Discriminant Analysis

Analysis Case Processing Summary Unweighted Cases Valid Excluded Missing or out-of-range group codes At least one missing discriminating variable Both missing or out-of-range group codes and at least one missing discriminating variable Total Total 0 20 .0 100.0 0 .0 0 .0 N 20 0 Percent 100.0 .0

Group Statistics Valid N (listwise) BRAND National Brand ANNUAL INCOME HOUSEHOLD SIZE Local Brand ANNUAL INCOME HOUSEHOLD SIZE Total ANNUAL INCOME HOUSEHOLD SIZE Unweighted 10 10 10 10 20 20 Weighted 10.000 10.000 10.000 10.000 20.000 20.000

Analysis 1

Summary of Canonical Discriminant Functions

Eigenvalues Functio n 1 Eigenvalue 1.113a % of Variance 100.0 Cumulative % 100.0 Canonical Correlation .726

a. First 1 canonical discriminant functions were used in the analysis.

Wilks' Lambda Test of Functio n(s) 1 Wilks' Lambda .473 Chi-square 12.721 df 2 Sig. .002

Standardized Canonical Discriminant Function Coefficients Function 1 ANNUAL INCOME HOUSEHOLD SIZE .722 -.490

Structure Matrix Function 1 ANNUAL INCOME HOUSEHOLD SIZE Pooled within-groups correlations between discriminating variables and standardized canonical discriminant functions Variables ordered by absolute size of correlation within function. .887 -.734

Canonical Discriminant Function Coefficients Function 1 ANNUAL INCOME HOUSEHOLD SIZE (Constant) Unstandardized coefficients .335 -.313 -4.545

Functions at Group Centroids Function BRAND National Brand Local Brand Unstandardized canonical discriminant functions evaluated at group means 1 1.001 -1.001

Classification Statistics

Classification Processing Summary Processed Excluded Missing or out-of-range group codes At least one missing discriminating variable Used in Output 20 0 20 0

Prior Probabilities for Groups BRAND Prior Cases Used in Analysis

Unweighted National Brand Local Brand Total .500 .500 1.000 10 10 20

Weighted 10.000 10.000 20.000

Classification Results

b,c

Predicted Group Membership BRAND Original Count National Brand Local Brand % National Brand Local Brand Cross-validated
a

National Brand 9 2 90.0 20.0 8 2 80.0 20.0

Local Brand 1 8 10.0 80.0 2 8 20.0 80.0

Total 10 10 100.0 100.0 10 10 100.0 100.0

Count

National Brand Local Brand

National Brand Local Brand

a. Cross validation is done only for those cases in the analysis. In cross validation, each case is classified by the functions derived from all cases other than that case. b. 85.0% of original grouped cases correctly classified. c. 80.0% of cross-validated grouped cases correctly classified.

Classification Results

b,c

Predicted Group Membership BRAND Original Count National Brand Local Brand % National Brand Local Brand Cross-validateda Count National Brand Local Brand % National Brand Local Brand National Brand 9 2 90.0 20.0 8 2 80.0 20.0 Local Brand 1 8 10.0 80.0 2 8 20.0 80.0 Total 10 10 100.0 100.0 10 10 100.0 100.0

a. Cross validation is done only for those cases in the analysis. In cross validation, each case is classified by the functions derived from all cases other than that case. b. 85.0% of original grouped cases correctly classified.

ANSWERS:
1) From the classification results table, we can say that discriminant function is able to classify 17 cases out of 20 or 85% of original grouped cases correctly and 16 cases out of 20 incase of cross validation or 80% of the cross validated grouped cases correctly.

2)

Wilks' lambda is the proportion of the total variance in the discriminant scores NOT explained by differences among the groups. From the wilks lemda table, we can say that discriminant function is statistically significant as the value of wilks lemda is equal to 0.473.ie less than 0.5 Also eigen value is equal to1.113 which is greater than 1 and canonical correlation is 0.726 which is also high. That means the discriminant function is significant.

3)

From both the standardised coefficient table and structure table, income is relatively better in discriminating b/w consumers for national and local brands.

4)

By looking at unstandardised coefficients table, we can find the value D; D= -4.545+0.335(annualincome) - 0.313(household size) If the value of D is close to 1.001 (group centroid table), then, the new customer will fall under national brand group and if the value of D is close to -1.001, then he will fll under local brand group.