Secondary market research, or desk research, collects second-hand data and information that already exists as these were gathered by others. Secondary market research can be collected both from internal sources and external sources. This type of research is easier and cheaper than primary market research however the results might be out of date.
Purpose of secondary market research might include the following situations:
- Businesses planning a new market development and newly formed businesses.
- Gathering background data on other businesses in the same industry.
- The characteristics and the outlook (trends) for a particular product or market.
- Population statistics with details of total number of people living in the area, their age and occupation distributions, numbers of households, the proportions of the local population from different ethnic groups, etc.
- Information about current and potential customers such the customer’s name, address, what they purchased and when they last made a purchase.
- Measure how well a business is doing compared with competitors.
Any market analysis should start with secondary market research. The process of secondary market research includes collecting information both internally and externally. Internal secondary sources have already been gathered by the business organization itself such as annual reports and sales records. External secondary sources include insights from third-party sources such as marketing research reports, consulting firm analyses, magazine articles, and so on.
There are many extensive sources for secondary market research including public libraries, electronic databases, the Internet as so on that are offering researchers convenience, accessibility to a large array of information sources at a very low cost.
Common methods of secondary research
The data and information can be gathered from several popular sources of secondary sources:
1. Financial reports
Final Accounts are the official records of all financial transactions of the business organization.
This includes company quarterly reports and annual reports. At the end of each accounting period, usually one year and each quarter, accountants draw up the Final Accounts which include all past financial records.
The basic Final Accounts of the business consist of three financial statements including Profit and Loss Account (P&L Account), Balance Sheet and Cash Flow Statement:
- Profit and Loss Account (P&L Account), or an income statement, contains financial data which business stakeholder groups find extremely useful. It shows the Sales Revenue, all business costs and profit or loss of a business over a given period of time.
- Balance Sheet gives different stakeholders useful information about the financial status of a business. Mainly, what the business owns and how did the business pay for it. A business can pay for what it owns either using its own money or using borrowed money.
- Cash Flow Statement shows movements of cash within a business. Cash Flow relates to the timing of payments – receiving cash and spending cash. It is the sum of Cash Inflows, all the cash payments flowing into the business mainly from customers, less Cash Outflows, all the cash payments flowing out of the business mainly to employees, suppliers and lenders.
These financial documents might be a very useful source of secondary information about public limited companies which are not only required by law to keep records of their financial statements, but also make them public to investors. Researchers can easily figure out the current financial performance of the business, compare trends over the past few years of trading and learn more about the future strategy.
2. Industry trade information:
- Trade associations. Exist in nearly every industry. One function performed by many trade associations is to conduct surveys and provide other industry metrics. Accessing the info may be as simple as visiting the trade association’s website, although some trade associations may limit access to members only. Finding trade associations for a particular industry or product can be a challenging task. Another problem is that certain industries may be represented by multiple trade associations.
- Trade show sites. If you have a problem finding trade association, then look to websites that are in the trade show business since where there is a trade show there is often a trade association sponsoring it.
- Trade magazines. Publications that cover industry news, such as trade magazines, may also offer good market information. The majority of publications providing industry news are distributed by commercial publishers. Most of these magazines are rarely available on newsstands, but an Internet search with industry name and the words ‘trade publication’ could yield more results.
3. Market analyses / Market intelligence reports
Market analyses are very detailed and pricey reports about individual industries.
A market analysis shows the overview of a particular industry helping the business organization form business plans, marketing strategies and compare performance against rivals. Usually specialist market research agencies such as Nielsen or Mintel prepare and publish a range of market analyses for different markets offering a quick and in-depth insights into each industry.
A typical market analysis contains data and information about the market size, market share of each company, market growth rates, detailed industry insights, consumer profiles and forecast about the future sales demand.
Less detailed market analyses including brief data and information can also be found in many commercial sources and public information sources such as trade publications prepared by trade organizations.
