Research using Secondary Data Sources

By Steppingstones Dec 21, 2004, 17:47 Secondary data is information gathered for purposes other than the completion of a research project. A variety of secondary information sources is available to the researcher gathering data on an industry, potential product applications and the market place. Secondary data is also used to gain initial insight into the research problem. Secondary data is classified in terms of its source either internal or external. Internal, or in-house data, is secondary information acquired within the organization where research is being carried out. External secondary data is obtained from outside sources. The two major advantages of using secondary data in market research are time and cost savings.

The secondary research process can be completed rapidly generally in 2 to 3 week. Substantial useful secondary data can be collected in a matter of days by a skillful analyst. When secondary data is available, the researcher need only locate the source of the data and extract the required information. Secondary research is generally less expensive than primary research. The bulk of secondary research data gathering does not require the use of expensive, specialized, highly trained personnel. Secondary research expenses are incurred by the originator of the information.

There are also a number of disadvantages of using secondary data. These include:

Secondary information pertinent to the research topic is either not available, or is only available in insufficient quantities. Some secondary data may be of questionable accuracy and reliability. Even government publications and trade magazines statistics can be misleading. For example, many trade magazines survey their members to derive estimates of market size, market growth rate and purchasing patterns, then average out these results. Often these statistics are merely average opinions based on less than 10% of their members. Data may be in a different format or units than is required by the researcher. Much secondary data is several years old and may not reflect the current market conditions. Trade journals and other publications often accept articles six months before appear in print. The research may have been done months or even years earlier.

As a general rule, a thorough research of the secondary data should be undertaken 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. Internal data sources Internal secondary data is usually an inexpensive information source for the company conducting research, and is the place to start for existing operations. Internally generated sales and pricing data can be used as a research source. The use of this data is to define the competitive position of the firm, an evaluation of a marketing strategy the firm has used in the past, or gaining a better understanding of the companys best customers. There are three main sources of internal data. These are: 1. Sales and marketing reports. These can include such things as:

Type of product/service purchased Type of end-user/industry segment Method of payment Product or product line Sales territory

Salesperson Date of purchase Amount of purchase Price Application by product Location of end-user

2. Accounting and financial records. These are often an overlooked source of internal secondary information and can be invaluable in the identification, clarification and prediction of certain problems. Accounting records can be used to evaluate the success of various marketing strategies such as revenues from a direct marketing campaign. There are several problems in using accounting and financial data. One is the timeliness factor it is often several months before accounting statements are available. Another is the structure of the records themselves. Most firms do not adequately setup their accounts to provide the types of answers to research questions that they need. For example, the account systems should capture project/product costs in order to identify the companys most profitable (and least profitable) activities. Companies should also consider establishing performance indicators based on financial data. These can be industry standards or unique ones designed to measure key performance factors that will enable the firm to monitor its 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. 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 companys business plan and customer calls (complaints) log can be useful sources of information. External data sources There is a wealth of statistical and research data available today. Some sources are:

Federal government Provincial/state governments Statistics agencies Trade associations General business publications Magazine and newspaper articles Annual reports Academic publications Library sources Computerized bibliographies Syndicated services.

A good place to start your search is the local city, college or university library. Most reference librarians are very knowledgeable about what data is available, or where to look to find it. Also contact government libraries and departments for research reports/publications they may have done.

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Secondary data is the data that have been already collected by and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data can not be obtained at all. Advantages of Secondary data

1. It is economical. It saves efforts and expenses. 2. It is time saving. 3. It helps to make primary data collection more specific since with the help of secondary data, we are able to make out what are the gaps and deficiencies and what additional information needs to be collected. 4. It helps to improve the understanding of the problem. 5. It provides a basis for comparison for the data that is collected by the researcher. Disadvantages of Secondary Data 1. Secondary data is something that seldom fits in the framework of the marketing research factors. Reasons for its non-fitting are:a. Unit of secondary data collection-Suppose you want information on disposable income, but the data is available on gross income. The information may not be same as we require. b. Class Boundaries may be different when units are same.
Before 5 Years 2500-5000 5001-7500 7500-10000 After 5 Years 5000-6000 6001-7000 7001-10000

c. Thus the data collected earlier is of no use to you. 2. Accuracy of secondary data is not known. 3. Data may be outdated. Evaluation of Secondary Data Because of the above mentioned disadvantages of secondary data, we will lead to evaluation of secondary data. Evaluation means the following four requirements must be satisfied:-

1. Availability- It has to be seen that the kind of data you want is available or not. If it is not available 2. Relevance- It should be meeting the requirements of the problem. For this we have two criterion:a. Units of measurement should be the same. b. Concepts used must be same and currency of data should not be outdated. 3. Accuracy- In order to find how accurate the data is, the following points must be considered: a. Specification and methodology used; b. Margin of error should be examined; c. The dependability of the source must be seen. 4. Sufficiency- Adequate data should be available. Robert W Joselyn has classified the above discussion into eight steps. These eight steps are sub classified into three categories. He has given a detailed procedure for evaluating secondary data. 1. Applicability of research objective. 2. Cost of acquisition. 3. Accuracy of data. then you have to go for primary data.

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