Factor Analysis

The purpose of factor analysis is to describe a great number of variables or questions using only a small number of key variables called factors. The analysis explains the pattern of similarity between observed variables. Unlike cluster analysis, which classifies members, factor analysis groups variables.

Factor analysis is often used in examining consumer satisfaction so it can identify key dimensions of services and in profiling studies to determine main patterns of consumer behaviour. For example, using factor analysis the main factors which influence the purchase of a certain product or brand can be identified. Managers in retail stores, banks, telecommunication companies, car manufacturers etc. can benefit from the results obtained by factor analysis.