In order for businesses to understand an industry, reduce uncertainty, and make more informed decisions, they use market research. One common approach is secondary market research, which relies on finding, organizing, and interpreting information that already exists.
Professionals often use it to explore an industry and identify potential unique selling points, and there’s an art to doing it efficiently. Here, we’ll look at exactly what secondary market research is, why it’s used so widely, and how it can be a solid first step before making more calculated decisions.
What is secondary market research in business
Secondary market research refers to research that’s been completed by other people, and it’s often one of the first steps in the research process. So, if you find a report, database, or study about the public from a reputable source, that would count as secondary market research.
More than 75% of companies rely on targeted market research, including secondary market research, to gather insights and stay competitive.
Instead of talking directly to consumers and asking them direct questions, you’re using other public sources to understand your market. For example, a toy retailer might use market research secondary research to look at pricing trends before determining a price range for a particular action figure.
Primary vs secondary market research
Primary research refers to data you’ve collected yourself. For example, if a restaurant owner might develop a survey to gauge how interested their customers were in a new menu item, then tally the responses to decide whether it was worth purchasing the ingredients and training their chefs.
Secondary research refers to data that’s already available. So, the same restaurant owner might start with a national report about the general popularity of a menu item before deciding if it had regional appeal. Most businesses will not favor one over the other — you need both to get a good sense of the market. Starting with secondary research helps you determine whether you need to conduct more specific primary research.
When secondary market research makes the most sense
Most people rely on secondary research when they’re just getting started. If you’re preparing to start your business, it can help you explore a new industry, estimate market size, understand broad trends, and decide whether an idea is worth deeper investigation before investing time or money.
Secondary research can be used as a prep source for primary research, and identifying the broad trends and opportunities to assess early-stage risk. Just make sure you’re finding data that’s both recent and relevant, and factor in the relative rate of change in your industry. For example, a market research report in a rapidly evolving tech industry could easily be outdated after just a few weeks.
Types of secondary market research
Secondary market research draws from multiple existing resources. Here, we’ll look at the key types and what their reports generally focus on.
Industry reports and market studies
Industry reports and market studies are usually published by official groups within the relevant sector. These reports usually provide a good overview of market size and general trends.
Government and public data
These reports are often focused on more practical data, like population sizes, economic conditions, or labor and demographic stats. For example, you might look up the average age of a town before deciding whether to open a brick-and-mortar location. Or you might note the average education level of an area before deciding if you’ll have enough workers to staff your facility.
Academic and institutional research
Academic and institutional research refers to studies done by research organizations or universities. These studies can be a good way to track long-term trends for broader analysis. For example, you might pull up a business school’s analysis of the aerospace industry, and how long-term investment trends have dictated the advancements in different sectors.
Competitor and company information
Competitor and company information refers to public filings, company websites, and press releases. So, you might check out your nearest competitor’s product pages to get a sense of how they market their wares, who they market to, and how they set their price points to conduct a competitive analysis. Or you might look up public lease filings to get a sense of the turnover for new businesses in any given area.
Secondary market research methods
With all the research available, it’s important to gather existing information as efficiently as possible, especially if you’re somewhat unfamiliar with the market.
- Search and review: Before you start, cement a method to evaluate and catalog the information. For example, you might spend three minutes reviewing the report to decide whether it’s worth further pursuit.
- Compare sources: You might be surprised at just how many reports you’ll find that claim to prove entirely separate trends. Make sure that you’re comparing what different voices are saying before you decide one way or the other.
- Evaluate credibility: As you review the research, make sure you have a way to evaluate the credibility of the data. For example, the study size, the research methodology, and the organization’s reputability.
- Synthesize insights: Ideally, you’re not just collecting facts and figures, you’re figuring out a way to establish aligned insights on the core questions that you need to answer.
Secondary market research can give you a clearer picture of the intricacies of a market. For example, if you stumble upon multiple reputable studies that have wildly different conclusions about a customer base, you might conclude that your primary research should be the primary driver of your decisions.
Limitations of secondary market research
There are a few major limitations of secondary market research:
- Outdated data: People move fast in every industry, with consumer expectations changing for multiple reasons. If you’re not paying attention to the most recent trends, you’ll have to play catch up by the time you’re up and running.
- Irrelevant data: Many studies won’t give you any relevant information about your customers, either because the sample size was too small or because the research was addressing a different subject.
- Uncontrolled data: If you didn’t do the study yourself, you won’t know exactly who the people were, how the questions were phrased, and what biases the researchers might have used to compile their findings. Keep in mind that even the most neutral of organizations may still have their own agenda.
- Interpretation: Most research reports require some degree of interpretation, essentially forcing you to extrapolate the conclusions from the facts. This can lead to incorrect assumptions, especially if you’re trying to sync two very different ideas.
It can be tempting to rely on one type of research over another, but they really do work best in parallel. Let’s say that you’re running a small grocery store in a small town, and you’re losing business to a big box store that’s 20 minutes outside of town. You can use secondary reports to get a sense of how economic factors and personal preferences are driving your loss of revenue, but that will only give you general insights into a national struggle.
You’ll still need primary research to better understand what needs your business is currently serving, and how you can exploit or expand those offerings to tempt more customers to you. For example, you might conduct a focus group and then decide to work the local angle, highlighting how your business is closer for all the last-minute ingredients a customer may need.
Getting prepared before doing secondary market research
Being prepared means narrowing down what you’re looking for and how you’ll clarify your findings:
- Define the question: You should have specific questions that translate to specific answers. So, you might research the demand for luxury fashion accessories over the last 20 years before asking your customers about whether to add a new option to your online store.
- Clear business idea: Define how the research will translate into taking the next step of your business idea. For instance, what type of primary research will best answer your remaining questions.
- Organization: Figure out how you’ll organize your research, so it’s easy to go back and clarify facts and figures. So, you might set up a spreadsheet with different tabs based on the type of secondary market research or the key questions you’re attempting to answer.
- Planning decisions: Usually, secondary market research is a gateway to primary market research. Only if you have enough of a foundation in secondary market research will you decide to go further. However, you can prepare by outlining how planning decisions will be made as you progress from one stage to the next.
While neither market nor primary research guarantees demand or success. Both of these research methodologies can get stuck in a common problem: that customers don’t always know what they’re looking for until they make the final decision. This is why you may see major variance not just from region to region but from household to household. Research is meant to serve as a solid foundation to help you avoid the major pitfalls that many business owners face if they blindly jump in without a safety net.
Platforms like Tailor Brands are a good way to stay organized and clarify details as you research. This way, you’re more confident if you do decide to invest your time and energy in the next step.
Conclusion
Secondary market research can’t replace talking to customers, but it’s often the fastest way to get a handle on the market. When you leverage existing information, you get a stronger idea of when and how to move forward. As you dive deeper into any given subject, you should be able to determine whether your business has the resources and the expertise to fill a market need.