research meaning in business

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Business research: definition, types & methods.

10 min read What is business research and why does it matter? Here are some of the ways business research can be helpful to your company, whichever method you choose to carry it out.

What is business research?

Business research helps companies make better business decisions by gathering information. The scope of the term business research is quite broad – it acts as an umbrella that covers every aspect of business, from finances to advertising creative. It can include research methods which help a company better understand its target market. It could focus on customer experience and assess customer satisfaction levels. Or it could involve sizing up the competition through competitor research.

Often when carrying out business research, companies are looking at their own data, sourced from their employees, their customers and their business records. However, business researchers can go beyond their own company in order to collect relevant information and understand patterns that may help leaders make informed decisions. For example, a business may carry out ethnographic research where the participants are studied in the context of their everyday lives, rather than just in their role as consumer, or look at secondary data sources such as open access public records and empirical research carried out in academic studies.

There is also a body of knowledge about business in general that can be mined for business research purposes. For example organizational theory and general studies on consumer behavior.

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Why is business research important?

We live in a time of high speed technological progress and hyper-connectedness. Customers have an entire market at their fingertips and can easily switch brands if a competitor is offering something better than you are. At the same time, the world of business has evolved to the point of near-saturation. It’s hard to think of a need that hasn’t been addressed by someone’s innovative product or service.

The combination of ease of switching, high consumer awareness and a super-evolved marketplace crowded with companies and their offerings means that businesses must do whatever they can to find and maintain an edge. Business research is one of the most useful weapons in the fight against business obscurity, since it allows companies to gain a deep understanding of buyer behavior and stay up to date at all times with detailed information on their market.

Thanks to the standard of modern business research tools and methods, it’s now possible for business analysts to track the intricate relationships between competitors, financial markets, social trends, geopolitical changes, world events, and more.

Find out how to conduct your own market research and make use of existing market research data with our Ultimate guide to market research

Types of business research

Business research methods vary widely, but they can be grouped into two broad categories – qualitative research and quantitative research .

Qualitative research methods

Qualitative business research deals with non-numerical data such as people’s thoughts, feelings and opinions. It relies heavily on the observations of researchers, who collect data from a relatively small number of participants – often through direct interactions.

Qualitative research interviews take place one-on-one between a researcher and participant. In a business context, the participant might be a customer, a supplier, an employee or other stakeholder. Using open-ended questions , the researcher conducts the interview in either a structured or unstructured format. Structured interviews stick closely to a question list and scripted phrases, while unstructured interviews are more conversational and exploratory. As well as listening to the participant’s responses, the interviewer will observe non-verbal information such as posture, tone of voice and facial expression.

Focus groups

Like the qualitative interview, a focus group is a form of business research that uses direct interaction between the researcher and participants to collect data. In focus groups , a small number of participants (usually around 10) take part in a group discussion led by a researcher who acts as moderator. The researcher asks questions and takes note of the responses, as in a qualitative research interview. Sampling for focus groups is usually purposive rather than random, so that the group members represent varied points of view.

Observational studies

In an observational study, the researcher may not directly interact with participants at all, but will pay attention to practical situations, such as a busy sales floor full of potential customers, or a conference for some relevant business activity. They will hear people speak and watch their interactions , then record relevant data such as behavior patterns that relate to the subject they are interested in. Observational studies can be classified as a type of ethnographic research. They can be used to gain insight about a company’s target audience in their everyday lives, or study employee behaviors in actual business situations.

Ethnographic Research

Ethnographic research is an immersive design of research where one observes peoples’ behavior in their natural environment. Ethnography was most commonly found in the anthropology field and is now practices across a wide range of social sciences.

Ehnography is used to support a designer’s deeper understanding of the design problem – including the relevant domain, audience(s), processes, goals and context(s) of use.

The ethnographic research process is a popular methodology used in the software development lifecycle. It helps create better UI/UX flow based on the real needs of the end-users.

If you truly want to understand your customers’ needs, wants, desires, pain-points “walking a mile” in their shoes enables this. Ethnographic research is this deeply rooted part of research where you truly learn your targe audiences’ problem to craft the perfect solution.

