What Is Primary Market Research?
Primary market research is information that has been collected directly from the source – so in the financial world, that means it has been collected from potential customers. A firm can do this independently, or alternatively a research company can be hired in order to gather the information on behalf of the firm. The information is usually gathered via surveys, focus groups and interviews.
There are two basic types of primary market research – exploratory and specific. Exploratory research is an open-ended way of finding out information, helping firms to find out what problems there are that can be addressed. This often involves unstructured interviews where detailed answers are given back, from which the firm can work out how to move forward.
Specific research is much more precisely tuned and is used to solve problems that have already been identified by exploratory research! This is more expensive because interviews and surveys are much more structured and need to be more formally approached – after all, this information is directing the firm’s problem-solving strategy!
The most common forms of carrying out primary market research are direct mail, telephone interview or personal interview. Direct mail is perhaps the easiest but has the lowest return rate as it is easy to ignore. Typically, only about 3% of people will reply to a mail-out questionnaire. Telephone interviews are typically the most cost effective, but again, people can choose to ignore such calls with ease. Therefore, the most effective form is often the personal interview, which can be done via a survey or an in-depth interview, depending on the results the firm is looking for!