4. Government publications & Government statistics
Government publications mainly include a broad range of data (statistics) about the economy such as population census, economic trends, social trends, unemployment figures, inflation rates, labor market developments, international trade statistics, family expenditure surveys, etc.
Governments of most countries publish the aforementioned data and information related to their own country on monthly, quarterly and annual basis which can be accessed online at www.usa.gov in the US and at www.statistics.gov.uk in the UK or in printed government publications.
In addition, many national and local governments offer a full range of helpful business materials including information on consumers, domestic businesses and international markets. These publications are often available in public libraries giving free access to printed materials and often the Internet access.
5. Media articles
Media articles primarily include general business newspapers and magazines which are an excellent starting point as they contain valuable data and information mentioned in the article, as well as specialist publications.
They exist both widely available online either for free or after paid subscription, and in print. Media articles are a very useful source of secondary market research containing information about the local, national and international markets and economies. These days most newspapers and magazines have dedicated business section.
Examples of media articles include business news agencies such as Bloomberg and Reuters, business-specific newspapers such as The New York Times, Wall Street Journal or Financial Times, business-related magazines such as Forbes, Business Insider or Fortune Magazine, books about business management such as biographies and autobiographies of successful entrepreneurs, press releases on company websites, business blogs, social media accounts, and so on.
6. Academic journals
An academic business journal is a periodical publication compiled and published by a university, business school or an educational research institution.
The peer-reviewed articles are published related to a particular academic discipline such as marketing, entrepreneurship, strategy, human resources, etc. are published in these journals. The research findings come from academics and industry experts whose aim is to make their theoretical works available to the public rather than sold for profit.
Some globally recognized academic journals in the area of business management include Harvard Business Review, Stanford Business Magazine, MIT Sloan Management Review or Knowledge@Wharton.
7. Market research agencies
Market research agencies are large professional companies carrying out market research on behalf of their clients who are usually multi-national businesses operating around the world.
These agencies are in the business of preparing the research, collecting and analyzing market research data and information, and selling those in the form of written reports to other businesses. They are helping other companies to drive business forward in the future.
Some examples of popular market research agencies include Kantar, Pan-Asia, Gartner or IPSOS.
8. Internal company documents
These internal corporate documents are internal business records in addition to financial reports mentioned earlier in the first point.
Data and information is often held in the form of computer databases or spreadsheets with records containing detailed information about past, current and potential customers, partners and suppliers. Older companies which have been on the market for some time will have a great quantity of secondary data readily available for further analysis.
Examples of company documents might include existing market research reports, past sales records, future sales trends, feedback from customer services about complaints, delivery time and quantity, employee performance records, productivity statistics, etc.
9. Information from competitors
Competitors’ websites are easily accessible for any business on the market.
Wealth of data and information can come from corporate websites of publicly traded companies as they publish their annual reports for current and prospective investors.
In addition to corporate reports, companies often publish press releases or blogs as a part of promotional Public Relation (PR) activities.
Another useful document might be a so called white paper where a business is trying to establish a certain level of credibility among stakeholders for a company and its products or services. Since many white papers are based on serious market research, these white papers often contain good information in terms of the industry and sales forecasts.
10. The Internet
Secondary data collection has become so super easy with the development of the Internet in recent decades that everyone can do it anytime from anywhere in the world almost for free.
The Internet can provide marketers with invaluable amount of research data and information about any topic thanks to search engines, company websites, expert blogs and so on.
In addition, these days all of the above methods of secondary market research can be carried out using the Internet, hence market researchers need to always check the sources carefully, check for accuracy, relevance and timeliness.
To summarize, in the real-life situations, it is very common for marketers to use a mix of both primary marker research methods and secondary market research methods. This is simply because neither of those methods is perfect and they tend to complement each other.
Different type of research will connect different data and information that the firm needs. Secondary market research is cheaper and quicker, but might be out of date and insufficient. While primary market research is expensive and may not be representative, yet it gathers purposeful insights to research the specific business problem.
