Primary research and secondary research

Primary research is the collection of new, first-hand data gathered directly from the market for a specific purpose, using methods such as questionnaires, interviews or observation.

One method is a questionnaire (survey) — a set list of questions put to a sample of customers, online, by phone or in person. It allows the firm to collect data from many people relatively cheaply, gathering information on their preferences, opinions and buying habits. Its usefulness depends on asking clear questions and reaching a representative sample, otherwise the results could be misleading.

The first reason is low cost. Much secondary data — government statistics, internet sources and the firm's own internal records — is free or cheap to access. For a small business with limited finance, this means it can gather useful market information without spending money it cannot afford on costly field research.

The second reason is speed. Secondary data already exists, so it can be found and used quickly. This lets a small business make decisions and get to market faster, rather than waiting weeks to design and run primary research.

Together, low cost and speed make secondary research practical for a cash- and time-limited small firm, although the data may be out of date or not specific to the firm's exact needs, so it should be treated with some caution.

Primary research collects new, first-hand data for the firm's exact purpose, which makes it highly useful when entering a new market. Because it is specific to the firm's product and the new market's customers, it can answer precise questions — such as whether local customers want the product and what they will pay — that no existing data covers. It is also up to date and confidential, giving the firm current insight that rivals do not share. For a market the firm does not yet understand, this tailored, current information is very valuable.

Secondary research is also useful, but in a different way. It is cheap and quick, so it lets the firm build a broad picture of the new market's size, growth and competitors at low cost before spending on field research. However, it is generic — collected for someone else's purpose — and may be out of date or not specific to the firm's product, so it cannot fully answer the firm's exact questions and is available to competitors too.

Therefore the usefulness of each depends on what the firm needs and can afford. For broad background on the new market, secondary research is the more useful starting point; for specific, current answers about its own product, primary research is more useful. The most effective approach is usually to use secondary first to understand the market cheaply, then primary to fill the specific gaps — combining the strengths of both.

Spending heavily on primary research before a launch has clear benefits. Primary data is specific to the firm's exact product and customers, up to date, and confidential, so it directly tests whether demand exists and at what price. This can reduce the risk of a failed launch, which for an expensive product could cost far more than the research itself — so the spending may pay for itself by preventing a costly mistake. Detailed primary research also helps design the marketing mix to fit the target customers, improving the chance of strong sales.

However, large spending on primary research has drawbacks. It is expensive and slow, so for a small firm the cost could be unaffordable and the delay could let rivals launch first. The research may also be unreliable if the sample is too small or biased, or if customers say one thing and do another — meaning the firm could spend a large sum and still make the wrong decision. Cheaper secondary research might provide much of the needed information at a fraction of the cost.

Judgement. Whether the large spend is justified depends on the cost and risk of the launch itself. For an expensive, high-risk product, where a failed launch would be very costly, thorough primary research is worth a large investment because avoiding failure saves far more than the research costs. For a cheap, low-risk product, or where good secondary data already exists, such heavy spending would not be justified — the firm should do limited, targeted research instead. On balance, the firm should match its research budget to the scale and risk of the launch: spend heavily only when the potential loss from getting it wrong is large.

Primary research collects new, first-hand data for a specific purpose, while secondary research uses data that already exists. Primary research is often said to be more useful, but how far this is true depends on the firm's needs, budget and the type of information required.

The case that primary research is more useful. Primary data is specific to the firm's exact question, so it answers precisely what the firm needs to know rather than offering general information. It is up to date, reflecting current customer views, and confidential, giving the firm an edge that rivals cannot copy from public sources. For decisions that depend on the firm's own product and customers — such as testing a new product or setting its price — primary data is far more useful than generic secondary data, because no existing source covers the firm's exact situation. This is why primary research is usually decisive for important, product-specific decisions.

The case that secondary research can be more useful. First, secondary research is cheap and quick, so for a firm with little money or time it may be the only practical option, and it is far more useful than expensive primary research the firm cannot afford. Second, for broad background — market size, growth and competitors — secondary sources such as government data and market reports provide a wide picture that would be slow and costly to gather first-hand. Third, primary research is only useful if it is well designed: a biased or too-small sample produces misleading data, so poor primary research can be less useful than reliable secondary data. Fourth, secondary research is the sensible starting point that tells the firm what primary research still needs to investigate.

Weighing it up (criterion). Which type is more useful depends on the purpose of the research, the firm's budget and how specific the question is. For specific, current, product-level decisions with a reasonable budget, primary research is more useful. For broad background, urgent or low-budget situations, or when reliable existing data already exists, secondary research is more useful.

Judgement. Primary research is more useful to a significant extent — but only for specific, current questions the firm can afford to research properly. It is not universally more useful, because for broad background, tight budgets, or when good secondary data already exists, secondary research serves the firm better. The most defensible conclusion is that the two are complementary rather than rivals: the most useful approach is to use secondary research first to understand the market cheaply, then primary research to answer the specific questions that remain. So primary research is the more powerful tool for product-specific decisions, but it is most useful when combined with, not used instead of, secondary research.