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Unit Iv

Multivariate analysis is crucial in marketing research and data analytics as it helps understand the relationships between multiple variables and their impact on outcomes. Techniques include dependence methods like multiple linear regression and logistic regression, as well as interdependence methods such as MANOVA, factor analysis, and cluster analysis. These methods enable analysts to make informed predictions and decisions by exploring causal relationships and grouping variables meaningfully.

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4 views15 pages

Unit Iv

Multivariate analysis is crucial in marketing research and data analytics as it helps understand the relationships between multiple variables and their impact on outcomes. Techniques include dependence methods like multiple linear regression and logistic regression, as well as interdependence methods such as MANOVA, factor analysis, and cluster analysis. These methods enable analysts to make informed predictions and decisions by exploring causal relationships and grouping variables meaningfully.

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sonia
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UNIT IV

Multivariate Analysis
• These techniques are important in marketing research because most business problems are
multidimensional and can only be understood when multivariate techniques are used.
• In data analytics, we look at different variables (or factors) and how they might impact certain
situations or outcomes. For example, in marketing, you might look at how the variable “money spent
on advertising” impacts the variable “number of sales.” In the healthcare sector, you might want to
explore whether there’s a correlation between “weekly hours of exercise” and “cholesterol level.” This
helps us to understand why certain outcomes occur, which in turn allows us to make informed
predictions and decisions for the future.
• multivariate analysis encompasses all statistical techniques that are used to analyze more than two
variables at once.
Multivariate analysis techniques:
Dependence vs. interdependence

• Dependence methods are used when one or some of the variables are
dependent on others. Dependence looks at cause and effect; in other
words, can the values of two or more independent variables be used to
explain, describe, or predict the value of another, dependent variable?
To give a simple example, the dependent variable of “weight” might be
predicted by independent variables such as “height” and “age.”
• Interdependence methods
• Interdependence methods are used to understand the
structural makeup and underlying patterns within a
dataset. In this case, no variables are dependent on
others, so you’re not looking for causal relationships.
Rather, interdependence methods seek to give meaning
to a set of variables or to group them together in
meaningful ways.
Multivariate analysis techniques.
• Multiple linear regression
• Multiple logistic regression
• Multivariate analysis of variance (MANOVA)
• Factor analysis
• Cluster analysis
Multivariate analysis techniques.
• Multiple linear regression
• Multiple linear regression is a dependence method which looks at
the relationship between one dependent variable and two or more
independent variables. A multiple regression model will tell you the
extent to which each independent variable has a linear relationship
with the dependent variable. This is useful as it helps you to
understand which factors are likely to influence a certain outcome,
allowing you to estimate future outcomes.
• Example of multiple regression:
• As a data analyst, you could use multiple regression to predict
crop growth. In this example, crop growth is your dependent
variable and you want to see how different factors affect it.
Your independent variables could be rainfall, temperature,
amount of sunlight, and amount of fertilizer added to the soil
Multiple logistic regression

• Logistic regression analysis is used to calculate (and


predict) the probability of a binary event occurring. A
binary outcome is one where there are only two possible
outcomes; either the event occurs (1) or it doesn’t (0).
So, based on a set of independent variables, logistic
regression can predict how likely it is that a certain
scenario will arise.
• Example of logistic regression:
• Let’s imagine you work as an analyst within the insurance sector
and you need to predict how likely it is that each potential
customer will make a claim. You might enter a range of
independent variables into your model, such as age, whether or
not they have a serious health condition, their occupation, and so
on. Using these variables, a logistic regression analysis will
calculate the probability of the event (making a claim) occurring.
Multivariate analysis of variance
(MANOVA)
• Multivariate analysis of variance (MANOVA) is used to
measure the effect of multiple independent variables on
two or more dependent variables. With MANOVA, it’s
important to note that the independent variables are
categorical, while the dependent variables are metric in
nature.
Multivariate analysis of variance
(MANOVA)
• Example of MANOVA:
• Let’s imagine you work for an engineering company that is on a mission to build
a super-fast, eco-friendly rocket. You could use MANOVA to measure the effect
that various design combinations have on both the speed of the rocket and the
amount of carbon dioxide it emits. In this scenario, your categorical independent
variables could be:
• Engine type, categorized as E1, E2, or E3
• Material used for the rocket exterior, categorized as M1, M2, or M3
• Type of fuel used to power the rocket, categorized as F1, F2, or F3
Factor analysis

• Factor analysis is an interdependence technique which seeks to


reduce the number of variables in a dataset. If you have too
many variables, it can be difficult to find patterns in your data. At
the same time, models created using datasets with too many
variables are susceptible to overfitting. Overfitting is a modeling
error that occurs when a model fits too closely and specifically to
a certain dataset, making it less generalizable to future datasets,
and thus potentially less accurate in the predictions it makes.
Factor analysis

• Factor analysis example:


• Let’s imagine you have a dataset containing data pertaining to a person’s
income, education level, and occupation. You might find a high degree of
correlation among each of these variables, and thus reduce them to the
single factor “socioeconomic status.” You might also have data on how happy
they were with customer service, how much they like a certain product, and
how likely they are to recommend the product to a friend. Each of these
variables could be grouped into the single factor “customer satisfaction” (as
long as they are found to correlate strongly with one another).
Cluster analysis

• Another interdependence technique, cluster analysis is used to group


similar items within a dataset into clusters. When grouping data into
clusters, the aim is for the variables in one cluster to be more similar to
each other than they are to variables in other clusters. This is measured in
terms of intracluster and intercluster distance. Intracluster distance looks
at the distance between data points within one cluster. This should be
small. Intercluster distance looks at the distance between data points in
different clusters. This should ideally be large. Cluster analysis helps you
to understand how data in your sample is distributed, and to find patterns.
Cluster analysis

• Cluster analysis example:


• A prime example of cluster analysis is audience segmentation. If
you were working in marketing, you might use cluster analysis to
define different customer groups which could benefit from more
targeted campaigns. As a healthcare analyst, you might use
cluster analysis to explore whether certain lifestyle factors or
geographical locations are associated with higher or lower cases
of certain illnesses.

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