Posts Tagged ‘secondary research’

Secondary Research Can Enhance Primary Research

August 4, 2010

Most of the marketing research a small business owner or startup entrepreneur does is secondary: research that has already been conducted by another entity for some other purpose, and later published in mass media sources. Often, businesses rely upon secondary research for marketing information because conducting their own primary research can be very expensive. While one must be careful to understand the purpose for and methodology by which the secondary research was conducted, it can be quite beneficial in many ways, including enhancing primary research. Secondary research provides the following benefits:

Setting the Stage for Future Primary Research

Sometimes you have no clue what you’re trying to find. Let’s say that you want to start a coffee shop in your town, but because of the likes of Starbucks and Caribou Coffee, you’re not sure whether your market is saturated, or if there is a way to differentiate yourself. Secondary research can be an invaluable tool to help you explore. The Yellow Pages, the Web sites of chain stores – Starbucks, Caribou, Dunkin’ Donuts, McDonald’s – selling coffee, and the entertainment sections of newspapers can tell you how much competition you’re facing.

Secondary research might even be able to help you identify demographics of your community that you can use to your advantage. You examine the Census Bureau’s demographic data for the ZIP codes within a five-mile radius of your proposed location. You notice from other sources that there are about 10 competing eating and drinking establishments like those we named above. But from the Census data, you uncover a sizeable ethnic Middle Eastern or Eastern Mediterranean population. You might be able to refine your business concept to be a coffee shop that specializes in selling Eastern Mediterranean style coffees, or medium- to highly- acidic variety coffees, as is common in the Middle East. Now, you can do some basic primary research like small-scale surveys and focus groups to members of the community to see how receptive they would be to a coffee shop with that theme.

Reducing the Scope and Cost of Primary Research

Why spend $20,000 on a full-scale primary research project if you can find available data to meet a large amount of your needs? For example, you’re trying to find out what types of Middle Eastern coffees are selling well in the area. Conducting a survey can be very costly. But if you can find out what you need to know from trade publications covering the food and beverage industries, you might be able to save yourself quite a bit of time and money. Assume you read that a few kinds of Middle Eastern coffees are selling well – or are on an increasing trend – in various parts of the country. Now, you might order a few pounds of each, and then invite local residents to do a taste test and give their thoughts. Your secondary research has saved you thousands of dollars and several days of fieldwork.

Putting Primary Research Results in Perspective

You can even use secondary research to help validate what you find in your primary research. If you were to conduct a survey of your coffee shop’s customers and ask them what kinds of pastries you might serve in your shop, you might see a lot of responses suggesting berry-flavored cobblers and scones, pastries containing cinnamon or cardamom, and even some chocolate. By doing your secondary research, you will also find that, in the Eastern Mediterranean, berries, cinnamon, and cardamom are common flavor pairings, since coffees of that region tend to have berry- and wine-like characteristics, with some element of spice and cocoa. Secondary research, in this case, has validated what your primary research is indicating.

Most times, secondary research is all the marketing research you’ll need to do. However, when you need to do primary research, a good, ongoing system of secondary research can help you discover new information so that you can explore and pursue different avenues in your primary research; fill in several blanks in your research so that you need not reinvent the wheel; and complement any primary research so you can substantiate its findings.

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Doing Market Research for Your Business Plan Need not be Expensive

June 2, 2010

Every business needs to do market research. Whether your company is a Fortune 500 corporation or the neighborhood bar, understanding the market or markets in which you operate is critical to your company’s success. Would you invest money in an oil company that didn’t research the fields where it wanted to drill? Would you buy a house in a neighborhood without checking out the schools, crime rate, or housing market? Would you open a restaurant if you knew nothing about the location, the traffic around it, or the prospective customers? You can be sure that if you wanted to open a business, no banker will loan you money without you having done proper, thorough market research.

When one hears the phrase “market research,” most often he/she thinks about surveys and focus groups. These are the most common, yet often most expensive types of market research. Surveys and focus groups are primary research methods, since they are conducted from scratch. Most market research that small businesses need is secondary, that is, research that has already been conducted, published, and available to the public. Often, secondary research can be found in libraries, online, or through other published sources. Secondary research is also much less expensive – sometimes even free – to obtain; however, sifting through it for information relevant to your business’ needs and analyzing it properly can be very time-consuming. In this post, we will discuss how someone starting a business can do market research without breaking the budget.

