Multidimensional scaling (MDS) is an alternative to factor analysis. It can detect meaningful underlying dimensions, allowing the researcher to explain observed similarities or dissimilarities between the investigated objects.
B2b multidimensional scaling
In many business to business markets respondents tell us that there is little difference between products and suppliers. To find out if this is true we can use multi-dimensional scaling.
For example, we may have five chemical companies and we want to find out in what way they are considered different. In the questionnaire aimed at buyers of chemicals, each of the five companies would be paired with one another and respondents are asked, on a scale, how similar they believe them to be on a variety of questions. How similar is their quality? How similar is their technical service? How similar are their prices?
We then use a statistical program to map the companies and the factors that have been tested to see how different or similar they are. These perceptual maps are extremely useful in brand analysis for determining if there is a need to work on the positioning of a brand to make it more distinctive.