Factor Analysis

Objective

To reduce a set of intercorrelated items to a smaller set of independent items; to obtain insight into the underlying structure.

Examples/Applications

• Identifying underlying structures
• Brand image
• Benefits
• Brand competition
• Data reduction
• Screening long lists of variables (i.e., benefit screening)
• Phase II of segmentation studies
• Simplification for presentation purposes
• Categorizing people into groups

Assumptions

• An underlying structure (i.e., may not always exist)
• Additivity (the original matrix can be reproduced by linear combinations)
• Orthogonality of factors (usually)

Mechanics

• The original (unrotated) matrix
• The extraction process
• Rotation (i.e., varimax, quartimax)
• Analysis (factor naming, meaning)

Seminal Articles/Texts

• Harman, Harry; Modern Factor Analysis; 2nd Ed, University of Chicago Press, 1967
• Fruchter, Benjamin; Introduction to Factor Analysis, D. Van Nostrand Co. 1954

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