Page 292 - DMGT404 RESEARCH_METHODOLOGY

Research Methodology

Notes had a greater impact. To summarize, we can say, that Discriminant Analysis can be used when
we want to consider the variables simultaneously to take into account their interrelationship.
Like regression, the value of dependent variable is calculated by using the data of independent
variable.
Z = b x + b x + b x + ..............
1 1 2 2 3 3
Z = Discriminant score
b = Discriminant weight for variable
1
x = Independent variable

As can be seen in the above, each independent variable is multiplied by its corresponding
weightage.
This results in a single composite discriminant score for each individual. By taking the average
of discriminant score of the individuals within a certain group, we create a group mean. This is
known as centroid. If the analysis involves two groups, there are two centroids. This is very
similar to multiple regression, except that different types of variables are involved.

Application

A company manufacturing FMCG products introduces a sales contest among its marketing
executives to find out “How many distributors can be roped in to handle the company’s product”.
Assume that this contest runs for three months. Each marketing executive is given target regarding
number of new distributors and sales they can generate during the period. This target is fixed
and based on the past sales achieved by them about which, the data is available in the company.
It is also announced that marketing executives who add 15 or more distributors will be given a
Maruti Omni-van as prize. Those who generate between 5 and 10 distributors will be given a
two-wheeler as the prize. Those who generate less than 5 distributors will get nothing. Now
assume that 5 marketing executives won a Maruti van and 4 won a two-wheeler.
The company now wants to find out, “Which activities of the marketing executive made the
difference in terms of winning a prize and not winning the prize”. One can proceed in a number
of ways. The company could compare those who won the Maruti van against the others.
Alternatively, the company might compare those who won, one of the two prizes against those
who won nothing. It might compare each group against each of the other two.
Discriminant analysis will highlight the difference in activities performed by each group
members to get the prize. The activity might include:
1. More number of calls made to the distributors.
2. More personal visits to the distributors with advance appointments.
3. Use of better convincing skills.

Discriminant analysis answers the following questions:
1. What variable discriminates various groups as above; the number of groups could be two
or more? Dealing with more than two groups is called Multiple Discriminant Analysis
(M.D.A.).
2. Can discriminating variables be chosen to forecast the group to which the brand/person/
place belong to?
3. Is it possible to estimate the size of different groups?

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