ChapterXIX

FactorAnalysis

ChapterOutline
1)Overview
2)BasicConcept
3)FactorAnalysisModel
4)StatisticsAssociatedwithFactorAnalysis

5)ConductingFactorAnalysis
i.ProblemFormulation
ii.ConstructionoftheCorrelationMatrix
iii.MethodofFactorAnalysis
iv.NumberofofFactors
v.RotationofFactors
vi.InterpretationofFactors
vii.FactorScores
viii.SelectionofSurrogateVariables
ix.ModelFit

6)ApplicationsofCommonFactorAnalysis
7)InternetandComputerApplications
8)FocusonBurke
9)Summary
10)KeyTermsandConcepts
11)Acronyms

Fig19.1

ConductingFactorAnalysis
Problemformulation
ConstructionoftheCorrelationMatrix
MethodofFactorAnalysis
DeterminationofNumberofFactors
RotationofFactors
InterpretationofFactors

Selectionof
Surrogatevariables

Calculationof
FactorScores
DeterminationofModelFit

Table 19-1

RESPONDENT
NUMBER
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

V1
7.00
1.00
6.00
4.00
1.00
6.00
5.00
6.00
3.00
2.00
6.00
2.00
7.00
4.00
1.00
6.00
5.00
7.00
2.00
3.00
1.00
5.00
2.00
4.00
6.00
3.00
4.00
3.00
4.00
2.00

V2
3.00
3.00
2.00
5.00
2.00
3.00
3.00
4.00
4.00
6.00
4.00
3.00
2.00
6.00
3.00
4.00
3.00
3.00
4.00
5.00
3.00
4.00
2.00
6.00
5.00
5.00
4.00
7.00
6.00
3.00

V3
6.00
2.00
7.00
4.00
2.00
6.00
6.00
7.00
2.00
2.00
7.00
1.00
6.00
4.00
2.00
6.00
6.00
7.00
3.00
3.00
2.00
5.00
1.00
4.00
4.00
4.00
7.00
2.00
3.00
2.00

V4
4.00
4.00
4.00
6.00
3.00
4.00
3.00
4.00
3.00
6.00
3.00
4.00
4.00
5.00
2.00
3.00
3.00
4.00
3.00
6.00
3.00
4.00
5.00
6.00
2.00
6.00
2.00
6.00
7.00
4.00

V5
2.00
5.00
1.00
2.00
6.00
2.00
4.00
1.00
6.00
7.00
2.00
5.00
1.00
3.00
6.00
3.00
3.00
1.00
6.00
4.00
5.00
2.00
4.00
4.00
1.00
4.00
2.00
4.00
2.00
7.00

V6
4.00
4.00
3.00
5.00
2.00
4.00
3.00
4.00
3.00
6.00
3.00
4.00
3.00
6.00
4.00
4.00
4.00
4.00
3.00
6.00
3.00
4.00
4.00
7.00
4.00
7.00
5.00
3.00
7.00
2.00

CorrelationMatrix

Table19.2

Variables
V1
V2
V3
V4
V5
V6

V1
1.00
0.53
.873
.086
.858
.004

V2

V3

V4

V5

V6

1.00
.155
.572
.020
.640

1.00
.248
.778
.018

1.00
.007
.640

1.00
.136

1.00

ResultsofPrincipalComponentsAnalysis

Table19.3

Communalities

Variables
V1
V2
V3
V4
V5
V6

InitialEigenvalues

Initial
1.000
1.000
1.000
1.000
1.000
1.000

Extraction
.926
.723
.894
.739
.878
.790

Factor
1
2
3
4
5
6

Barletttestofsphericity

Approx.ChiSquare=111.314

df=15

Significance=.00000

KaiserMeyerOlkinmeasureof

samplingadequacy=.660

Eigenvalue %ofvariance
2.731
45.520
2.218
36.969
0.442
7.360
0.341
5.688
0.183
3.044
0.085
1.420

Cumulat.%
45.520
82.488
89.848
95.536
98.580
100.000

Table19.3Contd.
ExtractionSumsofSquaredLoadings
Factor
1
2

Eigenvalue %ofvariance
2.731
45.520
2.218
36.969

Cumulat.%
45.520
82.488

Factor Matrix
Variables
V1
V2
V3
V4
V5
V6

Factor1
.928
.301
.936
.342
.869
.177

Factor2
.253
.795
.131
.789
.351
.871

Rotation Sums of Squared Loadings

Factor
1
2

Eigenvalue %ofvariance
2.688
44.802
2.261
37.687

Cumulat.%
44.802
82.488

Table19.3Contd.