Case study research

A case study is a detailed piece of research that provides in depth knowledge about a specific person, place or organization. In the context of business research, case study research might focus on organizational dynamics or company culture in an actual business setting, and case studies have been used to develop new theories about how businesses operate. Proponents of case study research feel that it adds significant value in making theoretical and empirical advances. However its detractors point out that it can be time consuming and expensive, requiring highly skilled researchers to carry it out.

Quantitative research methods

Quantitative research focuses on countable data that is objective in nature. It relies on finding the patterns and relationships that emerge from mass data – for example by analyzing the material posted on social media platforms, or via surveys of the target audience. Data collected through quantitative methods is empirical in nature and can be analyzed using statistical techniques. Unlike qualitative approaches, a quantitative research method is usually reliant on finding the right sample size, as this will determine whether the results are representative. These are just a few methods – there are many more.

Surveys are one of the most effective ways to conduct business research. They use a highly structured questionnaire which is distributed to participants, typically online (although in the past, face to face and telephone surveys were widely used). The questions are predominantly closed-ended, limiting the range of responses so that they can be grouped and analyzed at scale using statistical tools. However surveys can also be used to get a better understanding of the pain points customers face by providing open field responses where they can express themselves in their own words. Both types of data can be captured on the same questionnaire, which offers efficiency of time and cost to the researcher.

Correlational research

Correlational research looks at the relationship between two entities, neither of which are manipulated by the researcher. For example, this might be the in-store sales of a certain product line and the proportion of female customers subscribed to a mailing list. Using statistical analysis methods, researchers can determine the strength of the correlation and even discover intricate relationships between the two variables. Compared with simple observation and intuition, correlation may identify further information about business activity and its impact, pointing the way towards potential improvements and more revenue.

Experimental research

It may sound like something that is strictly for scientists, but experimental research is used by both businesses and scholars alike. When conducted as part of the business intelligence process, experimental research is used to test different tactics to see which ones are most successful – for example one marketing approach versus another. In the simplest form of experimental research, the researcher identifies a dependent variable and an independent variable. The hypothesis is that the independent variable has no effect on the dependent variable, and the researcher will change the independent one to test this assumption. In a business context, the hypothesis might be that price has no relationship to customer satisfaction. The researcher manipulates the price and observes the C-Sat scores to see if there’s an effect.

The best tools for business research

You can make the business research process much quicker and more efficient by selecting the right tools. Business research methods like surveys and interviews demand tools and technologies that can store vast quantities of data while making them easy to access and navigate. If your system can also carry out statistical analysis, and provide predictive recommendations to help you with your business decisions, so much the better.

Related resources

Market intelligence 10 min read, marketing insights 11 min read, ethnographic research 11 min read, qualitative vs quantitative research 13 min read, qualitative research questions 11 min read, qualitative research design 12 min read, primary vs secondary research 14 min read, request demo.

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Business Research: Types, Methods, Examples

• Updated on  
• Jan 29, 2024

Ever wondered what it takes to build a flourishing business ? Aiming to provide maximum sales and profit, business research helps you to gather comprehensive information about your business and accordingly make relevant changes if required. So, in this process of being successful, we gather all types of data to better define our strategies and understand what products or services customers want. And in case, you’re planning to expand your business, research can help you determine your odds of positive results. In this blog, we’ll help you understand the basics of research and analysis .

“Whoever gets closer to the customer, wins.” – Bernadette Jiwa

This Blog Includes:

What is business research, business research example, importance of business research, types & methods, focus groups , case study research , ethnographic research, survey , correlation research , experimental research , advantages and disadvantages of business research, scope of business research, role of business research, business research books, business research report, top 10 tools for business research, business research partners, top 10 business research topics, career prospects , [bonus] best mba colleges in the world.

Business Research can be simply defined as a process of gathering comprehensive data and information on all the areas of business and incorporating this information for sales and profit maximization. If you are wondering what is Business Research, it is a systematic management activity helping companies to determine which product will be most profitable for companies to produce. Also, there are multiple steps in conducting research, with each thoroughly reviewed to ensure that the best decision is made for the company as a whole.

Also Read: Scope of MBA in International Business

Let’s say there’s an automobile company that is planning to launch a car that runs on CNG. To promote cleaner fuel, the company will be involved in developing different plans and strategies to identify the demand for the car they intend to launch. Other than this, the company will also look for competitors, and the target audience, keeping in mind the distribution of CNG in India. Hence the research is conducted on various ideas to formulate a sustainable and more efficient design. 

