Consumer Behavior Research Methods

Factor Analysis

1. Number of Factors: Percentage of total variance explained

  • In order to define the number of factors, you can help yourself by identifying the variance explained by each component

  • This is an SPSS output for the “total variance explained”:

  • Rule of thumb: Keep the factors that account for 70-80% of the variance!
Explanation:
 
  • The column ”% of variance” reports the percentage of variance explained by each component

  • The first components explain a higher percentage of variance

  • You should consider the first components for a total of 70-80% of variance explained

  • In our example, we consider the components from 1 to 3, since they already explain nearly the 88% of variability in the original ten variables

  • So you can considerably reduce the complexity of the data set by using these components, with only a 12% loss of information

Diskussion