Chapter Data Analysis:

Seventeen Multivariate
Techniques for the
Research Process

Copyright © 2006
McGraw-Hill/Irwin
Learning Objectives

1. Define multivariate analysis.

2. Understand how to use multivariate analysis in

marketing research.

3. Distinguish between dependence and interdependence

methods.

4. Define and understand factor analysis and cluster

analysis.

5. Define and use discriminant analysis.

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 Value of Multivariate
Techniques in Data Define multivariate analysis
Analysis
• Multivariate analysis--statistical techniques used
when there are two or more measurements of each
element and the variables are analyzed
simultaneously.
– Multivariate techniques are concerned with the
simultaneous relationships among two or more
phenomena.

– Important in marketing research because most

business problems are multidimensional

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 Define multivariate analysis
Exhibit 17.1

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 Define multivariate analysis
Exhibit 17.2

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 Classification
Dependence Method
Multivariate Techniques

• Dependence Method –multivariate technique

appropriate when one or more of the variables can
be identified as dependent variables and the
remaining as independent variables

– Dependence techniques–multiple regression

analysis, discriminant analysis, and MANOVA

– Multiple discriminant analysis–dependence

technique which predicts customer usage based on
several independent variables
• Age, income, peer group, education, lifestyle.

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 Classification
Interdependence techniques
Multivariate Techniques
• Interdependence techniques – multivariate statistical
techniques in which a whole set of interdependent relationships is
examined
• No single variable is defined as dependent or independent

– Multivariate procedure–analysis of all variables in the data set

simultaneously

– Goal of this method–to group things together

– Simplify data

– No one variable is predicted or explained by the others

– Interdependence techniques– factor analysis, cluster analysis,

Perceptual Mapping and multidimensional scaling

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 Classification
First Step
Multivariate Techniques
• Nature of the Measurement Scales

– Determine which multivariate technique is appropriate to

analyze the data
• Dependence vs. Interdependence

• Dependent variable

– Measured nonmetrically(Nominal)–Discriminant analysis,

Conjoint

– Measured metrically (ratio or interval) –multiple regression,

ANOVA, and MANOVA

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 Classification
Multivariate Techniques

• Independent variable

– Require metric independent variable–multiple

regression and discriminant analysis–can use
nonmetric dummy variables

– Nonmetric independent variables–ANOVA and

MANOVA

– Metrically measured variables and nonmetric

adaptions–factor analysis and cluster analysis

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 Interdependence
Techniques
Factor Analysis

• Factor Analysis–used to summarize information

contained in a large number of variables into a
smaller number of subsets or factors

• Purpose of Factor Analysis–to simplify the data

– No distinction between dependent and

independent variables

– all variables under investigation are analyzed

together–to identify underlying factors

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 Exhibit 17.3 Factor Analysis

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 Interdependence
Techniques
Factor Analysis

• Factor Loading–simple correlation between the variables

• Starting Point–interpreting factor analysis is factor loadings

• Factor loading–measure of the importance of the variable in

measuring each factor

– Like correlations–vary from +1.0 to –1.0

– Statistical analysis associated with factor analysis–

produces factor loadings between each factor and each of
the original variables

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 Exhibit 17.4 Factor Analysis

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 Interdependence
Techniques
Factor Analysis

• Next Step in Factor Analysis

– name the resulting factors
– Factor 1 Service Quality
– Factor 2 Food Quality

• Final Aspect of Factor Analysis

– the number of factors to retain

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 Exhibit 17.5 Factor Analysis

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 Interdependence Define and understand factor
Techniques analysis and cluster analysis

• Factor Analysis Applications in Marketing Research

– Advertising
• to better understand media habits of various customers

– Pricing
• to identify the characteristics of price-sensitive and prestige-
sensitive customers

– Product
• to identify brand attributes that influence consumer choice

– Distribution
• to better understand channel selection criteria among
distribution channel members

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 Define and understand factor
Exhibit 17.6 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.7 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.8 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.9 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.10 analysis and cluster analysis

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 Interdependence
Techniques
Cluster analysis

• Cluster analysis–multivariate interdependence technique whose

primary objective is to classify objects into relatively homogeneous
groups based on the set of variables considered