When it comes to the question of why Business Research is important, it has an essential role to play in varied areas of business. Here are some of the reasons describing the importance of Business Research:

• It helps businesses gain better insights into their target customer’s preferences, buying patterns, pain points, as well as demographics.
• Business Research also provides businesses with a detailed overview of their target markets, what’s in trend, as well as market demand.
• By studying consumers’ buying patterns and preferences as well as market trends and demands with the help of business research, businesses can effectively and efficiently curate the best possible plans and strategies accordingly.
• The importance of business research also lies in highlighting the areas where unnecessary costs can be minimized and those areas in a business which need more attention and can bring in more customers and hence boost profits.
• Businesses can constantly innovate as per their customers’ preferences and interests and keep their attention on the brand.
• Business Research also plays the role of a catalyst as it helps businesses thrive in their markets by capturing all the available opportunities and also meeting the needs and preferences of their customers.

Also Read: Business Analyst vs Data Analyst

Business research plays an important role in the business intelligence process. This is usually conducted to determine if a company can succeed in a new region through competitive analyses and a better marketing approach. Due to this, this broad field has been distinguished into two types namely, Qualitative Research and Quantitative Research Method.

Here are the most important types of Business Research :

Qualitative Research Methods 

It involves putting open-ended questions to the audience through different channels of communication to understand why researchers think in a particular manner. Stress is laid on understanding the intent, attitude, and beliefs to figure out the behaviour and response of the customers. Moreover, the goal of Qualitative Business Research is to get in-depth knowledge about the subjects of the research. Moreover, qualitative research enables us to put the perspective of the consumer in front of the researcher so that we can understand and see the alignment of the ideas between the market and the business. 

The data collected in this type of business research is by the following methods:  

• Interviews 
• Case Study 
• Ethnographic Research 
• Website Visitor Profiling 
• Content Analysis 

Also Read: Study MBA in Music Business at Berklee College of Music!

Let us take a detailed look at some of the ways-

Interviews and surveys are similar. The only difference lies in the fact that the responder can put a question in an interview whilst it is not possible during a survey. Through interviews, it is easier to understand the detailed perspective of the person concerning the subject of research. A mobile brand researched to understand why certain colours are preferred by male and female customers. The research revealed that since red is assumed to be a feminine colour, it is more preferred by females than males. 

Focus groups are a type of business research that involves only a set of individuals. Each selected individual represents a particular category of the target market. The major difference between interviews and focus groups is the number of people that it involves. To launch a new product for a particular group of society, focus groups prove to be the best way to understand the needs of the local audience. 

For example, Tesla decides to launch their latest car model in India. The company, therefore, will require feedback from the Indian audience only.

Did you know? Amazon, the internet giant changed its payment strategy to enter the Indian market. Since the Indian economy was not entirely ready for online modes of payment, amazon introduced a new payment method and came up with ‘ cash on delivery ’ to gain consumers’ trust.

One of the most effective ways for business research is conducting case studies. With the motive to understand customer satisfaction, challenges that usually the customers face while using the product and hence, providing them with the right solution can be achieved by analysing data secured through data secured by case studies. Case study researchers are conducted in many fields of business that ultimately aid organisations in improving their products or services. 

Ethnographic Research refers to understanding people as a whole. One must be able to grok their consumers or target audience which will help identify patterns, flaws, etc. Ethnography is a branch of anthropology that is the study of what elements or features make us humans. How did people live? What aspect made us so dependent on smartphones and technology? Why would people buy one product over the other? It refers to asking questions about lifestyle, communities, etc., and trying to gain insight into consumer behaviour and buying patterns.

For example, consider a random product. Are people looking for that product? Do they need it? Is it a necessity or a luxury? Which class of people are most likely to buy it? People often cannot comprehend what they are looking for. Gaining different perceptions can help us tailor our products accordingly to the consumers. Who would have thought that the majority of humans will need face masks for survival?

Also Read: How to Become a Research Analyst?

