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Market Research Dictionary - Index F

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cobble stones

Statistical Analysis Is All About Recognizing Patterns

Bev Lloyd-Roberts, LRPS, Photographer. © February 20, 2011 Stock.xchng
Definition:

Index F contains definitions for statistical terms such are factor analysis, fractional factorial design, frequency distribution, and frequency of response.  The Index also contains definitions for other words beginning with "F" that are used in advertising and marketing, such as focus group and freemium.

Focus Group h3>The Art of Focusing a Group

Focus Groups are specially designed gatherings of consumers who fall within a market segment for a particular product or service, and who are assembled for the purpose of gaining information about consumer perceptions related to a product, service, product mix, or brand. Focus groups are moderated by market research specialists, with the value and outcomes of the focus group highly dependent on the quality of the moderation and the selection of the panel.

Focus groups can take place face-to-face, in real time. Or they can take place on a digital bulletin board at the convenience of the focus group participants. In the digital environment, a focus group can be remotely located, essentially making their contributions to the focus group process from across the globe. Very often, focus groups are constructed through the use of consumer panels which are pre-established and whose opinion services are available through special arrangements and fees by market research providers.

Fractional Factorial Design

Freemium

The Factor Analysis Family of Correlation

Factor analysis is a statistical process that enables researchers to simultaneously manage an enormous number of variables (factors) that have relevance to a study. Through factor analysis, researchers are able to compensate for invalid data, random error, and complex interrelationships that seem uninterruptable without a systematic approach to the distinct and major regularities (correlations).

Factor analysis is mathematically complicated. The interpretation and application of factor analysis requires deep knowledge of statistical process. The technical vocabulary associated with factor analysis is intimidating to the uninitiated. When scientists talk about factor analysis, they use terms like Eigenvalues, rotation, simple structure, orthogonal, loadings, and communality. Presentation of factor analysis can take up many pages in a report, most of which is not understood – in terms of the nature of the statistical process (what it is doing) and the significance (how strong the relationship is) by a general audience of laymen, by many social scientists, and by policy makers. Market researchers who use factor analysis will do well to present key data points in the form of infographics.

Factorial design uses all the possible combinations of variables to look for correlation in the data.

Fractional factorial research uses only a specific sub-set of the universe of all possible combinations of variables in the analysis. Careful selection of the subset enables only the most important variables to be revealed. That is, those variables (factors) that are the most likely to be statistically significant to the research questions.

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Examples:

How Is Fractional Factorial Design Used?

One of the most common uses of fractional factorial design is in the procedure known as conjoint analysis. Conjoint analysis research is concerned with consumer preference data. Fractional factorial design enables the selection and analysis of the most promising combinations of variables from all the possible combinations of consumer preferences and variables impacting a particular study of consumer decision-making. Many commercial software applications offer this statistical analysis technique.

Advertising and Marketing with Freemium Offers

Freemium is a portmanteau that combines two attributes of business models -- the attribute of being a "free" offer and the attribute of being a "premium" offer.

In the social entertainment media field, freemium business models are common. Advertising in the digital world for games, web content, publishing services, and – commonly – software, all take advantage of the freemium model. The freemium model is familiar to most consumers, in that, it provides a free, simple but functional model for consumer use. However, advanced features of the free and simpler offerings are not free. In order to access increased functionality or related products and services, the consumer must pay a premium charge. Freemium is a very effective way to marketing and advertising a good product. Users who try the free model are often pleased with the functionality that they can access, but those enticing premium features continue to beckon all the while the simpler free product or service is used. In a bricks and mortar business, free sample or a "loss leader" is the equivalent of a freemium. The main distinction is that a small fee is charged for a "come-on" product or service advertised in the manner of a loss leader. However, freemium means free.

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