Factory Analysis — a Tool for Data Reduction

Determines that factor analysis is a data reduction technique, which takes a number of different variables and tries to note any underlying relationships which may be present. Posits that the factor analysis technique was originally pioneered by a psychologist named Spearman to aid his understanding of human abilities, he postulated that a basic factor of intelligence underlies each person's ability to perform various skills. Adumbrates that the applications of factor analysis in marketing are in two main categories, to: attempt to understand behavioural processes by trying to identify and give descriptive definitions to underlying factors; reduce large groups of descriptive variables into a smaller but more manageable representative subset. Closes by giving a table, with sorted rotated factor loadings which are useful in naming factors, from the pharmaceutical industry. Concludes that factor analysis is useful when the researcher is primarily concerned with degree of association among variables.