Quantitative Research Methods 

With the employment of mathematical, statistical and computational techniques, quantitative research is carried out to deal with numbers. This systematical empirical investigation starts with the acquisition of the data and then moves on to analyzing it with the help of different tools. The goal is to identify clientele and then meet the targets of the audience. As the method of business research employs a questionnaire to determine the audience’s response, the questions are built around the idea that the audience knows about the product or the services that the firm offers. Some of the key questions answered in quantitative research methods include, who is connected with your network, how they qualify for the ‘product’ or how regularly they visit your website.

The data is collected based on the following research:

• Correlational
• Online 
• Casual Comparative 
• Experimental 

It is the most common method under quantitative research via which a huge amount of data can be collected concerning a product or service. A common set of questions are asked to the people and they are asked to provide their inputs. To understand the nature of the market in-depth, this method is massively used by leading organisations all across the globe. Analysing data recorded through service helps organisations make suitable decisions.

Under this research, usually two entities are put together to examine the impact they create on each other. As suggested by the name it is the best process to understand patterns, relationships and trends. the data grasped through correlation research is generally combined with other tools as one cannot achieve a firm conclusion using this type of business research.  

Experimental research is purely based on proving a particular theory that is pre-assumed. True experimental research companies can understand varied behavioural traits of the customers that further assist them in generating more revenue. Exposing a set of audience to common parameters, their behaviour is recorded and hence analysed. This can be understood as the main basis of the experimental research. 

Also Read: Scope of Operation Research

There are certain pros and cons of business research that you must know about. Here are the advantages and disadvantages of Business Research.

Advantages of Business Research

• Business Research plays the role of a catalyst in identifying potential threats, issues as well as opportunities .
• It provides a detailed analysis of customers and the target audience , thus helping in building better relationships with one’s audience and capturing the areas which we might be missing out on.
• It also anticipates future problems thus the enterprise is able to tackle those uncertainties and prepare for them beforehand.
• It keeps a continuous track of competition in the market and gives businesses the scope to come up with better strategies to tackle their competitors.
• Business Research also conducts a thorough cost analysis thus helping the company efficiently manage resources and allocate them in an optimal manner.
• It keeps you updated with the latest trends and competitor analysis .

Disadvantages of Business Research

• Business Research can be expensive and time-consuming .
• It also has the danger of being assumptive and imprecise at times , because the focus groups might be small or can be highly based on assumptions.
• The market is ever-changing and ever-evolving and capturing the right trends or anticipating them can constitute a complicated process for business research.

Also Read: Types of Research Design

The process of business research can be as comprehensive and as detailed as a business wants it to be. Generally, a company takes up research with a certain aim or hypothesis in order to figure out the issues, opportunities and trends and how they can be leveraged in the best way.

Here is the step-by-step process of Business Research:

• Identifying the Opportunity or Problem – To begin with the research, we first need to know what is the problem or the opportunity we would be leveraging on. It can be a popular trend or a common problem that a business is facing and can potentially become the headstart for the research process. Once you know the problem or the opportunity, go ahead with giving an understandable statement of what it’s about, what the hypothesis of the research will be as well as its objectives.
• Decide and Plan the Research Design – The next step in the business research process to find the right research design which suits the objectives and overall plan of the research. The most popular research designs are Quantitative and Qualitative Research.
• Determining the Research Method – The research design is closely connected to the research method since both qualitative and quantitative research designs have different methods for data collection, analysis, amongst others. So, once you have put a finger on what the right research design will be, go ahead with finding the right research method as per the plan, types of data collection, objective, costs involved, and other determining factors.
• Collect Data – Utilizing the research method and design, the next step in the business research process is to collect data and assimilate it.
• Data Analysis and Evaluation – After assimilating the data required, the data analysis will take place to gather all the observations and findings.
• Communicate Results – The presentation of the business research report is the concluding step of this procedure after which the higher management works upon the best techniques and strategies to leverage the opportunity or tackle the issue.

Also Read: MBA in Business Analytics

The scope of Business Research is multifarious and reaches out to many specialisations and areas. Let’s take a look the scope of business research across various specialisations:

• Marketing Management When it comes to business research, becomes an important part of marketing management that analyses consumer behaviour, target audiences, competition, price policy, promotional plans and much more.
• Financial Management It also plays an essential role in budgeting, financial planning, cost allocation, capital raising, tackling fluctuations with international currency as well as taking finance-related decisions.
• Production Management Production Management also includes business research as it helps in product development, planning out for a newer one, finalizing the right technologies for production, and so on.
• Materials Management Business Research is an important aspect of checking the best materials and carrying out its production, supply chain management , logistics , as well as shortlisting negotiation strategies.

