Research is fundamental to success in business, and in the age of information, the business with the most high-quality data wins. Whether you’re doing research and development for a new product or service, marketing research or gathering general business intelligence, understanding the importance of good research can help you drive success. For business administrators, staying up to date with the latest research tips and tricks is crucial, as this can help you solve problems and make data-driven decisions, leading to more profit. Below, we explore the importance of research in business and offer some examples and tips to guide you.
What is business research?
In general, research helps you navigate the business landscape and identify the potential opportunities and risks that lay ahead in any business venture. It’s a business administrator’s primary tool for decision making, and it can help you analyze demand in a market, understand competition and develop pricing strategies, to name a few examples. Specific kinds of business research also include activities like management research, which is a form of applied research that seeks to optimize internal management activities. Here are some common types of business research and what they seek to achieve:
Management research systematically reviews management processes to identify improvement areas and gather information to help with managerial activities. This kind of research helps businesses optimize their management processes and structures, leading to more streamlined activities and effective decision making. It can also help business leaders create policies that affect entire companies, and performing research before implementing them ensures they’ll function as intended. For example, those setting up a virtual office may need to research the topic extensively before they can create the managerial structure required to facilitate it.
Management research helps managers make intelligent decisions and be strategic in the way they manage people. It helps them devise sensible policies, make group decisions, maintain good morale and reduce employee turnover. Specific research methods in operational management include running simulations, creating mathematical models and conducting action surveys.
Market research, or marketing research, involves analyzing market segments and target customers to determine the viability of bringing a new product or service to a market. In basic terms, it involves questioning potential customers to measure their level of interest in a product or service, which, in turn, helps you predict how much demand exists. You can achieve this in various ways, such as through product testing, surveys or interviews. Often, businesses compensate those involved in the research in the form of free samples or financial compensation. Many businesses outsource market research to specialist firms, though some do it in-house.
Market research is a fundamental aspect of research and development. It’s also an essential component of marketing planning, as it helps businesses segment their audiences and target them with personalized marketing. When you understand what customers value most highly, you can sell the benefits of your product or service to them more effectively. Similarly, when you gather more information on your target prospects through research, you can learn about their behavioral patterns, such as what platforms they use and what content they interact with. This maximizes your chances of success with your product launches and marketing campaigns.
Project research, not to be confused with a research project, involves analyzing the viability of a given project before executing it. It can also be used when designing a project, as it helps professionals identify any potential challenges and opportunities that lay ahead. As with any type of research, the goal is to expand knowledge, gather evidence and guide action, thus minimizing the likelihood of failure.
This form of business research involves examining operations to aid in problem-solving and decision making, optimizing their efficiency and effectiveness. Here’s what operation research looks like:
- Identifying a problem or area for improvement
- Creating a sophisticated model representing the situation
- Using the model to produce hypotheses and solutions
- Using the model to test solutions and simulate outcomes
- Identifying workable solutions and implementing them
Modelling helps researchers determine the statistical probability of success with each proposed solution. This helps them maximize their chances of succeeding when they implement solutions in the real world. These problem-solving and process improvement techniques originate from WWII, where military experts would use them to optimize the deployment of new weapons systems. It’s since gained popularity among business administrators and government bodies.
Financial research involves analyzing financial information to identify areas of improvement. This helps businesses reduce waste, optimize spending and deliver products or services more cheaply, leading to increased profits. A detailed financial analysis looks at the cost of resources, labor and manufacturing to ensure profitability is being maximized. Companies can dramatically increase their profits following financial research because it often reveals opportunities for improving efficiency and achieving savings. They can use these insights to produce items at a cheaper rate per unit and deliver services more efficiently, which directly increases profits.
This can sometimes overlap with market research, but competitor research is often a project of its own. It involves analyzing the current players in a market or companies who sell a similar product or service to you and compete for your customers. Understanding what your competitors offer and whether they are outperforming you can help you understand their competitive advantage and improve your products or services accordingly. Competitor analysis can also help with things like pricing strategies, as learning how other businesses price products similar to yours can reveal approximately how much you should charge.
Large companies may do competitor analysis with the intention of buying a company, as this can be strategically advantageous for companies looking to enter an industry.
Why is research important in business?
