by Cindy Kennaugh, On The Mark

Primary market research is conducted when you need to gather new information about your customers to help your company make marketing decisions. The goal of this research is to ascertain your existing and potential customers' attitudes and behaviors regarding your products (both current and proposed), your company, and your competitors.

There are three types of primary market research:

• Observation
• Surveys
• Focus groups

Each research technique yields different results. Before you decide which technique to use for your research, take the time to determine the goal for your research project. Decide what you want to learn about your customers and their attitudes and behaviors, and how you are going to use that information to make improvements to your products or services. You also must be aware of the pros and cons of each type of primary market research.

When to conduct primary market research

Primary market research can be time-consuming and expensive, so you should conduct it only after you have exhausted secondary market research sources. Despite the time and money involved, you need to seriously consider conducting primary market research, because there is often no better way to learn about your customers.

To learn more about secondary market research sources, see the More information section at the bottom of this page for related articles.

Reward research participants

Primary market research (with the exception of blind observation) almost always requires some sort of incentive for participation, which can include:

• Cash
• Gifts
• Sweepstakes entries (be sure you are aware of legal ramifications)
• Heartfelt thank-yous

What you offer research participants depends on the nature of your customer relationships, how much time you want them to spend participating in your research, and what your customers value.

Technique #1: Observation

This type of primary market research involves observing customers using your products, shopping for and purchasing your products, or interacting with your customer service organization. The goal is to learn how your customers behave so that you can make your offerings more appealing.

There are two types of observation techniques:

• Blind observation  This technique involves watching subjects who do not know that they are being observed. Conduct blind observation studies wherever your customer interactions normally take place: in a store, at an office, or on the Web.
• Structured observation  This technique involves participants who do know they are part of a research project. This type of observation is typically conducted in a controlled environment.

With both observation techniques, it is important to avoid interacting with the customers. The goal is to learn how they behave on their own. In reality, you can't steer your customers, so steering your research participants will not yield useful results.

Examples of observation research include:

• Monitoring traffic flow through a retail environment to identify layout changes that might increase sales.
• Counting the number of customers during a given time frame (for example, hourly or daily) to improve staffing and service levels.
• Counting the number of customers who shop without making a purchase so that you can determine at what point they decide not to make a purchase.
• Identifying the features of your product that customers don't use or understand so that you can make improvements.

Observation research has its pros and cons:

Blind observation

• Pros  Blind observation is inexpensive, and because your subjects are unaware that they are being observed, the technique offers real-life results. Blind observation also does not require willing participants.
• Cons  Because you are observing customers from a distance, you cannot easily determine the motivation behind participants' actions, and therefore, you must make assumptions about their actions.

Structured observation

• Pros  Structured observation is comparable to real-life interaction. You can talk to the participants to determine their motivation for certain behaviors.
• Cons  Structured observation requires more resources. In addition, customers usually require some sort of incentive for participating in your research.

Technique #2: Surveys

Surveys offer a predetermined and fixed set of questions to a number of individual customers. The goal is to learn about your customers' attitudes and perceptions regarding your products and processes. You might also use surveys to learn about your competitors' attitudes and perceptions regarding your products. There are five basic types of surveys:

• In-person interviews
• Telephone interviews
• Mailed questionnaires
• E-mailed or online questionnaires
• Questionnaires distributed at a store or at some other location

The best method for surveying your customers is dictated by the access that you have to your customers. Retail stores can usually interview shoppers while they're in the store. Businesses that have more geographically dispersed customers must use a more indirect approach.

Following are some survey do's and don'ts:

• Do phrase the questions very specifically to avoid confusion.
• Do restrict the questions to existing products or processes, because it is difficult to convey new and complex scenarios by using a survey.
• Do create questions that can be answered either with a rating or ranking scale (for example, from 1 for "totally agree" through 10 for "totally disagree") or with multiple-choice selection.
• Do include at least one open-ended question (such as "Is there anything else you'd like to tell us?") to determine whether the survey is missing an important point.
• Don't create a written questionnaire that takes over 5 minutes to complete.
• Don't ask questions about abstract or future concepts unless they are easy to grasp (like a color change) or familiar (because they are part of a well-known competitor's product).

Survey research has its pros and cons:

• Pros  The results that you gather are specific and easy to tabulate. Telephone and in-person surveys — in contrast to written questionnaires — can last up to 30 minutes and can cover a lot of ground.
• Cons  Because surveys don't leave room for much probing or clarification, you must limit surveys to simple, easy-to-grasp concepts. Customers can choose whether or not to participate. Due to the expense, it is difficult to conduct surveys in large enough numbers to be statistically significant.

Technique #3: Focus groups

Focus groups are structured meetings of existing or potential customers who collectively respond to questions and scenarios. Focus groups typically have from 5 through 20 participants and last from 1 to 3 hours. The number of participants is determined by the complexity of the issues at hand. The more complex the issues are, the smaller the group needs to be.

Focus groups are the ideal research tool to assess the acceptance of new products or features, because this type of primary market research allows you to explain your research questions and probe for more specific feedback from the participants.

If you conduct a focus group, you need to use a professional moderator. Professional moderators are invaluable because they can balance the desire to let the group creatively generate new insights with the desire to keep them on topic. It's a difficult job, and even professionals can get lost by going off on a tangent.

Focus group research has its pros and cons:

• Pros  Focus groups are a powerful technique for ascertaining interest in future or abstract concepts.
• Cons  It is difficult to attract participants for focus groups because the activity takes so much time. Focus groups are typically expensive because they require a facility, a facilitator, and a substantial incentive for participation.

Help is available

You can conduct primary market research with in-house staff, but several external resources are available to you, including:

• Market research firms (for everything from planning to execution)
• Telemarketing agencies (for telephone surveys)
• Students (for in-person surveys)
• Post office employees (for information on how to mail questionnaires)
• Industry lobby groups and associations (for general advice)

Take the time to plan your primary market research. Novices at this type of research commonly make the mistake of collecting information that isn't pertinent to the decisions at hand. Figure out exactly what you need to know before you begin. The time that you spend planning your research can save you lots of time and money.

To learn more about choosing an effective and cost-efficient market research technique, see the More information section at the bottom of this page for related articles.

More information

• Choose a cost-effective market research technique
• Secondary market research: Getting the most for the least

About the author   Cindy Kennaugh is President of On The Mark, a Silicon Valley–based consulting firm specializing in all aspects of business-to-business marketing in the high-technology industry.