There is an incremental role of business research as its importance is across every aspect of the business. Let’s take a look at the role of business research in an enterprise:

• The most primary role of business research is that it helps across every decision in the business, from product innovation to marketing and promotional planning.
• Business Research also helps in forecasting a business, whether in terms of competition or any other types of problems it will be facing.
• Another key area where this plays a bigger role is ensuring consumer satisfaction as through research, we can carry out research and highlight areas where we can efficiently serve our target audience.
• Business research also helps in implementing cost-effectiveness in a business as it can assist in cutting costs wherever needed and investing more in those areas, where profit is coming from.

Want to understand and learn more about business research? Here are some of the books that will make you a pro in this field. Check out the list of business research books:

Also Read: Is It Possible to Study MBA in Europe Without GMAT?

The purpose of a report is to inform the other members, junior and subordinates of the team to provide information on the specific topic. There is a specific format of a business report which makes it look more professional and presentable. There should be a title with the date and nature. The second section includes the introduction, body, and then conclusion. Reports help to identify the issues and helps in resolving them at earlier stages. It can include graphs, surveys, interviews, flow, and piecharts also.

Are you wondering why is there a need to do business research? Business is not stable and it is vital to stay up to date with all the data and developments. It is also important to make business-related decisions, and keep track of competitors, customer feedback, and market changes. The basic objective of business research is to identify the issues and evaluate a plan to resolve them for better managerial functioning.

Now that you are familiar with the objective, importance, and advantages the next important step is to know how to conduct research. There are numerous tools available for free while for some advanced tools there is a membership. Check out the list of top 10 tools:

• Google Keyword Tools
• Google Analytics
• Google Trends

The one thing constant in a business is market changes. A new trend or change comes every time you blink an eye. To keep track of everything externally and internally a research partner comes helpful. There are a few things to keep in mind that will help you in choosing the right business partner. The first thing to keep in mind is that the person should have relevant work experience and expertise in that particular field. An experienced partner can help businesses reach new heights. Look for a partner that can provide well-curated solutions and not the generic ideas that every enterprise follows. Last but not least is that your business research partner should have knowledge of the latest tools and techniques.

Also Read: MBA in Sustainable Development: Courses & Universities

Is your big presentation coming up or your report is due on Monday but you still haven’t finalized your business research topic? Here are some of the trendiest research topics for you:

• How advertisements influence consumer behaviour?
• Does incentive motivation increase employee productivity?
• How to handle crises in the business?
• How to create a work-life balance in the organization?
• What are the things a small business owner has to face?
• How to expand the company globally?
• How is digital marketing helping every business type?
• How to maintain the quality and quantity of products?
• What are the struggles entrepreneurs of a start-up face?
• How to create a budget and maintain company finances?

In order to build a career in Research , you can simply grab a degree in the field of Management , Business or Administration. So, students with an understanding of the core concepts of business and an inclination for research can consider it as a go-to option. Other suitable programs can be Master in Management , MBA Business Analytics , and MBA Data Analytics , to name a few.

To know more, check out Qualitative Research Methods !

It can simply mean researching every area of a business and using the provided information and data to ensure profit maximization.

There are different types of business research such as interviews, surveys, focus groups, correlational research, ethnographic research, case study research, and quantitative research methods, amongst others.

It is essentially important for various aspects of a business such as profit maximization, cost-cutting, financial management , personnel management, consumer behaviour, etc.

The process of research depends upon the type of research design you are opting for. To start with, we first need to determine the aim or objective of the research, then plan out the whole process which includes the types of methods we will be using, then the actual research that takes place followed by the data found that helps in understanding the key observations and how they can be implemented to actualize research hypothesis.

If you’re thinking to start a product line in your existing business or planning a startup, business research is a fundamental process that helps you to navigate the opportunities and obstacles in the marketplace. Knowing your strengths and weaknesses can help you come up with advanced and powerful research techniques that will make it easier to manage. Are you planning to take your higher education abroad? Then, you can quickly book a counselling session with the experts at Leverage Edu and we can help you build the right platform for you to grow in the corporate world.

