Factor analysis using SPSS

Factor analysis is used to find factors among observed variables. In other words, if your data contains many variables, you can use factor analysis to reduce the number of variables. Factor analysis groups variables with similar characteristics together. Therefore with factor analysis you can produce a small number of factors from a large number of variables which is capable of explaining the observed variance in the larger number of variables. One can use the reduced factors for further analysis.

When is factor analysis applied?

You may be interested to investigate the reasons why customers buy a product such as a particular brand of soft drink (e.g. coca cola). Several variables were identified which influence customer to buy coca cola. Some of the variables identified as being influential include cost of product, quality of product, availability of product, quantity of product, respectability of product, prestige attached to product, experience with product, and popularity of product. From this, you designed a questionnaire to solicit customers’ view on a seven/five point scale, where 1 = not important and 7/5 = very important.

Factor analysis in SPSS

  • Step 1: From the menu bar select Analyze and choose Data Reduction and then CLICK on Factor. Highlight related variables and send them to “Variables”. Nothing has to be put into “Selection Variables”.  (See Figure 1 below).
 Figure 1: Factor analysis in SPSS

Figure 1: Factor analysis in SPSS

  • Step 2: CLICK on the DESCRIPTIVES button and its dialogue box will load on the screen. Within this dialogue box select the following check boxes Univariate Descriptives, Coefficients, Determinant, KMO and Bartlett’s test of sphericity, and Reproduced. CLICK on Continue to return to the Factor Analysis dialogue box (figure 2).
Figure 2

Figure 2

  • Step 3: From the dialogue box CLICK on the EXTRACTION button and its dialogue box will load on the screen. Select the check box for Scree Plot (untick the “Unrotated Factor Solution” option). CLICK on Continue to return to the Factor Analysis dialogue box (figure 3).
 Figure 3

Figure 3

  • Step 4: From the dialogue box CLICK on the ROTATION button and its dialogue box will load on the screen. CLICK on the radio button next to Varimax to select it. CLICK on Continue to return to the Factor Analysis dialogue box (figure 4).
Figure 4

Figure 4

  • Step 5: From the dialogue box CLICK on the OPTIONS button and its dialogue box will load on the screen. CLICK on the check box of Suppress absolute values less than to select it. Type 0.50 in the text box. CLICK on Continue to return to the Factor Analysis dialogue box. Click on OK to run the procedure. The dialogue box should be completed as shown below (Figure 5).
Figure 5

Figure 5

  • Step 6: Finally, CLICK on OK on the main Dialog Box, and results would appear in the Output SPSS file. The interpretation of the Analysis Results has been presented in the next article.
  • Step 7: The next article will discuss the interpretation of its output i.e. Interpretation of Factor Analysis using SPSS.
Cross tabulation in SPSS
Interpretation of factor analysis using SPSS

Priya Chetty

Partner at Project Guru
Priya is a master in business administration with majors in marketing and finance. She is fluent with data modelling, time series analysis, various regression models, forecasting and interpretation of the data. She has assisted data scientists, corporates, scholars in the field of finance, banking, economics and marketing.

Related articles

  • Interpretation of factor analysis using SPSS We have already discussed about factor analysis in previous article (Factor Analysis using SPSS), and how it should be conducted using SPSS. In this article we will be discussing about how output of Factor analysis can be interpreted.
  • Basic terms of statistics “Statistical Product and Service Solutions” is abbreviated as SPSS and was first developed by Norman H. Nie, Dale H. Bent and C. Hadlai Hull in year 1968.
  • Frequency analysis with SPSS In my previous article “Introducing Data” we discussed about importing files and creation of data sheet in SPSS. Moving further, in this article I will be discussing about the most basic technique which can be applied within SPSS i.e. Frequency Testing.
  • Reliability test in SPSS using Cronbach Alpha Cronbach Alpha is a reliability test conducted within SPSS in order to measure the internal consistency i.e. reliability of the measuring instrument (Questionnaire).
  • Linear regression analysis using SPSS In order to determine the relationship between dependent variable and a set of multiple independent variables, linear regression analysis is conducted.
Discussions

5 Comments.

  1. Ashutosh Singh

    Dear Author
    U are working well undoubtedly but u can contribute to enhance the knowledge of people like me if you can also give a link of a sample file for practice. If you can do this it will be wonder full. thanks

  2. Dear Author,

    its easily understand me how to factor analysis done and interpreted the data. thank you so much.

  3. I am new to statistics. I am doing my M.sc in aviation Management. I need assistance especially at this point in interpreting Factor analysis, Multiple Regression, Anova and all the other stuff like Scree test, T-Test, Box plots etc. This is urgent, reply a.s.a.p.

  4. Sudeshna Chakraborty

    Hey Brewster Joseph,

    For the requisite tools, please visit the links below:
    T-test: https://www.projectguru.in/publications/index.php?s=T-Test
    Interpreting Factor Analysis (inclusing scree & box plots): https://www.projectguru.in/publications/interpretation-of-factor-analysis-using-spss/
    ANOVA: https://www.projectguru.in/publications/one-way-anova-test-spss/
    Multiple Regression: https://www.projectguru.in/publications/17-linear-regression-analysis/

    For other requirements/queries, kindly contact [email protected]

    Hope this helps! 🙂

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