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Senin, 18 Mei 2009

Secondary vs. Primary Market Research

Success depends on a lot of things, but when you have information about a particular market segment, a geographic area, or customer preferences, you'll be better prepared to make the decisions that can make or break your business.

Many companies use market research as a guide. Whether you want to expand your business into a new area or introduce a new product, primary and secondary market research can provide valuable insight to help you shape your business and prevent costly missteps.

Secondary Research
If you’re considering extending your business into new markets or adding new services or product lines, start with secondary research. This type of research is based on information gleaned from studies previously performed by government agencies, chambers of commerce, trade associations, and other organizations. This includes Census Bureau information and Nielsen ratings.

You can find much of this kind of information in local libraries or on the Web, but books and business publications, as well as magazines and newspapers, are also great sources.

Although secondary research is less expensive than primary research, it's not as accurate, or as useful, as specific and customized research. For instance, secondary research will tell you how much teenagers spent last year on basketball shoes, but not how much they're willing to pay for the shoe design your company has in mind.

Primary Research
Simply put, primary research is research that's tailored to a company's particular needs. By customizing tried-and-true approaches — focus groups, surveys, field tests, interviews or observation — you can gain information about your target market. For example, you can investigate an issue specific to your business, get feedback about your Web site, assess demand for a proposed service, gauge response to various packaging options, and find out how much consumers will shell out for a new product.

Primary research delivers more specific results than secondary research, which is an especially important consideration when you're launching a new product or service. In addition, primary research is usually based on statistical methodologies that involve sampling as little as 1 percent of a target market. This tiny sample can give an accurate representation of a particular market.

But professional primary research can be pricey. Tabs for focus groups can easily run from $3,000 to $6,000, and surveys cost anywhere from $5,000 to $25,000 and up. Do-it-yourself research is, of course, much cheaper. Services that provide online survey tools usually charge a flat fee (typically around $1 or more per response) plus a setup fee. There are also a host of software products available that will help you conduct your own online and offline primary research.

Using Both for Your Business
Savvy entrepreneurs will do secondary research first and then conduct primary research. For example, the owner of a video-rental shop would want to know all about a neighborhood before opening a new store there. Using information gleaned from secondary sources, the owner can leard all kinds of demographic data, including detailed income data and spending patterns.

They can then send out a questionnaire to a sampling of households to find out what kinds of movies people like to rent. That primary-research technique will help when it comes time to stock the store with the latest Hollywood releases.

Secondary research lays the groundwork and primary research helps fill in the gaps. By using both types of market research, business owners get a well-rounded view of their market and have the information they need to make important business decisions.


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