Table19.3Contd.

The lower left triangle contains the reproduced

correlation matrix; the diagonal, the communalities;
the upper right triangle, the residuals between the
observed correlations and the reproduced
correlations.

FactorScoreCoefficientMatrix
Variables
V1
V2
V3
V4
V5
V6

V1

.926
.078
.902
.117
.895
.057

V2

.024
.723
.177
.730
.018
.746

V3

.029
.022
.894
.217
.859
.051

V4

.031
.158
.031
.739
.020
.748

V5

.038
.038
.081
.027
.878
.152

V6

.053
.105
.033
.107
.016
.790

ScreePlot

Fig.19.2

3.0

Eigenvalue

2.5
2.0
1.5
1.0
0.5
0.0
1

3
4
5
6
ComponentNumber

FactorLoadingPlot

Fig.19.3

RotatedComponentMatrix

Component

Variable12
ComponentPlotinRotatedSpace
Component1

1.0

V6

V4

V2

0.0

.5
1.0

V5

V3

Component2

0.5

V1

V1

0.9622.66E02

V2

5.72E02.848

V3

0.934.146

V4

9.83E02.854

V5

.9338.40E02

V6

8.337E020.885

Table19.4

ResultsofCommonFactorAnalysis

Communalities
Variables
V1
V2
V3
V4
V5
V6

Initial
.859
.480
.814
.543
.763
.587

Extraction
.928
.562
.836
.600
.789
.723

Factor
1
2
3
4
5
6

Eigenvalue %ofvariance
2.731
45.520
2.218
36.969
0.442
7.360
0.341
5.688
0.183
3.044
0.085
1.420

Initial Eigenvalues

Barletttestofsphericity
Approx.ChiSquare=111.314
df=15
Significance=.00000
KaiserMeyerOlkinmeasureof
samplingadequacy=.660
Cumulat.%
45.520
82.488
89.848
95.536
98.580
100.000

Table19.4Contd.
Extraction Sums of Squared Loadings
Factor
1
2

Eigenvalue %ofvariance
2.570
42.837
1.868
31.126

Cumulat.%
42.837
73.964

Factor Matrix
Variables
V1
V2
V3
V4
V5
V6

Factor1
.949
.206
.914
.246
.850
.101

Factor2
.168
.720
.038
.734
.259
.844

Rotation Sums of Squared Loadings

Factor
1
2

Eigenvalue %ofvariance
2.541
42.343
1.897
31.621

Cumulat.%
42.343
73.964

Table19.4Contd.
Rotated Factor Matrix
Variables
V1
V2
V3
V4
V5
V6

Factor1
.963
.054
.902
.090
.885
.075

Factor2
.030
.747
.150
.769
.079
.847

Factor Score Coefficient Matrix

Variables
V1
V2
V3
V4
V5
V6

Factor1
.628
.024
.217
.023
.166
.083

Factor2
.101
.253
.169
.271
.059
.500

Table19.4Contd.
The lower left triangle contains the reproduced
correlation matrix; the diagonal, the communalities;
the upper right triangle, the residuals between the
observed correlations and the reproduced correlations.

FactorScoreCoefficientMatrix
Variables
V1
V2
V3
V4
V5
V6

V1

.928
.075
.873
.110
.850
.046

V2

.022
.562
.161
.580
.012
.629

V3

.000
.006
.836
.197
.786
.060

V4

.024
.008
.005
.600
.019
.645

V5

.008
.031
.008
.025
.789
.133

V6

.042
.012
.042
.004
.003
.723

RIP19.1

DrivingNutsForBeetles

Generally, with time, consumer needs and tastes change.

