Unit 4 Multi Variate Data

Multivariate Data
Factor Analysis
Cluster Analysis
Co-joint Analysis
Application of Multivariate Data
Multivariate Analysis
Multivariate analysis consists of a collection of
methods that can be used when several
measurements are made on each individual or
object in one or more samples.
Multivariate analysisis based on the statistical
principle ofmultivariate statistics, which
involves observation and analysis of more than
one statistical outcome variable at a time.
This technique is used to perform trade studies
across multiple dimensions.
Multivariate there are more then two variable
under study.
Factor Analysis
Factor Analysis is a multivariate statistical
technique in which there is no distinction
between dependent and independent
variable.
In factor analysis all the variables are
under investigation factors.
Factor analysis is data reduction method. It
is a very useful method to reduce a large
number of variables resulting in data
complexity to a few manageable factors.
Factor Analysis- Process

First of all identify the salient attributes that consumers
use to evaluateproducts that we are studing.
Then, quantitative researchtechniques (such
assurveys) is used by the researcher to collect data
from a sample of potentialcustomers. The data
regarding their ratings of all the product attributes is
taken .
Then, data is put in the statistical program and run the
factor analysis procedure. The computer will yield a set
of underlying attributes (or factors).
Lastly researcher use these factors to
constructperceptual mapand otherproduct
positioningdevices.
Factor Analysis- Advantage

Both objective and subjective
attributes can be used provided the
subjective attributes can be
converted into scores.
Factor analysis can identify latent
dimensions or constructs that direct
analysis may not.
It is easy and inexpensive.
Factor AnalysisDisadvantage
Usefulness of factor analysis depends on the
researchers' ability to collect a sufficient set of product
attributes. If important attributes are excluded or
neglected, and the value of the procedure is reduced.
If sets of observed variables are highly similar to each
other and distinct from other items, factor analysis will
assign a single factor to them. This may obscure
factors that represent more interesting relationships.
Naming factors may require knowledge of theory
because seemingly dissimilar attributes can correlate
strongly for unknown reasons.
Cluster Analysis
Cluster analysisorclusteringis the task of grouping
where objects, individuals, and entities are grouped on
the basis of their proximity.
Objects are grouped in such a way that objects in the
same group (called acluster) are similar to each other
(in some sense or another) and they differ from those
in other groups (clusters).
The emerging groups are homogenous in their
composition and heterogeneous as compared to other
groups.
The basis assumption of this analysis is the fact that
similarity is based on multiple variables.
Application areas of Cluster Analysis are Market
Segmentation, Segmenting Industries, Segmenting
markets, Career Planning, Training Analysis and is also
Applications of Cluster
Analysis
Applications of Cluster Analysis

Cluster analysis is widely used in market research when
working with multivariate data fromsurveys and test
panels.
Market researchers use cluster analysis to divide the
generalpopulation ofconsumersinto groups of people
with similar needs and wants (market segments) and to
better understand the relationships between different
groups of consumers/potentialcustomers
Cluster Analysis is also used for
Market Segmentation
Product Positioning
New Product Development
Selecting test markets.
Use Of Multivariate Analysis in Marketing

Research
1. AdvertisingMarketers use multivariate analysis to determine the best way of

advertising a product to consumers, based on a wide range of
consumer characteristics such as age and income.
Multivariate testing constitutes the process of advertising through
the multivariate method.
Multivariate advertising methods constitute the way in which
marketers collect and analyze data used in multivariate testing.
Basically, marketers use this form of testing to create a number of
advertisements and conduct tests on those ads. Based on
variables such as consumer age, income, gender, background,
industry and interests, these tests help determine the best method
of advertising a product for each market.
Multivariate analysis of variance, factor analysis, cluster analysis,
multidimensional scaling, correspondence analysis, cojoint
analysis, canonical variation and structural equation modeling. The
method used in multivariate advertising directly affects the
techniques employed by researchers.
Use Of Multivariate Analysis in

Marketing Research
2. Market Segmentation:- Market segmentation is the
area that most clearly shows the accessibility of
multivariate analysis. Clustering technique is used for
market segmentation.
Data is collected through a well-designed survey can be
help the researcher to develop custom segmentation
schemes based on the questions included in the survey.
The geographic information collected through survey
helps to understand the needs and wants that differ on
the basis of demographics and those demographics can
be used to develop a customized product or service for
the specific clusters.
Use Of Multivariate Analysis in

Marketing Research
3. Prediction and forecasting
Prediction and forecasting are inherently multivariate. Future
sales, for example, are dependent on various factors such as
the economy, demographic changes or changing tastes.
Even in a trend analysis, future activity is generally not a
simple function of a straight line projection or moving
average. It can be cyclical, have seasonal components or
have complicated lag times, all of which can and must be
modeled through multivariate techniques.
Multivariate econometric techniques have been developed to
deal specifically with the problems of forecast and projection.
These techniques have been highly optimized to obtain
mathematically based forecasts with minimum error given
the input data.
Conjoint Analysis
Conjoint analysisis a statistical technique used
inmarket researchto determine how people value
different attributes (feature, function, benefits) which
makes up an individual product or service.
The objective of conjoint analysis is to determine what
combination of a limited number of attributes is most
influential on respondent choice or decision making.
A controlled set of potential products or services is
shown to respondents and by analyzing how they make
preferences between these products, the implicit
valuation of the individual elements making up the
product or service can be determined.
These implicit valuations (utilities or part-worths) can be
used to create market models that estimate market
share, revenue and even profitability of new designs.
Applications of Conjoint
Analysis
It is used in many of the social sciences

and applied sciences including
Product management
Operations Research.
It is used frequently in testing customer
acceptance ofnew product designs,
In assessing the appeal
ofadvertisementsand inservice design.
It has been used inproduct positioning
Advantages
Helps to estimates psychological tradeoffs that
consumers make when evaluating several
attributes together
Helps to measures preferences at the individual
level
Helps to uncovers real or hidden drivers which may
not be apparent to the respondent themselves
Helps to know the realistic choice of customers
If appropriately designed, the ability to model
interactions between attributes can be used to
develop needs based segmentation
Disadvantages
Designing conjoint studies can be complex
With too many options, respondents resort to
simplification strategies and data collection becomes
difficult.
Difficult to use for product positioning research because
there is no procedure for converting perceptions about
actual features to perceptions about a reduced set of
underlying features
Respondents may feel forced to think about issues they
would otherwise not give much thought to
Poorly designed studies may over-value
emotional/preference variables and undervalue
concrete variables
Does not take into account the number items per
purchase so it can give a poor reading of market share
Multiple Regression
Method for studying the relationship
between a dependent variable and
two or more independent variables.
Purposes:
Prediction
Explanation
Theory building
Simple vs. Multiple

Regression
One dependent
variable Y predicted
from one independent
variable X
One regression
coefficient
r2: proportion of
variation in dependent
variable Y predictable
from X
One dependent
variable Y predicted
from a set of
independent variables
(X1, X2 .Xk)
One regression
coefficient for each
independent variable
R2: proportion of
variation in dependent
variable Y predictable
by set of independent
variables (Xs)

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Multivariate Data

Factor Analysis- Process

Factor Analysis- Advantage

Applications of Cluster Analysis

Selecting test markets.

Use Of Multivariate Analysis in Marketing

1. AdvertisingMarketers use multivariate analysis to determine the best way of

Use Of Multivariate Analysis in

Use Of Multivariate Analysis in

It is used in many of the social sciences

Simple vs. Multiple

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