Fantastic IGCSE Course in Business Studies

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Pros and cons

With both types of market research, there are positives and negatives to them making secondary research more useful in some areas than primary research and vice versa.

Pros of Secondary Research

+ Often obtained without cost

+ Good overview of a market

+ Usually based on actual sale figures, or research on large samples

Cons of Secondary Research

– Data may not be updated regularly

– Not tailored to your own needs

– Expensive to buy reports on many different marketplaces

Pros of Primary Research
+ Can aim questions directly at your research objective
+ Latest information from the marketplace
+ Can assess the psychology of the customer

Cons of Primary Research 
– Expensive: £10,000+ per survey
– Risk of questionnaire and interviewer bias.
– Research findings may only be usable if comparable backdata exists.

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Secondary research

This is the collection of secondary data, which has previously been collected by others and is not designed specifically for the study in question, but is nevertheless relevant. Secondary data is far cheaper and quicker to gather than primary data, but it can be out-of-date by the time that it is researched. The main sources of secondary data are reference books, government publications and company reports.

The primary and the secondary research will provide the business with much data relating to its markets and its consumers. This data can then be used to describe the current situation in the marketplace, to try to predict what will happen in the future in the marketplace, and to explain the trends that have occurred.

The business may also use the market research data to segment the market. This involves breaking the market down into distinct groups of consumers who have similar characteristics, so as to offer each group a product which best meets their needs. The main ways of segmenting a market are:

By consumer characteristics: this involves investigating their attitudes, hobbies, interests, and lifestyles.

By demographics: their age, sex, income, type of house, and socio-economic group.

By location: the region of the country, urban -v- rural, etc.

Effective segmentation of the market can lead to new opportunities being identified (i.e. gaps in the market for a product), sales potential for products being realised and increased market share, revenue and profitability.

Quantitative vs Qualitative research

Quantitative research

Quantitative research involves carrying out market research by taking a sample of the population and asking them pre-set questions via a questionnaire (normally 200+ respondents) in order to discover the likely levels of demand at different price levels, estimated sales of a new product, and the 'typical' purchaser of the company's products. The data is numerical and can be analysed graphically and statistically. There are several types of sample that can be used to gather quantitative data:

Random sampling - this gives each member of the public an equal chance of being used in the sample. The respondents are often chosen by computer from a telephone directory of from the Electoral Register.

Quota sampling - this method involves the consumers being grouped into segments which share certain characteristics (e.g. age or gender). The interviewers are then told to choose a certain number of respondents from each segment. However, the numbers of people interviewed in each segment are not usually representative of the population as a whole.

Cluster sampling - this normally involves the consumers being grouped into geographical groups (or 'clusters') and then a random sample being carried out within each location.

Stratified sampling - the consumers are grouped into segments again (or 'strata') based upon some previous knowledge of how the population is divided up. The number of people chosen to be interviewed from each 'strata' is proportional to the population as a whole.

Qualitative research

Qualitative research attempts to gain an insight into the motivations that drive a consumer to behave in a particular way. It is usually conducted through group discussions (often called focus groups) in order to discover the rationale behind consumers' purchases. The group discussion is often chaired by a psychologist in a relaxed manner, which should encourage the consumers to discuss their shopping habits and pre-conceptions concerning certain products and brands.

Forecasting

This involves attempting to estimate future outcomes (e.g. the level of sales). Forecasting can be done in a number of ways:

Extrapolation - this involves identifying the trend that existed in past data and then continuing this into the future. This is often done by using a software package to establish a line of best fit for past data, and then simply extending this line into the future.

The Delphi Technique - this involves using a panel of business and forecast 'experts' who discuss and agree long-range forecasting for important issues and events.

Market research - this can be used to try and establish the purchasing intentions of consumers.

Time Series analysis - this also attempts to predict future levels from past data. There are 4 main components of time-series data : the trend, cyclical fluctuations (due to the economic cycles of recessions and booms), seasonal fluctuations and random fluctuations.

Clearly, trying to predict and forecast what will happen in the future is not easy and many variables will change in both the short-term and in the long-term which will affect the accuracy of forecasts. It is always advisable for businesses to use a variety of forecasting techniques to arrive at suitable and acceptable figures for the future (e.g. costs, revenues, sales levels, profits, etc).

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Primary v secondary research

Why is market research needed?


