Descriptive Analysis As the name implies, is used to describe the results obtained.

In most cases the results are merely used to provide a summary of what has been gathered (e.g., how many liked or dislike a product) without making a statement of whether the results hold up to statistical evaluation. For quantitative data collection the most common methods used for this basic level of analysis are visual representations, such as charts and tables, and measures of central tendency including averages (i.e., mean value). For qualitative data collection, where analysis may consist of the researchers own interpretation of what was learned, the information may be coded or summarized into grouping categories. The focus of descriptive research is to provide an accurate description for something that is occurring. For example, what age group is buying a particular brand, a products market share within a certain industry, how many competitors a company faces, etc. This type of research is by far the most popular form of market research. It is used extensively when the research purpose is to explain, monitor and test hypotheses, and can also be used to a lesser extent to help make predictions and for discovery. The method is highly useful for professionals offering financial services, as well as people who are conducting marketing research. For the former, the trends followed by a set of shares being traded on the market, or the fluctuations in the currencies across the world will be known. This helps the traders and brokers estimate the further movements and make the investment or advice their clients better. The latter can easily gauge the trends reflected by the consumers for a particular product. By knowing how many people on an average purchased the product during a certain period, the researchers will be able to formulate the marketing strategy in a more focused manner. Inferential Data Analysis While descriptive data analysis can present a picture of the results, to really be useful the results of research should allow the researcher to accomplish other goals such as: Using information obtained from a small group (i.e., sample of customers) to make judgments about a larger group (i.e., all customers) Comparing groups to see if there is a difference in how they respond to an issue Forecasting what may happen based on collected information To move beyond simply describing results requires the use of inferential data analysis where advanced statistical techniques are used to make judgments (i.e., inferences) about some issue (e.g., is one type of customer different from another type of customer). Using inferential data analysis requires a well-structured research plan that follows the scientific method. Also, most (but not all) inferential data analysis techniques require the use of quantitative data collection. As an example of the use of inferential data analysis, a marketer may wish to know if North American, European and Asian customers differ in how they rate certain issues. The marketer uses a survey that includes a number of questions asking customers from all three regions to rate issues on a scale of 1 to 5. If a survey is constructed properly the marketer can compare each group using statistical software that tests whether differences exists. This analysis offers much more insight than simply showing how many customers from each region responded to each question. ANOVA Another test of significance is the Analysis of Variance (ANOVA) test. The primary purpose of ANOVA is to test for differences between multiple means. Whereas the t-test can be used to

compare two means, ANOVA is needed to compare three or more means. If multiple t-tests were applied, the probability of a TYPE I error (rejecting a true null hypothesis) increases as the number of comparisons increases. One-way ANOVA examines whether multiple means differ. The test is called an F-test. ANOVA calculates the ratio of the variation between groups to the variation within groups (the F ratio). While ANOVA was designed for comparing several means, it also can be used to compare two means. Two-way ANOVA allows for a second independent variable and addresses interaction. To run a one-way ANOVA, use the following steps: 1. Identify the independent and dependent variables. 2. Describe the variation by breaking it into three parts - the total variation, the portion that is within groups, and the portion that is between groups (or among groups for more than two groups). The total variation (SStotal) is the sum of the squares of the differences between each value and the grand mean of all the values in all the groups. The in-group variation (SSwithin) is the sum of the squares of the differences in each element's value and the group mean. The variation between group means (SSbetween) is the total variation minus the in-group variation (SStotal - SSwithin). 3. Measure the difference between each group's mean and the grand mean. 4. Perform a significance test on the differences. 5. Interpret the results. Ex:Say, a retail chain wants a better understanding of its customers buying behavior to increase footfalls. It can construct a questionnaire to be administered among mall visitors and also conduct focus groups interviews among select few top malls. Data from these will help create a profile of the customers and ANOVA will help determine which mall is considered best for factors like prices, recreational activities, fashion, value for money and so on. This information can then be used to create better and more effective marketing campaigns to increase footfalls. There are various advantages of MANOVA over one-way ANOVA. Firstly, we can study any interaction between the factors. Secondly, studying two or more factors simultaneously increases the models efficiency. And thirdly, the residual variation in the model is reduced when more factors are included in the study. Analysis of covariance (ANCOVA) is applied when an independent variable has a powerful correlation with the dependent variable. But, it is important to remember that the independent variables in Analysis of covariance (ANCOVA) do not interact with other independent variables while predicting the value of the dependent variable. Analysis of covariance (ANCOVA) is generally applied to balance the effect of comparatively more powerful non interacting variables. It is necessary to balance the effect of interaction in Analysis of covariance (ANCOVA) in order to avoid uncertainty among the independent variables. Analysis of covariance (ANCOVA) is applied only in those cases where the balanced independent variable is measured on a continuous scale. Let us assume a researcher wants to determine the effect of an in-store promotion on sales

