Market research should be used as a guide to help you make business decisions such as whether to expand into a new area or introduce a new product.

There are two types of market research you should be using. They are called primary and secondary market research, and they can each provide different -- but equally valuable --insight to help you shape your business and prevent costly missteps.

Secondary Research If you’re considering expanding into new markets or adding new services or product lines, start with secondary research.

This type of research is based on information from studies previously performed by government agencies, chambers of commerce, trade associations and other organizations. (It includes sources like Census Bureau information and Nielsen ratings.)

You can find most of the secondary research you'll need in your local library or on the Web, as well as books, business publications, magazines and newspapers.

The best part about secondary research is that it's less expensive than primary research, and it's pretty quick to find and relatively simple to gather, once you know where to look.

However, it's not as accurate, or as useful, as specific, customized research. For instance, secondary research will tell you how much money teenagers spent last year on video games, but not how much they're willing to pay for the new game your company is developing.

Primary Research Simply put, primary research is research that's tailored to your company’s particular needs.

You get primary research by customizing tried-and-true approaches -- focus groups, surveys, field tests, interviews or observation so that you can gain information about your target market. For example, using primary research methods, you can get feedback about your Web site, assess demand for a proposed service, gauge response to various packaging options, and find out how much consumers will shell out for a new product.

Primary research delivers more specific results than secondary research, which is vital when you’re considering launching a new product or service.

In addition, primary research is usually based on statistical methodologies that involve sampling as little as 1 percent of your target market. This tiny sample can give you an extremely accurate representation of your particular market.

However, professional primary research can be costly. The cost of a focus group can cost anywhere from $3,000 to $6,000, and surveys can run anywhere from $5,000 to $25,000 and up.

The cheaper alternative of course, is do-it-yourself research. If you're willing to think outside the box, and get creative, there are a lot of options available to you.

For example, you can find companies that provide online survey tools usually charge a flat fee (typically around $1 or more per response) plus a set-up fee. There are also a host of software products available that will help you conduct your own online and offline primary research.

You can ask your current customers if you know when and how to reach them. What about an online poll, set up on your Website? Or you could run a contest in your newsletter. Conduct a sampling of customers through random telephone calls, or emails.

The possibilities are endless, once you start thinking about it.

Using Both for Your Business Savvy entrepreneurs will do secondary research first and then conduct primary research. For example, the owner of a retail floral shop would want to know all about a neighborhood before opening a new store there. By using information gleaned from secondary sources, the owner can find all kinds of demographic data, including detailed income data and spending patterns of potential customers in the neighborhood.

They can then send out a questionnaire to a sampling of households to find out what kinds of flowers people buy, and the primary reasons for buying them. That primary-research technique will help when it comes time to stock the store with products.

Secondary research builds the framework and primary research helps builds a solid foundation. By using both types of market research, you will get a well-rounded view of your particular market and you'll have the information you need to help you make informed decisions about your business.

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