First Step: Decide on the Information You Need

Tom Johnson has decided to fulfill his dream of starting a comedy club. He’s purchased a book on writing a business plan, and finds that one section of a typical business plan is “Market Analysis.” Tom realizes he must get this section down pat in order to determine the viability of his business and make projections of his first few years of revenues, and convince a banker to lend him money. Tom needs to ask himself several questions: What type of customers am I catering to? What locations are most convenient for attracting those customers? What are the traffic patterns in those locations? What other comedy clubs and entertainment venues are in the area? What do they charge? How do they promote their businesses? What types of promotions do my target customers respond to? Tom writes down all the questions he can think of that will help him analyze his market.

Census Bureau

The first place Tom turns to is the U.S. Bureau of the Census. The bureau’s Web site, www.census.gov, provides a wealth of info for him. He looks at the Web site for demographics, and plugs in the ZIP codes for the locations he is considering, along with their adjacent ZIP codes. The Web site provides great insights into the number of households in the ZIP code, the age ranges, income levels, racial composition, and other demographic factors. Also from the bureau’s Web site, Tom obtains the latest “Consumer Expenditure Survey,” and finds out what the average family spends on entertainment each year.

Tom then notices that the bureau also does an Economic Census of businesses every five years. He finds the Web page for County Business Patterns and looks to see how many entertainment establishments are within the ZIP codes he is considering. He gets good insights about the number of establishments, their employee size, revenues, and payrolls. Tom also finds other interesting facts from the Economic Census – particularly what percentage of revenues entertainment establishments typically spend on various categories: advertising, salaries, maintenance, etc.

Local Library

Tom realizes the Census Bureau has provided him with data that is summarized and aggregated. He needs more information about specific competitors and business patterns in the areas he is considering. So he visits his local library, which has access to several different databases of small businesses, like Dun & Bradstreet’s Hoover’s, and Million Dollar Database. These databases provide information on several individual establishments, including revenues, owner/officer information, employees, and location. Tom does a search of all entertainment establishments in his locations of interest.

Tom also searches through local newspapers of the past few weeks to see which entertainment venues were advertising, how often they were advertising, what they were offering in their ads, etc. He then goes to the Yellow Pages to see if those prospective competitors advertise there as well.

Chambers of Commerce

Tom then contacts different chambers of commerce around his locations of interest. He finds out when their functions are and attends some of them. The local chambers of commerce are great sources for identifying the similar businesses in his area, meeting their owners directly, and finding other businesses that can be help to Tom in opening his business. For example, Tom could meet the general manager of a local movie theater, and might learn from him that the area seems to be pressed for customers, or is impacted by some local ordinance; Tom might also meet a banker or an attorney who specializes in helping new businesses start. Still, he might meet people from a local corporation who are seeking to do events for employees, of which a comedy club can be a great option. Tom might also find information on the cost of labor in the area, as well as commercial real estate rents in various areas. Chambers of commerce are ideal for networking, news, assistance, prospective customers, and other information.

Getting Out There

Tom has now done a lot of secondary research, an exhaustive amount if you ask me! But there is also some primary research he can – and must – do. Tom should drive the areas near the proposed locations for his comedy club. He should check out the other entertainment places nearby: restaurants, jazz/dance clubs, movie theaters, other comedy clubs, karaoke bars, etc. That is, he should mystery shop. Tom should go into some of these competitors and get a feel for the type of clientele to which they cater, the prices they charge, the quality of service they deliver, and how busy they are. He can also see the décor of these venues, their peak times, the outdoor signage, and the traffic around them. All of these can yield valuable clues about the venue’s degree of competitive threat to Tom’s comedy club, and the viability of the location.

Putting it all Together

While there are countless many more sources Tom can turn to for market research, we see he’s done quite an impressive amount already. While most of his sources were free, or of minimal cost, Tom’s real expense was the time and legwork he put into it; he must now synthesize all this information and analyze it to see which locations provide the best mix of traffic, revenue potential, rental costs, and demographics, and then use that information to create forecasts. Once he’s done that, Tom can write the Market Analysis section.

