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 company’s 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 company’s 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 company’s 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.