Dear members, I trying to find the differences in perception of buyer and non-buyers for a particular product and want to control for their demographic and expenditures variables to ascertain the difference between the two categories(buyer/non-buyer). Can someone guide me whether I am correctly doing it:
In step one: dependent(perception)= a+ b1(demographic) +b2(expenditure) + e.....equation 1.
store the residuals for equation 1 as e_perception
Step 2: dependent(e_perception)= a+ b1(buyer=0, non-buyer=1)dummy variable
If not: please suggest me how to go about it.
If you don't need regression modelling, the simplest way is to use partial correlation in buyers and non-buyers groups separately, with demographics and expenditure as controlling variables. If controlling variables are continuous, of course
I would do it the way you describe. Than you can take a look at the R² change in Step two. Make sure that your control Variables are either measured on an interval scale or dichotomous. If they are categorical you need to dummy code them (e.g. demographic sounds like a categorical variable).
Thanks Arne...the independent variable in step two is dummy coded (1=non-buyer, 0=buyer).
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