Primary research and secondary research — practice questions

Step 1: Calculate the cost of incentives. This is the cost to encourage customers to complete the survey. Calculation: 2,500 respondents × $4 per respondent Cost = $10,000$

Step 2: Calculate the cost of internal staff time. This is the cost of the marketing team's time to analyse the data. Calculation: 50 hours × $60 per hour Cost = $3,000$

Step 3: Calculate the total cost of the primary research. This is the sum of all individual costs. Calculation: Incentives + Agency Cost + Staff Cost Total Cost = $10,000 +$1,500 + $3,000$

Final Calculated Answer: The total cost of the primary research survey is **$14,500**.$

Advice: The primary research ($14,500) is significantly more expensive than the secondary report ($5,000). However, it provides bespoke data on their own customers' price sensitivity and preferences, which is crucial for a successful launch. The secondary report offers general market trends but won't answer the specific questions the coffee chain has. Therefore, despite the higher cost, the investment in primary research is justified to reduce the risk of a costly product launch failure and to ensure the marketing strategy is effective.

1. Secondary Research (Desk Research):

• Action: Start by purchasing an off-the-shelf market report on the UK food delivery/meal-kit industry (e.g., from Mintel or Euromonitor, cost approx. $1,500-$3,000). Also, analyse free sources like competitor websites (for pricing and offerings) and government statistics (ONS data on household spending).
• Justification: This is the most cost-effective first step. It provides essential background information on market size, growth trends, key competitors, and customer demographics. For a start-up with a tight budget, this is a low-risk way to understand the landscape before committing more funds.

2. Primary Research (Field Research):

• Action: With the remaining budget (approx. $2,000-$3,500), conduct focused primary research. An online survey using a platform like SurveyMonkey or Google Forms, distributed via social media targeting specific demographics, would be cost-effective. Aim for 200-300 responses to test specific concepts like price points, menu preferences, and brand names.
• Justification: While the secondary data provides a broad overview, it won't give feedback on the start-up's unique product idea. This targeted primary research fills that critical gap, providing specific, proprietary data to guide product development and reduce the risk of launching a product nobody wants. It is a pragmatic use of a limited budget.

Conclusion: A combined approach is best. Start with low-cost secondary research to frame the market, then use the remaining budget for targeted primary research to validate the specific business idea.