CHAPTER 4

LEARNNG OBJECTIVES:

• Enumerate reasons why market research

needs a prior search of secondary sources;
• Explain the advantages and disadvantages of
secondary data;
• Identify the different problems in secondary
data; and
• Identify the different problems in secondary
data; and
• List the different sources of internal and
external sources of data.
 As a general rule, a thorough
research of the secondary data should
be carried out prior to conducting
primary research. The secondary
information will provide a useful
background and will identify key
questions and issues that will need to
be addressed by the primary research.
THE NATURE OF SECONDARY DATA

Secondary data is data which has

been collected by individuals or agencies
for purposes other than those of a
particular research study. Secondary data
are already available, because they were
collected for some purpose other than
solving the present problem.
 For example, if a government
department has conducted a survey about
family good expenditures, then a food
manufacturer might use this data in the
organization’s evaluations of the total
potential market for a new product. In the
same manner, statistics prepared by
Department of Agriculture on Agricultural
production will prove useful to a whole
crowd of people and organizations,
including those marketing agricultural
supplies.
 Secondary data is classified in terms of
its source which is either internal or
external. Internal secondary data is
secondary information acquired within the
organization where research is being
carried out. External secondary data is
obtained from outside sources.
 No marketing research study should be
undertaken without a prior search of
secondary sources. There are several
reasons for this statement, namely:

1. Secondary data may be available which is

completely fitting and entirely enough to
draw conclusion and answer.
2. It is cheaper to collect secondary data than
to obtain primary data.
3. It takes less time to gather secondary
data than primary data.
4. Secondary sources of information can
result to more accurate data than that
obtained through primary data.
5. Secondary data has a considerable role
in the exploratory phase of research
when the task at hand is to define the
research problem and to create
hypotheses.
6. Secondary sources help define the
population.
 Users of secondary sources rapidly
develop a healthy disbelief. Regrettably, there
are many reasons why a forecast, historical
statistic, or estimate may be found to be
immaterial or too imprecise to be useful.
Before such a decision can be made, the
researchers should have answer to the
following question.
• Who - this question applies especially to
the character of the collecting agency for
honest and thorough work and the
reputation of the sponsoring organization.

• Why – data that are collected to further the

interests of a particular group are
especially suspected.

• How - it is likely to assess the quality of

secondary data without the knowledge of
the methodology used to collect them.
• What – wide variations in geographic, age,
and income groupings across studies are
frequent.
• When – the rate of obsolescence varies
with the type of data, but in all cases the
researcher should know when the data
were collected.
• Consistency – in the event that there is
some incongruity between two sets of data,
the process of reconciliation should first
identify the respective partialities and
determine which set is more believable.
Advantages and Disadvantages of
Secondary Data

Secondary data are data that were

collected by persons or agencies for purposes
other than solving the problem at hand. They
are one of the cheapest or cost-effective and
easiest means of access to information.
Researchers have to locate and utilize the data
that are relevant to their research.

The several advantages of using secondary

data in market research are time and cost
Advantages of Using Secondary Data

1. Easy availability of information

2. Less expensive
3. Lots of available data
4. May highlight truths about conducting
primary research
5. Answers research questions
6. Lots of free information available
7. Quicker to conduct
Disadvantages of Using Secondary Data
1. Difficult to cut back on useful
information/not specific
2. Lots of non-credible sources crate
difficult/lack of quality research
3. Incomplete information also available
4. May not be updated
How to Evaluate Secondary Data

1. Availability-if not available, go for

primary data
2. Relevance-units of measurement should
b the same; concepts used must be same
and currency of data should not be
outdated.
3. Accuracy-specification and methodology
used; margin of error should be
examined; dependability of the source
must be seen
4. Sufficiency-adequate data should be
• The Problems of Secondary Sources

Even as the benefits of secondary

sources are considerable, their
shortcomings have to be acknowledged.
There is a need to evaluate the quality
of both the source of data and the data
itself.
Definition The researcher has to be careful, when making use
of secondary data, of the definitions used by
those responsible for its preparation.
Measurem When a researcher conducts fieldwork he is possibly
ent error able to estimate inaccuracies in measurement through
the standard deviation and standard error, but these
are sometimes not published in secondary sources.

