factor-analysis

Vocabulary Word

Definition

When you see 'factor analysis,' think 'breaking down.' It's a statistical method used to figure out how different factors in a set of data work together. Imagine finding ingredients that make a dish special.

Examples in Different Contexts

In market research, 'factor analysis' is used to analyze consumer preferences and segment markets based on underlying patterns. A market researcher might note, 'Factor analysis enables us to identify distinct consumer segments with similar preferences and behaviors.'

Practice Scenarios

Product

Scenario:

The new line of our athletic shoes isn't catching on as we hoped. We need to dig deeper into customer preferences.

Response:

Agreed. Factor analysis might give us insight into the key drivers behind our customers' purchasing decisions.

Business

Scenario:

Our new product didn't perform as well as expected. There may be several reasons behind this.

Response:

Let's perform a factor analysis to isolate the variables that could be impacting our product's performance.