Accurate market research is essential for new businesses looking to understand their marketplace, their customers and their competitors. There are two core methods of obtaining this priceless information: primary and secondary research, also known as field and desk research.
Whether you’re developing a new product line, entering a new territory or growing an already established business, understanding the marketplace helps you make sound business decisions based on intelligence.
Both primary market research and secondary market research have their benefits. If you’re unsure of whether you can benefit from either or both of these research methods let’s take a closer look at the difference between the two:
Primary market research methods
Primary research is information that comes directly from source i.e. your potential customers and is new data that has never been collated before. The ultimate goal of any primary market research for entrepreneurs is to gain relevant insight into their target market that could not otherwise be gleaned from existing data.
When conducting primary market research, you’re looking for one of two types of information – either specific or exploratory. Specific research is, unsurprisingly, very precise in its scope and involves precise questioning to help solve a problem that has often been identified during exploratory research. Exploratory research is much more open-ended and unstructured, encouraging lengthier responses from your chosen respondents.
There are three common ways of targeting a group of people for primary research purposes:
- Direct mail
A direct mail questionnaire tends to feature questions that are short and to the point and of interest to the respondent. Any direct mail questionnaire should also feature a covering letter to adequately explain the reasons for the questionnaire.
- Phone surveys
Telephone surveys tend to be more cost-effective than direct mail questionnaires. Another advantage of phone interviews is speed and efficiency.
It’s possible to carry out half a dozen interviews within the space of an hour; which is certainly far quicker than awaiting questionnaire responses by post. Telephone interviews also allow you to cast your net further, getting responses across a wide geographic range cheaper and quicker than direct mail.
- Face-to-face interviews
The personal interview is one of the most effective forms of primary market research. Whether it’s a one-to-one interview or a focus group survey, it’s a great opportunity to build rapport with respondents and get their thoughts on product ideas, buying preferences and purchasing decisions.
One-on-one interviews can either be focused or nondirective discussions. Focused interviews are structured around questions selected prior to the interview while nondirective interviews give interviewees the freedom to address topics of their choosing without extensive questioning.
Secondary market research methods
Secondary research is industry data that’s already been compiled and organised ready for you to utilise to your advantage. Whether it’s previous industry reports or studies by official government bodies, trade associations and chambers of commerce or industry competitors, secondary market data is quantitative information that can often be procured for free or for a very low cost.
The drawbacks to secondary market research are that the data may not be customised to fit your research requirements. So although it might be cheaper and quicker to obtain, it might not be as useful as primary market research in terms of preparing your business to explore new markets and regions.
Secondary market research methods can be categorised under three different sources:
- Public sources
This category offers a host of valuable information that’s often free; from government departments to public libraries. At the British Library, our Business & IP Centre is home to £5m worth of current market reports from leading publishers, as well as up-to-date information for researching key industries.
- Commercial sources
This category is equally valuable, but most commercial data involves cost factors such as subscription and association fees. Whether it’s a financial institution, a research and trade association or a publicly traded corporation, it’s potentially valuable data that, even in a general sense, can give you a good overview of a marketplace.
- Educational institutions
Another source of data that’s sometimes left untapped is research conducted by colleges, universities and technical institutes.
Combining both primary and secondary market research is almost certainly the best way to get a top-level view of the market as well as a viewpoint of the local and regional competition.
Secondary research can lift the lid on a wide variety of demographic information; from average salaries and spending patterns to nationalities and household sizes. Primary research can work alongside to fill the blanks; understanding people to get a 360-degrees view of your industry.
The key to long term business growth is understanding your market and taking full advantage of the opportunities available to you. If you’re setting up in business but you need to know more about your industry to make better informed business decisions, sign up to our ‘How do I research a business Idea?’ workshop today. Our experts will open your eyes to the high quality data available at the British Library’s Business & IP Centre across a vast range of subjects to help you successfully develop and grow your business. Visit our events page to view our upcoming events.