Case Study#1: Exploratory Factor Analysis

Vistara airways wants to increase the airfare after the Government has declared to

increase the airport’s parking and services cost during the peak hours. As a result,

Vistara wants to increase the fare. Vistara knows that the customers are very price

sensitive. In order to understand consumer’s preference for characteristics and attributes

of the product, Vistara conducted a market research so that the preferred characteristics

and attributes are not compromised. 20 consumers were randomly selected, and they

were asked to indicate their responses on a seven-point scale (1- Completely disagree, 7-

Completely agree). A set of 10 statements relating to Vistara Airways services provided

to the consumers and responses were collected.

The ten statements were as follows:

1. Vistara Airways are always on time

2. The seats are very comfortable

3. I love the food they provide

4. Airhostesses are very beautiful

5. My boss/ friend flies with the same airline

6. The airlines have younger aircrafts

7. I get the advantage of a frequent flier program

8. The flight timing suits my schedule

9. I feel safe when I fly with Vistara Airways

10. Flying with Vistara, compliments my lifestyle and social standing in the society

Note: In a real scenario, you should have a set of 25/30 variables and at least 200
consumers.
 Different types of rotation:

 Varimax Method. An orthogonal rotation method that minimizes the number of

variables that have high loadings on each factor. This method simplifies the interpretation
of the factors.

 Direct Oblimin Method. A method for oblique (nonorthogonal) rotation. When

delta equals 0 (the default), solutions are most oblique. As delta becomes more negative,
the factors become less oblique. To override the default delta of 0, enter a number less
than or equal to 0.8.

 Quartimax Method. A rotation method that minimizes the number of factors

needed to explain each variable. This method simplifies the interpretation of the observed
variables.

 Equamax Method. A rotation method that is a combination of the varimax

method, which simplifies the factors, and the quartimax method, which simplifies the
variables. The number of variables that load highly on a factor and the number of factors
needed to explain a variable are minimized.

 Promax Rotation. An oblique rotation, which allows factors to be correlated. This

rotation can be calculated more quickly than a direct oblimin rotation, so it is useful for
large datasets.