Methods of Primary Market Research to Determine Demand for a New Product or Service

Several methods of primary market research can be utilized by a business to assess the demand for a new product or service. These methods include (postal) questionnaires/surveys, online surveys, interviews, focus groups, observation, and test marketing/product trials. Each method has its own advantages and disadvantages, and the choice of which method to use will depend on a variety of factors, including the nature of the product or service, the target market, and the budget available.

(Postal) Questionnaire/Survey

Advantages:

• Customer opinions, preferences, and suggestions can be gathered.
• Large amounts of information can be collected.
• Detailed information can be gathered.
• Allows many people to be asked the same questions.

Disadvantages:

• Questions may be poorly worded, leading to misinterpretation.
• Respondents may not always provide truthful answers.
• There is a risk of non-response from customers.
• Designing a proper questionnaire may require a skilled individual, leading to increased costs.

Online Survey

Advantages:

• Data can be quickly presented and analyzed using IT tools.
• Offers a fast response time.
• Costs less than interviews, postal questionnaires, or focus groups.
• No interviewer needed to conduct the survey.

Disadvantages:

• Limited to individuals with internet access.
• May suffer from low response rates.
• Difficult to ensure the target population is being reached.

Interview

Advantages:

• Enables detailed information gathering.
• Allows for clarification of questions.

Disadvantages:

• Potential for interviewer bias if not properly trained.
• Expensive to carry out.
• Time-consuming process.

Focus Group

Advantages:

• Provides highly detailed responses.
• Opportunity to ask follow-up questions.

Disadvantages:

• Risk of group dynamics influencing responses.
• Limited number of participants can be asked.
• Costly and time-consuming.

Observation

Advantages:

• Actions may provide more accurate insights than verbal responses.

Disadvantages:

• Can be more expensive compared to other methods.
• Does not provide insight into customer motivations or opinions.

Test Marketing/Product Trials

Advantages:

• Provides real-world data on consumer purchasing behavior.
• Limits the cost of any mistakes to a small output.

Disadvantages:

• Requires a longer time for the final product to reach the main market.
• Competitors may gain knowledge of the product and launch similar products before the full launch.

Best Method for a Small Business

Among the mentioned methods, a focus group may be the best choice for a small business. While it involves asking a smaller number of participants, the detailed and in-depth responses obtained, along with the opportunity for follow-up questions, can enable more informed decision-making regarding a new product or service. This increased detail could lead to better decisions, ultimately enhancing the chances of success. For businesses with very limited budgets, online surveys can provide a cost-effective alternative, though careful consideration should be given to potential limitations.

Ultimately, the best method of primary research will depend on the specific circumstances of the business and the product or service being researched. It is important to carefully consider the advantages and disadvantages of each method before making a decision.

**Source:** Stimpson, P. and Farquharson, A. (2015). Cambridge IGCSE® and O Level Business Studies. Cambridge: Cambridge University Press.