• Basic Purpose

– To classify or segment objects into groups so that objects within

each group are similar to one another on a variety of variables

– To classify segments or objects such that there will be as much

similarity within segments and as much difference between
segments as possible

– To identify natural groupings or segments among many variables,

without designating any of the variables as a dependent variable

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 Exhibit 17.11 Cluster analysis

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 Interdependence
Cluster analysis
Techniques

• Statistical Procedures for Cluster Analysis

– Degree of similarity between objects–

determined through a distance measure

– Distance between any pair of points is

positively related to how similar the
corresponding individuals are when the two
variables are considered together

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 Interdependence Cluster analysis Scatter Plots
Techniques

• Clusters–developed from scatter plots

– This is a very complex, trial and error process

– Requires the use of computer algorithms

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 Interdependence
Techniques
Cluster analysis

• Applications in Marketing Research

• New product research–to examine product offerings relative to

competition

• Test marketing–to group test cities into homogeneous clusters

for test marketing purposes

• Buyer behavior–to identify similar groups of buyers who have

similar choice criteria

• Market segmentation–to develop distinct market segments on

the basis of geographic, demographic, psychographic, and
behavioral variables

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 Define and understand factor
Exhibit 17.12 analysis and cluster analysis

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 SPSS exercise

• Use the Santa Fe database

• Find different subgroups of customers
with different levels of commitment
• Use Variables 22, 23,24
• Anaylse-classify-hierarchical cluster
• Select wards method
• Save box select 2
• This procedure takes time

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 Define and understand factor
Exhibit 17.13 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.14 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.15 analysis and cluster analysis

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 End Here

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 Analysis of Define and use discriminant
Dependence analysis

• Discriminant Analysis–multivariate procedure

used for predicting group membership on the basis
of two or more independent variables

• Purpose–to classify objects or groups by a set of

independent variables

• Dependent variable–nonmetric or categorical

• Independent variables–metric

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 Define and understand factor
Exhibit 17.17 analysis and cluster analysis

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 Analysis of Define and use discriminant
Dependence analysis

• Purpose of discriminant analysis–prediction of a categorical

variable by studying the direction of group differences based on
finding a linear combination of independent variables

– Discriminant function–linear combination of independent

variables developed by discriminant analysis which will best
discriminate between the categories of the dependent variable

• Discriminate analysis–statistical tool for determining linear

combinations of those independent variables and using this to
predict group membership

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 Analysis of Define and use discriminant
Dependence analysis

• Discriminant score (Z-score)–basis for predicting to which

group the particular individual belongs and is determined by a
linear function
Zi = b1X1i + b2X2i ⋅ ⋅ ⋅ + bnXni

• Zi = ith individual’s discriminant score

• bn = Discriminant coefficient for the nth variable

• Xni = Individual’s value on the nth independent variable

– Discriminant score–the score of each respondent on the

discriminant function

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 Analysis of Define and use discriminant
Dependence analysis

• Discriminant function coefficients–

– estimates of the discriminatory power of a
particular independent variable

– multipliers of variables in the discriminant

function when variables are in the original units
of measurement

• Coefficients–computed by means of the

discriminant analysis software

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 Analysis of Define and use discriminant
Dependence analysis

• Important goal of discriminant analysis–

classification of objects or individuals into groups

• Classification (Prediction) Matrix–to determine

whether the estimated discriminant function is a
good predictor

– Classification (or prediction) matrix–classification

matrix in discriminant analysis contains the number of
correctly classified and misclassified cases

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 Define and understand factor
Exhibit 17.18 analysis and cluster analysis

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 Analysis of Define and use discriminant
Dependence analysis

• Applications for Marketing Research

• Product research–to distinguish between heavy, medium, and light

users of a product in terms of their consumption habits and lifestyles

• Image research–to discriminate between customers who exhibit

favorable perceptions of a store or company and those who do not

• Advertising research–In distinguishing how market segments

differ in media consumption habits

• Direct marketing–in distinguishing characteristics of consumers

who respond to direct marketing solicitations and those who don’t

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 Define and understand factor
Exhibit 17.20 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.21 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.22 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.23 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.24 analysis and cluster analysis

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 Define and understand factor
Exhibit 17.25 analysis and cluster analysis

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 Summary

• Value of Multivariate Techniques in Data

Analysis
• Classification Multivariate Techniques
• Interdependence Techniques
• Analysis of Dependence

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 The End

Copyright © 2006 McGraw-Hill/Irwin

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