Consumerpreferencesforautomobilesneedtobecontinually
tracked to identify changing demands and specifications.
However, there is one car that is quite an exception the
Volkswagen Beetle. More than 21 million have been built
since it was introduced in 1938. Surveys have been
conductedindifferentcountriestodeterminethereasonswhy
people purchase Beetles. Principal components analyses of
thevariablesmeasuringthereasonsforowningBeetleshave
consistentlyrevealedonedominantfactorfanaticalloyalty.
The company has long wished its natural death but without
any effect. This noisy and cramped "bug" has inspired
devotionindrivers.

RIP19.1Contd.

Now old bugs are being sought everywhere. "The Japanese

are going absolutely nuts for Beetles," says Jack Finn, a
recyclerofoldBeetlesinWestPalmBeach,Florida.

BeetlesarestillmadeinMexico,buttheycannotbeexported
to US or Europe because of safety and emission standards.
Becauseoffaithfulloyaltyforthe"bug",VWhasrepositioned
thebeetleasanewshinyVW Passat,apremiumqualitycar
whichgivesanimageofsophisticationandclassasopposed
totheoldonewhichsymbolizedlowpricedbrand.

Factors Predicting Unethical

Marketing Research
Practices
survey of 420 marketing
professionals was conducted to

RIP19.2

A
identify organizational variables that determine the incidence of
unethical marketing research practices.
These marketing
professionals were asked to provide evaluations of the incidence
of fifteen marketing research practices that have been found to
pose ethical problems. They also provided responses on several
other scales, including an 11 item scale pertaining to the extent
to which ethical problems plagued the organization, and what
top management's actions were toward ethical situations. The
commonly used method of principal components analysis with
varimax rotation indicated that these 11 items could be
represented by two factors.

Contd.

RIP19.2Contd.

Factor Analysis of Ethical Problems and Top Management Action Scale

Extent of Ethical
Problems within Top Management
the organization actions on ethics
(factor 1)
(factor 2)
1. Successful executives in my company make
rivals look bad in the eyes of important people
in my company.
0.66
2. Peer executives in my company often engage
in behaviors that I consider unethical.
0.68
3. There are opportunities for peer executives in
my company to engage in unethical behavior.
0.43
4. Successful executives in my company take
credit for the ideas & accomplishment of others.
0.81
5. In order to succeed in my company, it is often
necessary to compromise one's ethics.
0.66
6. Successful executives in my company are
generally more unethical than unsuccessful
executives.
0.64
7. Successful executives in my company look for
a "scapegoat" when they feel they may by
associated with failure.
0.78

Factor Analysis of Ethical Problems and Top Management Action Scale

Extent of Ethical
Problems within Top Management
the organization actions on ethics
(factor
1)
(factor 2)
8. Successful executives in my company
withhold information that is detrimental to
their self-interest.
0.68
9. Top management in my company has let it
be known in no uncertain terms that
unethical behaviors will not be tolerated.
0.73
10. If an executive in my company engages in
unethical behavior resulting in personal
gain (rather than corporate gain), he/she
will be promptly reprimanded.
0.80
11. If an executive in my company engages in
unethical behavior resulting in corporate
gain, he/she will be promptly reprimanded.
0.78
Eigenvalue
5.06
1.17
% of Variance Explained
46%
11%
Coefficient Alpha
0.87
0.75
To simplify the table, only varimax-rotated loading of .40 or greater
are
RIP19.1Contd
.

RIP19.2Contd.

Factor Analysis of Ethical Problems and Top Management Action Scale

The first factor could be interpreted as the incidence of unethical

practices, while the second factor denotes top management
actions related to unethical practices. The two factors together
account for more than half the variation in the data with the first
factor being dominant. These two factors were then used along
with four other variables as predictors in a multiple regression.
The results indicated that they were the two best predictors of
unethical marketing research practices.