Factor analysis is a statistical method used to identify underlying relationships between variables. It helps researchers reduce a large number of variables into fewer, more manageable factors, making it easier to understand complex data sets. This technique is commonly used in fields like psychology, marketing, and social sciences to uncover patterns and group similar items. The process involves analyzing correlations among variables to determine which ones cluster together. By doing so, factor analysis reveals latent constructs that may not be directly observable, such as personality traits or consumer preferences. This simplification aids in data interpretation and enhances decision-making.