revenue. In this case, Analysis of covariance (ANCOVA) is an appropriate technique because the change in the attitude of the consumer towards the store will automatically affect the sales revenue of the store in Analysis of covariance (ANCOVA). Therefore, in Analysis of covariance (ANCOVA), the dependent variable will be the sales revenue of the store. And the independent variable will be the attitude of the consumer in Analysis of covariance (ANCOVA). Discriminant Analysis Analysis of the difference in means between groups provides information about individual variables, it is not useful for determine their individual impacts when the variables are used in combination. Since some variables will not be independent from one another, one needs a test that can consider them simultaneously in order to take into account their interrelationship. One such test is to construct a linear combination, essentially a weighted sum of the variables. To determine which variables discriminate between two or more naturally occurring groups, discriminant analysis is used. Discriminant analysis can determine which variables are the best predictors of group membership. It determines which groups differ with respect to the mean of a variable, and then uses that variable to predict new cases of group membership. Essentially, the discriminant function problem is a one-way ANOVA problem in that one can determine whether multiple groups are significantly different from one another with respect to the mean of a particular variable. A discriminant analysis consists of the following steps: 1. Formulate the problem. 2. Determine the discriminant function coefficients that result in the highest ratio of between-group variation to within-group variation. 3. Test the significance of the discriminant function. 4. Interpret the results. 5. Determine the validity of the analysis. Discriminant analysis analyzes the dependency relationship, whereas factor analysis and cluster analysis address the interdependency among variables. Discriminant Analysis is also widely used to create Perceptual Mapping by marketers and has some benefits over other methods that use perceived distances; like the option of using tests of significance to check for dissimilarities among products and that the distances between two products would not be impacted by other products included in the study. Discriminant Analysis has various other practical applications and is often used in combination with cluster analysis. Say, the loans department of a bank wants to find out the creditworthiness of applicants before disbursing loans. It may use Discriminant Analysis to find out whether an applicant is a good credit risk or not. This would serve as method of screening applicants and preventing later bad debts. In another scenario, say a retail chain wants to conduct market segmentation. It might use a survey to get respondents to rate various desirable service attributes and then use a combination of cluster analysis and Discriminant Analysis to segment its market and assign customers to different segments. This will help the retailer get an idea of customers preferences in each segment and also target them better in their marketing campaigns.

Factor Analysis Factor analysis is a very popular technique to analyze interdependence. Factor analysis studies the entire set of interrelationships without defining variables to be dependent or independent. Factor analysis combines variables to create a smaller set of factors. Mathematically, a factor is a linear combination of variables. A factor is not directly observable; it is inferred from the variables. The technique identifies underlying structure among the variables, reducing the number of variables to a more manageable set. Factor analysis groups variables according to their correlation. The factor loading can be defined as the correlations between the factors and their underlying variables. A factor loading matrix is a key output of the factor analysis. An example matrix is shown below. Factor 1 Factor 2 Factor 3 Variable 1 Variable 2 Variable 3 Column's Sum of Squares: Each cell in the matrix represents correlation between the variable and the factor associated with that cell. The square of this correlation represents the proportion of the variation in the variable explained by the factor. The sum of the squares of the factor loadings in each column is called an eigenvalue. An eigenvalue represents the amount of variance in the original variables that is associated with that factor. The communality is the amount of the variable variance explained by common factors. A rule of thumb for deciding on the number of factors is that each included factor must explain at least as much variance as does an average variable. In other words, only factors for which the eigenvalue is greater than one are used. Other criteria for determining the number of factors include the Scree plot criteria and the percentage of variance criteria.

Say you are a retailer and want to increase customer footfalls through brand promotions and a better understanding of customers purchase behavior. You could effectively use Factor Analysis to provide you with deep insights on customer demographics and buying behavior. This would help you target your market better and achieve higher sales. Factor Analysis is also extensively used in the field of marketing and market research related to product attributes and perceptions. The construction of Perceptual Maps and product positioning studies are some crucial areas where Factor Analysis is widely used along with other quantitative research and analysis tools.

Cluster Analysis Market segmentation usually is based not on one factor but on multiple factors. Initially, each variable represents its own cluster. The challenge is to find a way to combine variables so that relatively homogenous clusters can be formed. Such clusters should be internally homogenous and externally heterogeneous. Cluster analysis is one way to accomplish this goal. Rather than being a statistical test, it is more of a collection of algorithms for grouping objects, or in the case of marketing research, grouping people. Cluster analysis is useful in the exploratory phase of research when there are no a-priori hypotheses. Cluster analysis steps: 1. Formulate the problem, collecting data and choosing the variables to analyze. 2. Choose a distance measure. The most common is the Euclidean distance. Other possibilities include the squared Euclidean distance, city-block (Manhattan) distance, Chebychev distance, power distance, and percent disagreement. 3. Choose a clustering procedure (linkage, nodal, or factor procedures). 4. Determine the number of clusters. They should be well separated and ideally they should be distinct enough to give them descriptive names such as professionals, buffs, etc. 5. Profile the clusters. 6. Assess the validity of the clustering. Say, you are a retail chain with 100s of stores across locations. How do you conduct assortment planning and best manage store performance? Cluster analysis will provide you with the desired insights on customer demographics, purchase behavior and demand patterns across locations. This will help you in conducting assortment planning, planning your promotional activities and store benchmarking for better performance and higher returns. This is the kind of analysis and decision making that Cluster Analysis can help with. In the field of marketing, Cluster Analysis is widely used for market segmentation and positioning, and to identify test markets for new product development. In the areas of social networking and social media, Cluster Analysis is used to identify similar communities within larger groups.