Specific statistical hypotheses, formulated in
terms of the parameters of multivariate populations, are tested. This may be done to
validate assumptions or to reinforce prior convictions.