Factor Analysis is a type
of Multivariate
Analysis. Factor analysis takes
a large number of continuous factors and
combines them to form a small number of
continuous factors that explain most of
the variation in the response. These now
factors are called 'eigenvectors'.
Suppose that you had the results of a questionnaire
giving the reactions of customers on a new
car. There were 100 questions in the questionnaire.
You might be able to form these questions
into three eigenvectors, 'safety', 'esteem'
and 'comfort' that explained 90% of the
variation between the respondents, and by
extension the potential customer base.
Factor Analysis is similar to Principal
Components Analysis.