PlanPro Makes the Market Analysis Section of Your Business Plan a Snap!

Chances are you don’t have the time Tom did to do all of that research. Finding all that secondary information and making heads or tails of it is probably something you’d rather delegate to a professional. With PlanPro, Analysights conducts all the secondary research you need for your business, and provides you with templates for the primary research you need to do. Once all the research is compiled, we will analyze it and provide you with the findings, so that you could write the Market Analysis section of your business plan with ease. All for a flat $495! For an extra $125, we will also write the Market Analysis section for you. This way, you can spend more time on the elements of your business plan that make the best use of your time. To learn more about PlanPro, visit: http://analysights.com/PlanPro.aspx or call Analysights at (847) 895-2565.

When NOT to do Marketing Research

October 2, 2009

Marketing research is an important part of a company’s decision making process.  However, there are times to do marketing research and times not to.  When marketing research keeps you on top of the markets in which your company operates; helps you achieve a strategic marketing advantage; enables you to select the course of action that achieves your key marketing objectives; or clarifies problems or investigates marketplace trends that affect your marketing goals, you should, by all means, conduct it.

However, there are certain times when you should NOT conduct marketing research.  First and foremost, you should not do marketing research if you have not first defined the problem you need to solve.  Problem definition is the single most important step in the marketing research process.  If not done – or done correctly – any research performed will be useless.  Granted, sometimes companies have no idea what the marketing problem is, so they must then do exploratory research, to help them identify the problem.  In that instance, there is a business problem, and that is to determine what is causing the company’s current marketing situation.

You probably also don’t need marketing research if:

You have access to readily available marketing information     

Your sales force may know its territories very well and each sales representative may understand the environment in which he or she calls on.  They may know the price of the competition’s products in those markets, as well as the relevant competitors there, and how much it costs to acquire customers there.  In addition, the Internet has made all kinds of marketing information freely available, and data sources like Dun & Bradstreet’s Million Dollar Database or ABI’s ReferenceUSA  has made finding information about prospective competition and customers a snap.  As a result, secondary research may be all you need to do to find the solutions to your marketing problems.

There’s not enough time or resources to conduct marketing research

If time is an issue, conducting elaborate marketing research will do no good.  Sometimes a situation arises where a decision must be made quickly.  In such a case, you might be better off convening the company’s business experts for an urgent discussion of the situation, alternative courses of action, and the selection of the course to take.  In other instances, you may lack the financial resources, or the internal staff for proper marketing research.  In these cases, you may also rely on the business experts and the secondary research already available to you.

The research adds little or no value

If the decision you want marketing research to help you make has little impact on sales, profit, market share, customer loyalty, brand equity, or any other marketing performance indicator, then it makes no sense to do marketing research.  Marketing research can be costly both in terms of time and money, so if the benefit of the research doesn’t at least pay for itself in the dollars and manpower expended to conduct it, it’s worthless.  You also need to consider the opportunity costs of that research.  If you do research on a problem whose solution adds little value, the time and money could have been better used to research a different problem with a bigger payoff, and that opportunity is lost.

Knowing when you need to do marketing research 

Develop an internal monitoring system of your marketing environment.  If you have a system in place to compile information about your company and your competition, it will alert top management to problems that marketing research can attack.  These days, you can set up e-mail alerts with Google and many major newspapers to keep you informed of any news or blog posts about your company, your competition, and your industry.   Also read your industry’s trade publications and get out to trade shows and conferences.  Talk to your sales force, your suppliers, and your customers.  You can get a wealth of information for free from these sources.

Knowing when not to do marketing research is just as important as knowing when to do it.  When marketing research adds significant value or improves your competitive position, it’s a go; when marketing research is just “nice to know,” it’s a no!   

Small Businesses Can’t Afford to do Marketing Research? They Can’t Afford NOT To!

September 21, 2009

How many of us would go on a road trip without first determining the optimal route to our destination?  Or locating the lodging facilities, restaurants, and service stations along the way?  Yet, why is it that when it comes to running our business, many of us don’t take the time to research the route to our business’ success?

