Ref. No.

: BRM0012

Consumer’s Perception on Inverters in India:

A Factor Analysis Case

JK Company is a multinational company in the business of electric home appliances. It has

recently entered into Indian market by launching a product in inverters1 segment. Based on
several reports on the Indian electricity market, the management of JK Company feels that Indian
market is more favourable for the inverters. The market for Direct Current (DC) generators is
already saturated, as there are many players. On the other hand, JK Company has found that a
few local companies are competing heavily for market share and the number of players is also
less. The company decides to carry out a survey to understand the perceptions of the owners
about the inverters. This would help the company to understand the consumers’ perception better
and would also help the company to launch new products in India. To do this project, the company
hired Perfect Marketing Agency (PMA).
PMA decided to conduct a survey among the owners of different generators/inverters in India.
PMA identified 10 questions (Exhibit I) to be asked to different consumers. The customers were
asked to indicate their score on a scale of 1 to 7, which is (7= completely agree, 1 = completely
disagree). The scores indicated by the consumers are mentioned in Exhibit II. Meanwhile, the
marketing agency recruited a newly appointed young manager to handle this project and submit a
report to the management of JK. But the manager had very limited knowledge about the techniques,
which he could use to analyse this information. He was familiar only with the regression techniques.
He could see that there were around 10 questions regarding consumer perceptions. He is wondering
how this information can be clubbed in a meaningful way so that he can give important suggestions
to the company. Earlier, he thought of using multiple regressions to handle this problem but he found
that some variables are highly correlated and there is no dependent variable in the questionnaire
design. This was due to the fact that the questions asked were only about consumers’ perception of
the product they owned.

1
An inverter is an electrical device that converts Direct Current (DC) to Alternating Current (AC). The resulting AC can be
at any required voltage and frequency with the use of appropriate transformers, switching and control circuits. It is mainly
used as electrical storage device in homes/offices.

This case study was written by R. Muthukumar, IBSCDC. It is intended to be used as the basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation. The case was prepared from generalised experiences.

© 2009, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever
without the permission of the copyright owner.

License to use for IBS Campuses only. Sem II. Class of 2019-2021.
 Consumer’s Perception on Inverters in India: A Factor Analysis Case

Now, he wants to know which technique will help him in tackling the problem he is facing. In
addition, he is interested in knowing important consumer perceptions regarding the inverters in India?

Suggested Questions for Discussion

I. What is factor analysis and why is it used? Explain the process and methods used in it. What
are the different problems faced in interpreting the results derived from factor analysis?
II. Solve the problem presented in the case study using factor analysis.

Exhibit I
Questions asked to the Consumers

1. Space required should be adequate 6. It should be maintenance free.

2. Should be fuel-efficient. 7. Outer body should be strong.
3. Provision for automatic turn-on and off 8. The design should be attractive.
4. Good safety arrangements. 9. It should come with free insurance.
5. It should be affordable. 10. Operating should be comfortable.

Prepared by the author

License to use for IBS Campuses only. Sem II. Class of 2019-2021.
 Consumer’s Perception on Inverters in India: A Factor Analysis Case

Exhibit II
Scores of 20 Customers

Sl. No. Q-1 Q-2 Q-3 Q-4 Q-5 Q-6 Q-7 Q-8 Q-9 Q-10

1 7 6 6 1 2 1 1 1 4 1
2 6 7 7 2 3 2 2 2 5 2
3 6 6 4 4 4 1 1 1 6 2
4 7 4 3 3 2 2 3 3 3 5
5 5 5 5 1 3 3 4 4 5 1
6 6 6 6 2 4 1 2 5 6 2
7 7 1 4 3 6 4 5 2 5 3
8 3 5 5' 4 7 6 6 1 7 5
9 5 6 6 5 5 4 3 3 5 4
10 6 4 3 6 6 5 5 2 1 1
11 1 2 7 4 6 3 4 3 4 2
12 1 5 4 2 4 5 6 1 6 3
13 5 6 6 3 3 4 4 2 2 6
14 6 4 5 4 2 2 3 5 3 7
15 4 3 4 1 4 5 5 4 4 4
16 6 1 6 2 5 6 6 2 5 2
17 5 1 5 3 6 4 4 3 6 2
18 1 6 3 4 2 5 5 6 7 1
19 6 5 4 6 3 1 6 7 5 1
20 1 4 5 2 4 3 1 4 4 2

Prepared by the author

License to use for IBS Campuses only. Sem II. Class of 2019-2021.