8.3. Primary Research

Primary market research data

Primary data is information which is newly created by field research. Because primary information is newly created, it tends to be more expensive to gather than secondary data which is already in existence.

The major advantage of primary data is that, because it is fresh data gathered for a particular purpose, it is likely to match the firm's requirements more closely. It will also be up-to-date and exclusive to the collector.

In the past, most market research was undertaken by specialist research firms like Gallop, Mori, and the Market Research Bureau (MRB). However, new technology increasingly means that firms can carry out their own research. Large superstores can obtain primary marketing information using bar-code readers which immediately register patterns of sales with a central computer. Electronic Point-of-Sale (EPOS) systems are now used in nearly all large supermarkets and many other stores. For example, the head office of the McDonalds fast-food restaurant chain can monitor sales in every store daily and can measure the sales response of different products to particular kinds of promotional activities. This gives McDonalds an edge in being able to react very quickly to the market.

Sampling

All of the possible consumers in a market for a particular product taken together are called the target population. A survey based on primary research information from the whole population in a market is called a census. Because all possible buyers are surveyed, data gathered from a census is likely to be very accurate - and exceptionally expensive in all but the smallest markets.

Because of the expense involved in gathering data from the whole population, researchers usually survey a small part of the whole market. Selecting some of the market for research is called sampling.

Methods of collecting primary data

Face-to-face survey. A popular method of obtaining primary data is face-to-face questioning based on a pre-designed questionnaire. This method is cheap and has the advantage of allowing the interviewer to target particular kinds of people.

Open-ended interview. The advantage of an open-ended interview is that it is flexible. Using this method, the interviewer works from a list of subjects of interest, rather than specific questions. The interviewer can therefore ask questions as s/he wishes and can guide each interview as s/he feels best. This method is useful when the subject is of a confidential or embarrassing nature, or when a very complicated and specialised topic is being researched.

Telephone survey. Telephone surveys allow researchers to target particular respondents by geographical area. However, this method clearly rules out people not listed in the directory and those without telephones, which can cause bias.

Postal surveys. It is possible to select a market research sample through postal sampling. The biggest drawback is that people receiving postal questionnaires may view them as 'junk mail' and throw them away. Postal surveys work best when the customer is given an incentive to reply, perhaps entry into a prize draw or a promise of a free gift.

Consumer panels. A firm can test consumer opinion by inviting a group of potential customers to give their views on products and asking them to allow their spending decisions to be monitored over a period of time. Using a panel, researchers might ask people to keep records of their purchases over time in order to measure the impact of advertising or of trends in fashion. This method gives a picture over time, rather than just a snapshot of current buying habits, as with the questionnaire.

Observation. Simply observing consumer behaviour – for example, monitoring TV and radio audiences for particular programs and regions, or counting traffic on roads and at car parks - can generate a great deal of useful market research information. Some firms will use focus groups of consumers to monitor spending patterns and behaviour over periods of time.

Experimentation. Sometimes a new product or advertising campaign will be tested on a sample of the target population, perhaps in a particular region of the country. Because of the high cost of launching a product on a national or international market, test marketing (or field trials) reduces the risk of making expensive mistakes. If consumers in the test dislike certain aspects of the product or campaign, the firm can make modifications prior to launch.

Rules for designing questionnaires

Questionnaires are the most useful method of gaining primary data from consumers. They may be used in face-to-face surveys, telephone surveys, and postal surveys. Administration of questionnaires is much easier today thanks to the use of handheld electronic data processing machines.

However, a badly designed questionnaire can yield poor or inaccurate information. A number of rules must guide the design of a questionnaire. These are:

Questions should not be offensive or embarrassing for people to answer. If they are, people will either not answer, or not tell the truth. For example, how often people take a bath may be seen as a personal question by many respondents.

Questions should be easy for people to understand and not require specialist knowledge which most people do not possess. For example, most people would not know the chemical composition of their present bubble bath.

Questions should not require people to make calculations in their heads. Most people will not be able to calculate the volume of water in their bathtubs. If they give an answer, it is likely to be wrong.

Questions should not be loaded or encourage consumers to reply in a particular way. Leading questions like ‘You do use bubble bath, don’t you?’ will encourage people to say ‘Yes’, even if this is not true.

Questions should be designed to limit the number of possible responses that can be made. For example, the question: ‘What price would you be willing to pay for one litre of bubble bath: (a) less than 1 pound? (b) 1 to 5 pounds? (c) more than 5 pounds?’ is more likely to give a useful answer than an open-ended question asking how much someone would pay for bubble bath. It is hard for people to give an exact price, but much easier to indicate an ideal range.

Questionnaires may be open or closed in design. Open questions allow a wide variety of responses and do not pin the respondent down to particular answers. Such questions are likely to lead to fuller, and more varied answers than closed questions. Closed questions ask respondents to respond either ‘Yes’ or ‘No’, or to pick an answer from a limited range of options, known as multiple choice questions. Closed questions lead to a narrower range of responses and make analysis of data much easier. However, they prevent respondents giving opinions or introducing new and unexpected thoughts on the product.

Choosing the best method of gathering research information

Once the sampling method has been chosen, the next step is to decide exactly how the information will be gathered from the sample. Firms can use a variety of methods of collecting information, including face-to-face interview, postal questionnaire, consumer panel, or electronic data gathering using the latest retail auditing technology.

There is no one ‘best’ method of gathering information. Whichever method a firm chooses, it will need to weigh up the advantages and disadvantages, using a variety of criteria. These can be identified in the form of questions:

• Fitness for the purpose – will the survey collect the data required?

• Cost – how much will it cost to collect the data?

• Speed – how long will it take to collect data?

• Accessibility – how easy will it be to collect data?

• Accuracy – how accurate will the data be?

The first step in any research process is to define what information is required, and which consumers need to be surveyed. For example, consider a firm manufacturing baby foods who want to find out if parents and babies like their new recipes, and what price to charge for them. The firm would be ill-advised to gather information by taking a random sample of people leaving a supermarket. A better approach would be to arrange a consumer panel of parents and babies. Panel members might be chosen from details of new births from the register of births, deaths, and marriages.

Each survey method will perform differently on selection criteria, and firms need to determine which features are most important to them before going ahead. For example, if a business is in a highly competitive marker like consumer electronics, it will want to bring new products to marker very quickly to keep ahead of its competitors. In this case, speed is likely to be more important than cost. Alternatively, a small firm, inexperienced in market research, may choose whichever method is easiest to use.

Limitations of market research

In spite of very large expenditures on market research, around 90% of all new products fail after they have been launched. Market research may sometimes fail because buyers’ wants may change more quickly than firms can gather information. When this occurs, researchers say that the data is biased.

Bias can arise in primary data in a number of ways:

Sampling bias. If market research is to be of use to a firm, the sample of people chosen for interview must reflect the views and behaviour common to the whole population. If not, the sample will be biased.

Questionnaire bias. Questionnaires must be carefully designed. Leading questions may encourage or force people being interviewed to give particular responses, which may not represent their actual behaviour or views.

Interview bias. People conducting a survey may not always pick people at random. For example, a young male interviewer may be drawn towards asking more young females then he would have done if the selection was purely random.

Response bias. Some people may give misleading or unrepresentative answers to questions simply because they cannot remember how many times they have used a particular good or service, or how they felt about it. Some people may even lie!