Method category: Evaluative market experiment
How to Use This in GLIDR
Secondary Market Research is gathering information about your target market via secondary sources like news articles and published reports.
In GLIDR, Secondary Market Research is typically conducted as an Experiment to figure out the answer to a specific question about your market -- for example, how pricing for similar products has looked over time. Once you've set up the Plan phase of your Experiment, and connected any existing ideas that you want to look into more, move it to Run. In this phase, you can add one piece of Evidence - Other for each secondary resource you find and summarize key learnings from each. Finally, in the Analyze phase, figure out what this research has taught you and if it validated or invalidated any connected ideas.
Learn more about each of those aspects of GLIDR:
Secondary Market Research
Article excerpted from The Real Startup Book
Secondary market research gathers and interprets available information about the target market and includes published reports, newspaper articles, or academic journals. This method is used to figure out the size of the market or customer segment, pricing, and ways for the market to evolve. Also referred to as “desk research” or “market study,” this type of research is always done using third party sources, and there is no direct customer contact.
How much would our customers pay (What should be the price of our product)?
What is the size of the market? (How many customers would be using our product? How many would be paying customers?)
How much would it cost to sell? (What are the marketing channels and their exploitation costs?)
B2B (studies of industry sectors)
Quantitative (but simple figures)
This method does not refer to primary research such as customer discovery interviews, focus groups, surveys, and so forth. This form of market research is also called secondary research, that is “simply the act of seeking out existing research and data.”
As the data from secondary research cannot be easily verified and may come from a variety of sources, it is theoretical rather than experimental. Some would consider the data qualitative rather than quantitative because the researcher must factor in the quality of the data source to any conclusions.
The goal of secondary market research is to use existing information to derive and improve your research strategy prior to any first person research. Often, existing research can help determine rough market sizes and if first person research is worth the effort. With existing markets, a great amount of information can be found online or purchased from market research consultants.
This type of research can be performed for any market but is most often done for companies targeting existing markets. There is typically no information available for startups creating new markets.
We distinguish it from data mining, which is about exploiting big, numerical data sets (existing or generated by you) so that they can be automatically processed and plotted. We also distinguish it from Picnic in the Graveyard, which is about regarding existing or deceased products in the market rather than the market itself.
A first step is to find the relevant reports. Another is to analyze them in a way that allows you to learn something about your product or idea.
We can distinguish two directions of research. In “market status” research, you look at:
User behaviors: How often users have to use a similar product, in which circumstances (not to be confused with user behaviors regarding specific products, which is covered by the Picnic in the Graveyard method).
Marketing: What are the typical channels used? What are the costs of opening and maintaining such channels?
Current technology: Benchmark technology to understand what kind of standards have been set regarding speed, accessibility, etc.
Identifying relevant reports will help derive target population size, prices, and costs, hence, your revenue.
In “trend research” you look at:
User behaviors: What new user behaviors are emerging?
Marketing: What new channels start being used in this area?
Technology: What coming technology may disrupt the market and our own approach?
This helps deriving the possible evolution of your revenue and avoid pitfalls, or even give new ideas (as a generative method).
A typical use of market research is to develop a first idea of the target population itself. For instance, you may want to know if your product would be used more often by teenagers or young adults. Imagine your product is a Facebook app. There are numerous reports about the growth of distinct Facebook population segments and their respective habits; hence you can find if your type of product can meet the needs of younger or older Facebook users, and you can also see if this segment is growing or diminishing.
Time Commitment and Resources
When performed for a particular occasion (in order to answer a specific question about a market size, for instance, or to get the initial big picture at the beginning of the project), it may take from 1 to 3 days, depending on the difficulty of gathering relevant information, the amount of information that is available, and the filtering of the obtained information.
Where to find useful information:
Publications relevant to your target market
Public and nonprofit organizations that generate a lot of data (hospitals, transportation systems, etc.)
You must be specific to get information that is relevant to your specific question, i.e., the current status of your idea/product development. For instance, if you want to launch a service that enforces some privacy when publishing images on the Internet, look beyond the population of people that publish images on the Internet (which is very large). Figure out who is interested in privacy and takes it seriously; this is not necessarily just a subset of the first population because there may be people who currently do not publish any images out of concern for privacy issues.
To be specific, you have to be smart, or even crafty. For instance, you may examine annual reports from corporations that may include interesting facts about their target segment within the description of how their products are doing. Another trick is to use tools that are primarily made for other purposes. For instance, by trying to promote something on Facebook (a post, a page, or an app), you can define an ad campaign; then, Facebook provides you with tools to target your population (gender, age, device - iPhone or Android - and interests) and displays information about the potentially reached population, which in turn gives you an idea of its size. You do not need to actually launch the campaign and pay for this.
Research into competitors is also a source of information. Not just their product, but also their users, marketing channels, prices, and costs (or production methods). This method is generative as well as evaluative, for instance in indicating how you could, and when you should, differentiate your product.
This method can be quite extrapolative. You may resort to complex resources such as behavioral economics models, but it's better to keep it simple and allow the most space for actual experiments. Hence, use your results to get an early idea of the market, to detect and qualify niches within that market, and gain a broad idea of whether you should commit effort to that market. We use qualitative results to stay smart and aware and to avoid missing an important piece of information such as a disruptive trend (for instance when you want to launch a camera service to capture racers while self-piloted tracking drones are emerging).
False positives will often be due to a lack of specificity in your research. For instance, it is easy to get large numbers for potential users of a image publication app, while the specificity of the service you have in mind (e.g. to protect privacy or to enforce copyrights) will drastically decrease the numbers.
False positives are also due to the scale of markets that are described by the survey you use. Most often, surveys describe wide international environments while you will tackle regional markets, or niches inside this market. The mechanisms that result in the described market may be different at your own scale.
Confirmation biases are often obtained by suddenly importing an unfounded ratio in your population estimate that actually make the result of the whole exercise fanciful. Indeed, you have to consider the size of the population you will actually acquire out of the target population which depends on the competition (including indirect solutions) and your marketing channels. If you omit the conversion rate or use one that is too whimsical, your results will be too optimistic. One of the goals of market research, by the way, is to try to get a documented and realistic conversion rate. So it is important not to just figure out the size of a population having a given problem but also understand what part of this population is typically following such or such marketing channel, and what part will do so in the future.
“When looking at available market surveys, take into account your product specificity” @tdagaeff
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