Discriminant Function Analysis

One of the best statistical techniques to understand which variables discriminate between two or more naturally occurring groups is Discriminant Function Analysis. For example, a smart phone company may want to investigate which variables discriminate between customer who decide to (1) buy their product or (2) buy their competitor’s product. For that purpose the company will employ a market research company that will collect data on numerous variables prior to a customer’s buying a smart phone. Once a customer buys a smart phone, he will fall in either one of the two categories. Now in order to determine which variable(s) are the best predictors of customers’ choice of smart phone we can use Discriminant Analysis.

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