Source Researchers have to be aware of vested interests

bias when they consult secondary sources
Reliability The reliability of published statistics may vary over time.
It is not uncommon for the system of collecting data to
have changed over time but without any indication of
this o the reader of published statistics.

Time scale Most censuses take place at 10 year intervals, data

may be outdated at the time the researcher wants to
make use of the statistics.
• Researchers should use multiple sources
of secondary data whenever possible in
marketing. In this way, these different
sources can be cross-checked as
confirmation of one another. Where
differences transpire an explanation for
these must be found or the data should be
set aside.

• Source: Marketing Research (2014) by Brown &

Suter
INTERNAL SECONDARY DATA
Sources of secondary data can come
from within the firm itself, this is known as
internal secondary data. This is usually a
low-cost information source for the
company conducting the research, and in
the place to begin for existing operations.
Internally generated sales and pricing data
can be used as a research source.
 Internal sources of data should always be
considered as a first line of inquiry for any
investigation because they are usually the
quickest, cheapest and most convenient
source of information available. Internal data
will also be exclusive to the organization that
generated it, so that rival firms will not have
access to it.
 However, internal data may be
incomplete or out of data, and, if a market
study is original, there may be no relevant
data at all. In such cases, an organization
may need to consider using external
sources of secondary data.
Source Categories of Secondary Data

1. Sales and Marketing Data

• Sales by territory
• Sales by customer type
• Prices and discounts
• Average size of order by customer,
customer type, geographical area
• Average sales per sales person
• Type of product/service purchased
• Type of end-user/industry segment
• Method of payment
• Product/product line
• Salesperson
• Date of purchase
• Amount of purchase
• Application by product

This type of data is useful for identifying an

organization’s most profitable product and
customers. It can also serve to track trends
within the enterprise’s existing customer
group.
2. Accounting and Financial Data
An organization has a great deal of
data within its files on the cost of
producing, storing, transporting and
marketing each of its products and product
lines. Such data has many uses in
marketing research including allowing
measurement of the efficiency of
marketing operations.
 Companies should also consider
establishing performance indicators based
on financial data. These can be industry
standards or unique ones designed to
measure key performance over a period of
time and compare it to its competitors. Some
example may be sales per employee, sales
per square foot, expenses per employee
(salesperson, etc.).
3. Transport Data
Companies that keep good records
relating to their transport operations are
well placed to establish which are the most
profitable routes, and loads, as well as the
cost effective routing patterns. Good data
on transport operations enables the
enterprise to perform trade-off analysis
and thereby establish whether it makes
economic sense to own or hire vehicles, or
the point at which a balance of the two
gives the best financial outcome.
4. Storage Data
This consists of the rate of stock turn;
stock handling costs, assessing the
efficiency of certain marketing operations
and the efficiency of the marketing system
as a whole. More sophisticated accounting
systems assign costs to the cubic space
occupied by individual products and the
time period over which the product
occupies the space. These systems can
be further refined so that the profitability
per unit, and the rate of sale, are added. In
this way, the direct product profitability can
be calculated.
5. Miscellaneous Reports
These can include such things as
inventory reports, service calls, number
(qualifications and compensation) of staff,
production and R&D reports. Also the
company’s business plan and customer
calls (complaints) log can be useful .
EXTERNAL SECONDARY DATA