Marketing research is a key component in developing effective marketing and business plans.  Marketing research helps us understand who our customers are, what their needs and wants are, and how they perceive our companies and our products vis a vis our compeition; marketing research also helps us ascertain how viable the market is for our products and services, the degree of competition, and the trends within our industry; and marketing research helps us establish goals and choose courses of action.

Yet many small business avoid doing any marketing research because they perceive it to be very costly.  However marketing research exists in several forms, many low cost or even free.  There are two types of marketing research data: primary and secondary.  Primary research is information you collect directly from the customer through surveys or focus groups.  Secondary research is information that has been collected and published by various organizations such as government agencies, trade publications and associations, and chambers of commerce, for various purposes.   Secondary research tends to be the least costly of the two, so it will account for the vast majority of market research a small business conducts, and most often will be all it needs.

Doing Marketing Research on a Shoestring

How can a business do marketing research on a low budget?  There are lots of great secondary research sources available, often for the nominal cost of a trip to your local library or an Internet search.  One of the best sources of marketing research data is the U.S. Census.  The Census Bureau provides demographics and population estimates, as well as social, political, and economic data.  The Census Bureau also conducts an Economic Census every five years to measure industrial activity.  The Economic Census breaks statistics down by industry and region, enabling you to size up your competition.  You can find out how many firms are in your territory, how big they are, what their revenues are, etc.  You can even find out how much of the industry’s sales are controlled by the top companies.

Besides the Census Bureau, you can find inexpensive data from your chamber of commerce, your trade associations, your vendors, and even your customers.  Check out the Encyclopedia of Associations, by Gale Research, at your library.  This source can help you identify associations relevant to your industry, as well as associations your customers might be members of.

Your public library will also have sources like The Thomas Register of American Manufacturers and the Harris InfoSource All-Industries and Manufacturing Directories, which can help you target businesses in a certain industry, learn more about competitors, and find companies to manufacture your products.

If you’re looking for company-specific information, your library may have an online subscription to Hoover’s, which is owned by Dun and Bradstreet.  In fact, D&B also furnishes its Million Dollar Database, which provides addresses, key officers, sales, and number of employees for almost 2 million U.S. and Canadian organizations, both publicly traded and privately owned.

Secondary information can also be obtained from colleges and universities, community organizations, and other government agencies.

And this list is far from comprehensive.

Given all the secondary information at our fingertips, the question is no longer whether small businesses can afford to do marketing research, but whether they can afford not to.

Using Marketing Research to Lead You Out of the Recession

June 8, 2009

Some economic indicators are starting to turn positive and suggest that the worst of the recession may be over. Even so, companies continue to cut their marketing budgets and this is perhaps the very worst time to do so. Cutting marketing expenditures at this time in the economic cycle is akin to stopping contributions to one’s investment portfolio during a bear market – in each case, one stands to miss out on the rebound.

Right now, marketing research is more critical than ever. Yes, business is still slow. But marketing research can be used ever more strategically right now. Your margins might still be tight, and you may still have some cuts to make. Many travel-related industries, especially hotels, are making use of marketing research to identify which amenities they can either eliminate or charge extra for, without negatively impacting customer satisfaction and/or loyalty. You should consider doing the same.

Marketing research can also be helpful in gauging the optimism of your customers and prospects, so that you can plan ahead for the future. Conducting marketing research right now can also inform you of what your target customers are substituting for your product or service to cope with these hard times. This information can help you accommodate them and/or find other ways to fulfill their needs.

You can also do marketing research relatively inexpensively with survey tools such as SuveyMonkey, Zoomerang, Survey Gizmo, etc. As long as you understand survey theory and sampling, you should be able to use these tools without compromising research integrity. You may even be able to reduce the size of your typical samples without sacrificing much accuracy. And you may be able to rely more heavily on secondary research. You can even track your competition with online tools like Compete.com.

Whatever the case, don’t abandon marketing research, especially now. Some carefully thought out, informal research is better than no research at all. Marketing research is the compass that will help you navigate out of these hard economic times.