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• What is Business Research: Methods, Types & Examples

Defne Çobanoğlu

Every business owner wants their company always to be successful and profitable. And even if you have a successful business plan, that does not mean things will not need changing in the future. And trial and error may not be on the table when you can not afford to lose money and precious customers. Therefore, you need to be cautious before taking any steps and do your research . 

In this article, we explained business research, its methods, and types to help business owners and inform those interested to know more. We also added some examples of scenarios any company may face. Let us get started with the definition of business research!

• What is business research?

Business research is a type of research process where the main goal is to help a company thrive and collect data about the target audience, potential business plans, and marketing strategies . The data collection about possible risks and investment opportunities helps business owners make informed decisions about future plans. 

The fields that can use business research include marketing, business, education, and social science . But of course, they are not the only ones that can benefit from business research. It is a helpful research type for all business needs. Now, let us see how we can further categorize this into methods and types of business research.

• Methods and types of business research

Business research methods and types

In business research methodology, there are two main types. These are quantitative research and qualitative research. In the simplest terms, quantitative research is about collecting numerical and factual data, whereas qualitative research is about collecting data by using open-ended questions . These two methods can be divided into more specific parts. Let us get started with quantitative research methods.

• A. Quantitative Research Methods

Quantitative research methods give the researchers factual and numerical evidence that can be effectively used in decision-making processes. There are numerous ways to collect quantitative data, and it is also possible to use more than one method to prove the credibility of the information. Let us start with the first one:

• 1. Survey research

Surveys are a great way to collect information from a targeted group, no matter how big or small. They can be done in the format of an online survey, phone survey or questionnaire . Surveys are usually close-ended or multiple-choice questions that are easy to group and analyze. The business doing the research can collect valuable information directly from its customers.

• 2. Correlational research

Correlational research focuses on the discovery of whether two different entities influence each other in any way. The main focus of this research method is not to make decisions. But rather, they can use the findings to explore further using other research methods.

• 3. Causal-comparative research

Causal-comparative research is similar to correlational research in that both of them compare two different elements and how they affect each other. But the main difference is that fact the focus of this research method is to draw conclusions on the cause-and-effect relationship of said entities.

• 4. Experimental research

Experimental research has a broad spectrum when it comes to what is taken as ‘experimental’. Basically, it is when businesses want to test a specific theory about the quality of a product or service. There are many methods that can be used, and it is decided by the researcher according to the theory that will be tested.

• 5. Literature research

Literature research is a very effective and economical research method to use. It is about using offline and online existing literature and going through them to analyze the data. It is mostly used in sales about consumer behaviors.

• B. Qualitative Research Methods

Qualitative research is not about numbers like quantitative research. Instead, it is about emotions, opinions, and approaches. The target audience can be presented with a topic through open-ended questions. There is more than one method to go with, and it is even possible to use multiple methods at once. Let us see qualitative research methods: 

• 1. Interviews

The interview method is mostly done on a smaller participant group about a specific subject. They consist of open-ended questions and can be in a structured or unstructured format. Interviews are one-on-one questions asked to the target audience to gain insight into the problem . 

• 2. Focus Groups

A focus group is a pre-determined group of individuals who are chosen to participate in a study to answer specific questions. The researchers present them with a topic and encourage discussions with open-ended questions . Then, the findings are generalized to make decisions.

• 3. Ethnographic Research

Ethnographic research is similar to conceptual research, and its main focus is to understand the culture and people of the target audience by using observation . This method is done by observing the people in their natural environment and seeing how they interact with one another and their surroundings.

• 4. Case Study

Businesses generally use a case study method to showcase to potential consumers how their product or service helped a certain individual or a group . It is a good way to attract new customers. This method helps highlight the company’s skill sets and assets.

• 5. Website visitor research

This research method is relatively newer than others. Its main focus is to collect feedback from individuals who use the company website and ask them about their opinions. A business can use this method by presenting a customer with a quick survey after their purchase on the website . Afterward, the company can improve user satisfaction by fixing existing problems.