For business administrators, such as those who’ve completed an MBA program online from an institution such as Aston University, understanding the necessity of research is crucial. These courses give professionals a leadership edge, training them to think like leaders, overcome challenges and make intelligent decisions that benefit the company. When combined with excellent research skills, this knowledge can make you a highly effective business administrator or manager. Here are some of the main benefits of research for businesses:
Helps you understand your customers
Without proper research, businesses wouldn’t be able to understand their customers in terms of what they want to buy, what they like and dislike about a product and why they make the purchasing decisions they do. Research helps businesses eliminate guesswork and give customers what they want, leading to customer retention and brand loyalty. Businesses typically segment their audiences based on extrinsic and intrinsic characteristics. Extrinsic characteristics are observable things like age and gender, whereas intrinsic characteristics are things like motivations and interests. Understanding these helps you create highly personalized messaging that resonates with audiences.
It’s also necessary to understand your customers so that you know how much they are willing to pay for products and services, know what problems they face and can then start building meaningful relationships with them. Leveraging this kind of data before executing a plan or taking a product to market can dramatically improve your chances of success.
Helps you identify risks and opportunities
Fundamentally, research helps you understand situations so that you can predict future outcomes. Businesses research customer behavior so that they can predict future behavior, for example. Research enables businesses to identify opportunities and risks that lay ahead of them, giving them the opportunity to take advantage of opportunities and minimize risks. A SWOT analysis is one of the most common forms of research businesses undertake when trying to understand threats and opportunities. This stands for Strengths, Weaknesses, Opportunities and Threats, and it’s a useful model for developing products and services.
Helps you understand how customers perceive your brand
Perception is a critical factor when running a successful business, but it’s one of the more difficult elements to measure due to its intangibility. The typical research methods for understanding brand perception are surveys, interviews and focus groups. This helps you discover whether customers view you positively or negatively or how they view you in relation to competitors. You can also discover issues customers have with your brand. You can then use your findings to develop PR strategies to alter perceptions if necessary.
Helps you develop intelligent plans
Research projects help businesses devise plans that are likely to succeed based on data insights and statistical probabilities. This enables you to select the most appropriate course of action in any given business endeavor. In marketing, for example, businesses look to maximize their ROIs, and using the findings of your research to shape your marketing strategies can help you achieve this.
Helps you stay competitive
Data-driven decision making is now the standard for businesses, as businesses leveraging data insights invariably outperform ones that don’t. This is because it helps them make decisions that are more likely to result in success, helps them optimize spending and helps them maximize returns on investments. The majority of businesses survive less than five years, so making use of the latest data analytics technology and research techniques can help ensure your business’s longevity. You can also use it to predict trends in the market or economy, which you can also use to your advantage.
Seven tips for improving business research
Here are some tips you can use to guide your business research and ensure you get the most value from it:
- Create a list of objectives. Having a clear set of objectives is essential for conducting high-quality, useful research. This ensures the data you produce relates directly to your goals and helps you advance towards them.
- Ask the right questions. Once you understand your objectives, you can start asking questions that produce the kind of data you’re after. Besides including content that’s conducive to your aims, phrase questions simply and directly, as this helps respondents answer and increases the number of responses you generate.
- Test different approaches. To find the best research methods for your business and its objectives, test a few different approaches. There are multiple ways to collect both qualitative and quantitative data, so trialing a few of each can help you settle on the most effective approaches.
- Ask unbiased questions. Asking biased questions can produce biased data, which doesn’t reflect reality and therefore leads to poor decisions. Remaining completely neutral helps you collect valuable data insights, even if they’re unpleasant or necessitate the need for change.
- Ask open-ended questions in addition to closed ones. Closed-ended questions produce data that you can analyze statistically, and they are also easier to answer, which typically increases response rates. Open-ended questions are important too because they can reveal important insights that close-ended questions cannot. As such, it’s a good idea to use a combination of both.
- Target the right people. When conducting research, it’s important to target the right people so you know the information you’re getting is relevant. You can do this by creating customer profiles and segmenting audiences based on their characteristics.
- Create research summaries. Summarizing your research in the form of well-presented reports can help you communicate your findings to interested parties. It also helps you keep records of your research and easily apply your findings as and when you need to.