Any business should find out what people want to buy and how many people are going to buy that product before producing a product since the chances of failing are very high. Usually,market research try to answer these questions:

• What feature of the product do they like/dislike?
• Are people willing to buy the product?
• What price are people prepared to pay?
• Location of the selling point of the product.
• Type
  of customer who buys the product.
• Type of promotion that will be effective.
• Competition in the same industry.
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Secondary Research

Secondary research uses outside information assembled by government agencies, industry and trade associations, labor unions, media sources, chambers of commerce, and so on. It's usually published in pamphlets, newsletters, trade publications, magazines, and newspapers. Secondary sources include the following:

• Public sources. These are usually free, often offer a lot of good information, and include government departments, business departments of public libraries, and so on.
• 
  
• Commercial sources. These are valuable, but usually involve cost factors such as subscription and association fees. Commercial sources include research and trade associations, such as Dun & Bradstreet and Robert Morris & Associates, banks and other financial institutions, and publicly traded corporations.
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• Educational institutions. These are frequently overlooked as valuable information sources even though more research is conducted in colleges, universities, and technical institutes than virtually any sector of the business community.

Public Information Sources
Government statistics are among the most plentiful and wide-ranging public sources. Helpful government publications include the following.

The State and Metropolitan Area Data Book provides a wide variety of statistical information on states and metropolitan areas in the United States. Published by the U.S. Census Bureau, it's available online for $31 through the U.S. Government Printing Officeand at larger libraries.

The Statistical Abstract of the United States provides tables and graphs of statistics on the social, political and economic conditions in the United States. Published by the Census Bureau, it's available online for $48 through the U.S. Government Printing Officeand at larger libraries.

U.S. Industry and Trade Outlook presents recent financial performances of U.S. manufacturers and identifies emerging trends. Published by the Commerce Department in cooperation with McGraw-Hill, it's available online for $76 through the U.S. Government Printing Officeand at larger libraries.

The U.S. government online bookstore at the U.S. Government Printing Officehas an abundance wealth of publications on topics ranging from agriculture, aviation, and electronics, to insurance, telecommunications, forest management, and workers' compensation.

The U.S. Census Bureauwebsite also contains valuable information relevant to marketing. The Bureau's business publications cover many topics and trades--such as sales volume at furniture stores and payrolls for toy wholesalers--and are useful for small businesses as well as large corporations in retail, wholesale trade, and service industries. Also available are census maps, reports on company statistics regarding different ethnic groups, and reports on county business patterns.

One of the most important information resources you'll find is the SBA. The SBA was created by Congress in 1953 to help American entrepreneurs start, run, and grow successful small enterprises. Today there are SBA offices in every state, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, and Guam. Among the services offered by the SBA are financial assistance, counseling services through Small Business Development Centers (SBDCs), management assistance through programs like SCORE, and low-cost publications. The counselors at SCORE can provide you with free consultation on what type of research you need to gather and where you can obtain that information. They may also be able to suggest other means of gathering the information from primary sources. SBDCs generally have extensive business libraries with lots of secondary sources for you to review.

One of the best public sources is the business section of your public, or local college or university, library. The services provided vary from library to library but usually include a wide range of government publications with market statistics, a large collection of directories with information on domestic and foreign businesses, and a wide selection of magazines, newspapers and newsletters.

Almost every county government publishes population density and distribution figures in accessible census tracts. These show the number of people living in specific areas, such as precincts, water districts or even ten-block neighborhoods. Some counties publish reports that show the population ten years ago, five years ago, and currently, thus indicating population trends.

Other public information resources include local chambers of commerce and their business development departments, which encourage new businesses to locate in their communities. They will supply you (usually for free) information on population trends, community income characteristics, payrolls, industrial development and so on.

Don't overlook your bank as a resource. Bankers have a wealth of information at their fingertips and are eager to help their small business customers get ahead. All you have to do is ask.

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Primary v secondary research

Primary research provides two basic forms:

1. Exploratory: Exploratory research does not aim for a specific result or data point; it is more open-ended. It can help you identify problems and usually involves interviews or focus groups with extensive input from participants. For example, if you noticed your website was not producing any sales but you do not know why you would interview a focus group to see what the problem was. They might say they found it hard to navigate or they found it overwhelming; without open-ended discussion, you would not get that valuable feedback. 

1. Specific: Specific research is very targeted in its scope. It is used to solve the problem that you discovered through exploratory research. Usually done through interviews, specific primary research usually involves interviews and is very precise. In the example of your website, once the exploratory research identified the problem, that your website sales were down due to difficulties navigating the site, you would use specific research to test reactions to new layouts. 

One major downside to primary market research is cost. Running a study yourself or hiring a research form can cost thousands of dollars, making it inaccessible for many small business owners. 

What Is Secondary Market Research?

Secondary market research is when you use previously completed studies and apply the results to your own situation. It's easy to find using the internet or research journals and is usually free or low cost. The drawback for businesses is that the results are not specific to your business, and you may not be aware of all of the variables involved. The results may also be broader than your company's niche, making to more difficult to help inform your business decisions. 

What Kind of Research Should I Use?

