The PPT tells you about when and how to use the Discriminant Analysis to check the market relation between two or more variables.

1. DISCRIMINANT ANALYSIS

2. Definition
Discriminant Analysis is a multivariate statistical technique
used for classifying a set of observations into pre defined
groups.
OBJECTIVE
To understand group differences and to predict the
likelihood that a particular entity will belong to a
particular will belong to a particular class or group based
on independent variables.

3. Purpose
1) The main purpose is to classify a subject into one of the two
groups on the basis of some independent traits.
2) A second purpose of the discriminant analysis is to study
the relationship between group membership and the variables
used to predict the group membership.

4. Situations for its use
1) When the dependent variable is dichotomous or
multichotomous.
2) Independent variables are metric, i.e. interval or ratio.

5. Application of Discriminant Analysis
• To identify the characteristics on the basis of which one can
classify an individual as –
1) Basketballer or volleyballer on the basis of anthropometric
variables.
2) High or low performer on the basis of skill.
3) Juniors or seniors category on the basis of the maturity
parameters.

6. What we do in Discriminant Analysis
• It is also known as Discriminant Function Analysis.
• In Discriminant Analysis, the dependent variable is a
categorical variable, whereas independent variables are
metric.
• After developing the discriminant model, for a given set of
new observation the discriminant function Z is computed, and
the subject/object is assigned to first group if the value of Z is
less than 0 and to second group if more than 0. This criterion
holds true if an equal number of observations are taken in
both the groups for developing a discriminant function.

7. Assumptions
Sample Size
Normal Distribution
Homogeneity of Variance
Outliers
Non-multi co-linearity
Mutually Exclusive
Classification
Variability

8. STEPS IN ANALYSIS
• STEP 1 –
In step one the independent variables which have the
discriminating power are being chosen.
• STEP 2 –
A discriminate function model is developed by using the
coefficients of independent variables.

9. STEP 3 –
In step three wilk’s lambda is computed for testing the
significance of discriminate function.
STEP 4 –
In step four the independent variables which possess importance
in discriminating the groups are being found.
STEP 5 –
In step five classification of subjects to their respective group is
being made.

10. Application of SPSS
Eg. To identify the players into different categories during
selection process.