The marketing researcher who

seriously seeks after useful secondary
data is more often surprised by its
abundance than by its scarcity. Too often,
the researcher has secretly (sometimes
subconsciously) concluded from the outset
that his topic of study is so unique or
specialized that a research of secondary
sources is futile.
Sources of External Secondary Data
1. Trade Associations
Trade associations differ widely in the
extent of their data collection and
information dissemination activities.
However, it is worth checking with them
to determine what they do publish. At the
very least one would normally expect that
they would produce a trade directory and,
perhaps, a yearbook.
2. Commercial Services

This is another useful source of

supplying secondary data. Published
market research reports and other
publications are available from a wide
range of organizations which charge for
their information. Typically, marketing
people are interested in media statistics
and consumer information which has been
obtained from large scale consumer or
farmer panels.
• The following websites are some
examples of organizations making money
out of providing data to advertisers.
1. www.acneilsen.com
2. www.arbitron.com
3. www.infores.com
4. www.burke.com
5. www.find/svp.com
6. www.harrisinteractive.com
7. www.synovate.com
3. National and International Institutions

bank economic reviews, university

research reports, journals and articles are
all useful sources to contact. International
agencies such as World Bank,
International Monetary Fund (IMF), World
Health Organization (WHO), among others
produce a plethora of secondary data
which can prove extremely useful to the
marketing researcher.
4. Government Statistics

There are innumerable publications

brought by national and local government,
which contain valuable data for conducting
marketing research. These may include
all or some of the following:
• Population censuses
• Social surveys, family expenditure surveys
• Import/export statistics
• Production statistics
• Agricultural statistics
5. The Internet

It is the most used secondary market

research source but has the disadvantage of
several non-credible sources with incomplete
information. It is true that the internet or the
web is the greatest database for a wide variety
of information and data but just relying on it
and not using any other source could prove to
be a big mistake as far as market research is
concerned. One must remember that the
internet may not always offer reliable sources
and complete information. And, as they say,
incomplete information is dangerous.
6. Other Sources

Besides the above mentioned sources

of marketing research, there are many
other sources of supplying secondary data
such as colleges and universities, stock
exchanges and commodity exchanges,
specialized libraries, internal sources such
as sales and purchase records, salesman,
reports, sales orders, customer complaints
and records of other companies.
Advantages of External Secondary Data
External secondary research can be an
extremely beneficial aspect of your market
research process. Aside from the
accessibility and efficiency, the added
depth and perspective expands your
scope. External secondary research is a
tremendous tool with the following
numerous advantages.
• Cost-effective alternative
• Time-saving accessibility
• Credibility-enhancing perspective
• Resource for primary research design
Marketing Research in Actual Practice
The Coronel's Secret Weapon: A Massive
Database
Source: Marketing Research, 3rd ed, 2006 by
Malhotra, Hal Shaw and Oppenheim

With many company-owned and franchised

restaurants, KFC serves millions of Customers
each year. To better understand customer profiles
and trends, KFC hired Informix to develop
Metacube Software which collects data from each
of its 9000 restaurants and compiles it in their user-
friendly spreadsheet format.
 According to Micki Tomas, KFC's director of
information systems, "There's a day and a half
lag between when someone buys an order and
when a record of that transaction is available in
our data warehouse!'This detailed data provides
market researchers with a valuable tool in
analyzing market research problems.
The information can be used to help guide
corporate marketing decisions and provide
insights to individual stores that may not have the
technology or expertise to complete their own
market research. By using the data warehouse,
customer profiles are developed, analyzing what
is purchased and when, including the percentage
of customers eating in, using the drive-
throughand requesting home delivery.
 By understanding customer behavior, KFC can
greatly improve the probability ad customer
satisfaction within its individual franchises. For
example, the database is used to forecast sales by
the hour, day of the week and time of the year,
based on historical data within the warehouse and
economic trends in the geographical area. These
forecasts are used to maximize the efficiency of
employee scheduling and minimize food inventory.
Thus, by using database marketing techniques, KFC
helps franchisees anticipate customer needs,
improve service and customer satisfaction, and
maximize efficiency and profitability.