For many business owners, the best approach is to start with secondary research. By looking at regional data, community surveys and other available information, you can help identify your audience and market. Once you have narrowed down your target group, you can do lower cost versions of primary market research, such as sending out surveys or questionnaires. Secondary research gives you a foundation to build on, while the primary research helps you identify specific need

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Market research

• Primary research (field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.
• Secondary research (desk research) involves gathering existing data that has already been produced. For example, researching the internet, newspapers and company reports.

Factual information is called quantitative data. Information collected about opinions and views is called qualitative data.

Accurate market research helps to reduce the risk of launching new or improved products.

Some businesses opt out of field research and rely instead on the know-how and instincts of the entrepreneur to ‘guess’ customer requirements. They do this because market research costs time and money. Existing business can make use of direct customer contact to help them identify changing fashion and market trends.

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Secondary research

Secondary Research

Methods

• Census – provides information on all the households in the UK, updated every 10 years
• Internet – can provide a wealth of information however need to check validity of data
• Government statistics
• Books and journals
• Company reports
• MINTEL reports – these are often a good source of market information

Advantages

• Quick and easy
• Relatively cheap

Disadvantages

• May be out of date
• May not be relevant

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Secondary research

What is Secondary Market Research and Data?

Secondary data is the data collected by someone else other than the researcher himself. This data can be gathered from government records, books, trade associations, national or international institutes, statistics agencies, etc. Research done using this readily available information is called Secondary Market Research. 

Factors to be considered while collecting data from secondary sources :
1)  Accuracy of data: One should evaluate the credibility of source of data and methods used to collect data because these factors directly influence the accuracy of data.
2)  Time and Cost required to collect data: Some sources of data charge money in order to give access to their information, so an organization needs to evaluate this cost with the cost of collecting data by themselves (primary market research). 
3)  One also needs to take care that information collected answers the issues which need to be addressed.

Advantages of Secondary Market Research

1)  Time and Cost effective : Usually time and cost required to collect secondary data is less than efforts required to collect primary data. Data is available freely or at far lesser cost through secondary sources. 
2)  Extensiveness of data : Data collected by governments and other institutes is usually very extensive and covers a large spectrum of issues. An organization can filter that data and consider only parts which they are targeting.
3)  Basis of Primary Research : Data collected from secondary sources gives an idea to organization about effectiveness of primary research. From secondary data one can form hypothesis and can evaluate the cost and efforts required to conduct own surveys. One can also note down issues, which are not covered from secondary research and, need to be addressed through primary research.

Disadvantages of Secondary Market Research

1)  Data Definitions : Secondary Researcher needs to understand various parameters and assumptions that primary research had taken while collected information. A term may have different meaning for different people, example a term 'youth' used is ambiguous and one needs to find what is the assumed age taken by primary researcher.
2)  Inaccuracy of Data : As we are not gathering our own information, first-hand, we are totally dependent on someone else's efforts. Primary researcher may have been biased or may have used questionable methods to collect data; this can be pretty risky for secondary researchers to base their report on such data. 
3)  Time Lag Issues: Information collected from books, historical surveys are usually not sync with the times and might have changed drastically. Thus making such information a foundation of research may be highly risky for the business or project.
4)  May not be Specific : Extensiveness of such information is its benefit as well as drawback. Organization will not get answers to their specific issues through this data directly and one needs to 'mine' further into it to get relevant information. 
5)  Proprietary Issues : Some of the secondary sources might have copyrighted their information and using them without permission can lead to various legal complications.

Usually it’s for small organizations and projects secondary market research is preferred because the time and amount of money required is less.
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Secondary research

Secondary marketing research uses data that already exists and has been collected by someone else for another purpose.

Sources of secondary data can come from within the firm itself – this is known as internal secondary data. External secondary data, on the other hand, is data that has been published by other organisations

What are internal sources of secondary data?

Every department within an organisation will have its own records that represent a potential source of valuable data. For instance, records of past advertising campaigns within the marketing department can be compared with copies of invoices held in the sales department in order to judge their effectiveness and get ideas for future campaigns. Past sales figures can also be used to spot trends and forecast future figures.

The increasing availability and use of loyalty cards and big data has given businesses the chance to gather a wide range of valuable information on customer buying habits, allowing them to target promotional campaigns more effectively.

Internal sources of data should always be considered as a first line of enquiry for any investigation because they are usually the quickest, cheapest and most convenient source of information available. Internal data will also be exclusive to the organisation that generated it, so that rival firms will not have access to it.

However, internal data may be incomplete or out of date, and, if a project is new, there may be no relevant data at all. In such cases, an organisation may need to consider using external sources of secondary data.

What are external sources of secondary data?

There are several sources of existing data available from outside of the business that may be of value. These include:

Commercial market research organisations – including MINTEL, Keynote and Euromonitor

The Government – the much wider availability of open data from the government has significantly increased the availability of such data

Competitors – company reports and websites are easily accessible and contain a limited amount of information

Trade Publication

The general media

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