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Define Factor Analysis in Marketing

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Define Factor Analysis in Marketing

Statistics are used in a variety of fields from sports to television viewing to business. Factor analysis is a statistic that is used to isolate variable's effects on one another. For marketing, it is used to understand which factors affect product purchasing. This type of information translates directly to a company's bottom line.

  1. Definition

    • BNET.com's business dictionary defines factor analysis as the examination of the covariances, correlations or relationships between the variables observed in a statistical study. In other words, it is the relationships between variables.

    Factors in Marketing

    • The variables that affect marketing include, but are not limited to, product, product size, product color, packaging, weight, etc.

    Goal

    • Factor analysis in marketing studies how the product variables affect the customer's perception and/or purchase of the product. The goal is to create the ideal attributes to create customer purchases.

    Information Gathering

    • The information for factor analysis in marketing can be gathered through surveys and focus groups.

    Misconceptions

    • Do not imply a cause/effect relationship with factor analysis.

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  • Photo Credit Image courtesy of Microsoft Office online

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