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MRA03_Dell02 Recoding

We recoded the responses of Question 2, 4, 5, 6 and 9 on the basis that the higher the best and vice versa.

Inte rnet Usa ge

We used dimension reduction to condense the Internet Usage questions into 3 factors as we saw fit. We were able to subdivide the questions into 3 factors which were named Entertainment (users who use the internet mainly for entertainment purposes such as downloading movies, pictures etc), Information (users who use the internet to look at TV program listings and go on chatrooms), and Serious (users who use the internet mainly for looking for jobs and to book trips). These were the 3 factors we were able to decipher from the rotated component matrix. We also checked their communalities and saw that the variables data was well represented in the extraction. Satisfaction & Loyalty When we ran factor analysis on Q #4, 5, and 6 it did not give us rotated component matrix. We found that it is in fact one factor because there is high correlation between three variables. And we can say that a person who is satisfied can also recommend and repeat purchase dell. Manufacturer Importance/performance Ratings When we run factor analysis on Q # 8 we found that there are two sub factors, one is convenience and other is technical. Convenience are those who seek for ease of ordering, customization, quick delivery, competitive pricing,

program run quickly, and readily upgrade. Technical are those who seek for attractive design, no technical problems, appropriate software, internet access, and easy assembly.


The output suggests that 89.1% of the variance is explained as shown by the communalities data. The component matrix shows a very high correlation of 0.94 between the factor and the purchase likelihoods in price increases by either 5 or 10%. Early Adaptor Attributes Despite the fact that the question divides the responses into three major factors, i.e. Market Maven items, innovativeness and opinion Leadership; based on the output it was observed that market maven items and opinion leadership question responses were more or less the same. Factor analysis

was done ab initio using 3 factors which were later reduced to 2 when it was felt that the latter gave a much more meaningful result and conforming to expectations. (In the former market maven items and innovativeness were exhibiting positive correlation which appears to be flawed as a person who likes to introduce new items cannot possibly think unproven new products are a waste of time) It can be observed that the component 1 characterizes respondents who are early adopters who also share their opinions with others. On the other hand, component 2 contains respondents who are innovators who like to try different things. Special attention should be paid to Rotated Component Matrixa unproven new product are a waste of time. It is negatively Component correlated to other innovativeness questions which makes 1 2 3 4 sense as a person who answered agree completely to likes to try new things would most definitely mark disagree completely on unproven products being a waste of time. Factor of Factor After factoring on all blocks we run factor on factors which told us that what factors that are not relevant and we should ignore it in making cluster analysis. We found that technical and expert opinion leader are guys who are almost same for every components so we ignored it for our cluster analysis Rotated Component Matrixa Component 1 Entertainment Information Serious Satisfied Convenience Price Increase Innovator .028 -.024 -.050 .863 .785 .576 -.038 2 -.071 .004 .828 -.035 -.015 -.039 .631 3 .886 -.001 -.229 .078 .067 -.087 .453 4 -.033 .962 -.089 -.012 -.244 .142 .162 After excluding technical, and expert opinion we came up with the following factors and we can see that every factor is quite different for every component. Cluster Analysis Factor 1 Entertainment Satisfied Serious Information Convenience Price Innovation X X X x 2 X Entertainment Information Serious Satisfied Convenience Technical Price Increase Expert and Opinion Innovator .090 -.189 -.102 .866 .801 .257 .498 .057 -.074 .046 .769 .056 .128 -.142 .530 -.030 .631 -.103 .847 .065 -.128 .022 .051 -.292 .026 .530 .279 .070 -.089 .681 .003 -.008 .350 -.132 -.048 .705

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations.

Cluster 3 4

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 5 iterations.


We used the following color codes for each cluster. Cluster 1 is green. Cluster 2 is purple. Cluster 3 is brown. Cluster 4 is orange color coded. Cluster 1 is best in innovator and information whereas cluster 3 is worst in terms of innovation. Cluster 1 uses the

innovator vs information
1 0.5 0 -.50 -0.5 .00 -1 Innovator .50 1.00


internet for information whereas cluster 2 does not use the internet for information seeking purposes.

Cluster 4 is most price sensitive but does not use the internet for serious purposes such as booking trips and job searches. Cluster 2 is a very serious user and is not very price sensitive. Cluster 2 would buy even if prices are raised.

serious user vs price sensitive

1.5 1


0.5 0 -0.2 -0.1 -0.5 0 -1 0.1 0.2 0.3 0.4


Price sensitive


Cluster 1 wants the most entertainment and values convenience whereas cluster 2 does not think Dell is convenient. Cluster 4 is not a serious user nor an entertainment-type user, therefore cluster 4 uses the internet for information mostly.

entertainment vs convenience
1 0 -1 -0.5 -1 -2 -3 Convenience 0 0.5 1 -1.5

entertainment vs satisfied

Cluster 1 is most satisfied and uses internet for entertainment whereas cluster 2 is least satisfied.

1 0 -1 -0.5 -1 -2 Satisfied 0 0.5 1


Clusters 1 and 4 are price insensitive. Cluster 3 is most innovative but least price insensitive. This shows that cluster 3 would be price sensitive but also is the most innovative out of all the clusters. Cluster 2 is least innovative.

price insensitive vs innovative

1 Price Insensitive 0.5 0 -0.8 -0.6 -0.4 -0.2 -0.5 -1 Innovative 0 0.2 0.4 0.6 0.8 1 1.2


Cluster 1 Risk Takers

The respondents in this cluster are representative of a group of people who are highly innovative as they like to try new products, require very low convenience as they know their way around the markets and least satisfied. This may be due to the insight that consumers who are regularly in search of new products would constantly feel outdated as new products are released due to technological innovation. Since their churn rate is high, they are rarely satisfied with what they have. The people in this segment belong to 35-39 age segment, have some college education and income between $30,000 $49,999.

Cluster 2 Job Seekers

This segment is highly serious in terms of their customer usage as they mostly look up jobs or book trips online. They are constantly in search of best deals/value online due to which they are also quite price sensitive. We have defined this segment as job seekers who are out of jobs or unhappy with their current ones due to which they have less money to spend on computers and therefore price sensitive. The people in this segment belong to 35-45 age segment, are college graduates and income in the range $30,000 $49,999.

Cluster 3 Risk averse

This segment is characterized by customers are not innovative. They go for the tried and tested products. Due to their tendency to go for proven products, they are ready to pay high prices as they value reliability above all other factors. The people in this segment belong to 45 - 49 age segment, are college graduates and have income in the range $50,000 $74,999.

Cluster 4 Satisfied
This segment contains consumers who surf the internet for entertainment purposes, require a lot of convenience and highly satisfied. These are sort of the best customers in the sense that they think Dell meets their computing needs adequately. The people in this segment belong to 40 - 44 age segment, are college graduates and have income in the range $50,000 $74,999

1 0.5 0 -0.5 -1 -1.5 -2 -2.5 1 2 3 4 Information Entertainment Serious Satisfied Convenience Price Insenstive Innovator