• Importance of business research

The reasons for conducting business research

Businesses grow by knowing their target market, potential customers, and competitors. And this is only possible by conducting market research to help make informed business decisions. The main goal of business research is to help stakeholders of the company make planned and informed decisions using the facts in the business research report. However, there are other reasons why business research is important. These are:

• Gathering information on customers: A business research report provides data on consumers’ behavioral changes, their needs, preferences, and expectations. The managers and stakeholders can make informed decisions with this knowledge.
• Performance evaluation: Research allows businesses to evaluate their success against industry standards and other competitors. This helps keep track while deciding how to differentiate themselves from others.
• Market expansion: Business research topics include areas that were not explored before. Therefore, when the business wants to expand to new markets, the research provides information on the market’s dynamics and potential risks and profits .
• Efficiency and cost-reduction: The data collected by business research helps identify any obstacles to productivity and cost excessiveness. That way, a more cost-effective and efficient approach can be taken.
• Business research examples

Business research helps business managers make smart plans for the company and its future. They can make informed decisions about new marketing strategies, building new products or service branches, or improving customer satisfaction . 

Business research example #1

Imagine a company making energy drinks wants to know if they can expand their market to the older part of the population. They do not know if they will be interested in their product or what kind of marketing strategies they can use to attract older people’s attention. They can make up a focus group and ask them about their opinions. The company can also conduct literature research to find out information about the competitors .

Business research example #2

Imagine a company that has a clothing store website wants to know if there is anything that makes shopping on their website difficult for customers. They can show a pop-up customer satisfaction survey and ask them if they can find what they are looking for easily and how the website visiting experience was. Then, they can collect customer feedback and see how they can improve their website to enhance customer satisfaction levels.

• Frequently asked questions about business research

What are the 4 stages of business research?

Much like every other research, business research is also best done when it is preplanned and organized. And there is a 4 stage plan of business research. These are:

1 - Defining the problem

2 - Designing the research plan

3 - Collecting data and making an analysis

4 - Reporting on the findings

What is the purpose of business research?

The purpose of business research is to make sense of the existing elements of a business, such as consumers, product placement, marketing, innovation, etc . And using the data collected on these elements to make informed decisions and create smart business strategies to improve the success of the company.

When to use business research?

Business research is best used when a new approach is taken or a new product is launched, and the risks need to be assessed. It is essential to be mindful of all the negative and positive sides of a new strategy without risking the entirety of the company.

• Final words

When you own a business, no matter how big or small, change can be intimidating. You can not go to new territories blindly. But, you can not stay the same either. In order to keep your existing customers and find new potential ones, you should be mindful of their habits and opinions. The best way of doing this is either to ask them directly ( using a survey, interviewing them, etc .) or to do your own research to draw conclusions.

In this article, we explained business research, quantitative and qualitative research methods, and business research types. We also included some examples of business research and what methods can be used for those problems. If you want to do your own business research but do not know where to start, you can check out quantitative research questions to get you started. Also, do not forget to check out other articles on research and so much more!

Defne is a content writer at forms.app. She is also a translator specializing in literary translation. Defne loves reading, writing, and translating professionally and as a hobby. Her expertise lies in survey research, research methodologies, content writing, and translation.

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Business Research: Definition, Examples

Business research examines all aspects of a business environment. It asks questions about competitors, market structure, government regulations , economic trends, technological advances, changing patterns of the business world, and numerous other factors that make up the business environment.

The emphasis of business research is on shifting decision-makers from intuitive information gathering to systematic and objective investigation.

Like other research, business research is accomplished through exploration, description, explanation, and prediction.

Let’s Understand Business Research:

What is Business Research?

Business research is a systematic and objective inquiry that provides information to guide managerial decisions, which are arrived at through planning, acquiring, analyzing, and disseminating relevant data to decision-makers to mobilize the organization to take appropriate actions to maximize business performance.

Who Business Research Works?

Business research is of recent origin and mostly supported by business organizations, while the public domain has sponsored much environmental research, some of it for hundreds of years.

The development of scientific methods in business research lags behind similar evolution in the physical sciences.

Physical scientists have been more rigorous in their concepts and research procedures. They are much more advanced in their theory development than business scientists. Business research operates in a less favorable environment in other ways, too.

Physical research is usually conducted under controlled laboratory conditions, while business research seldom is.

Business research is an important management activity that helps companies determine which products will be most profitable for companies to produce.

Several steps are necessary when conducting business research: each step must be thoroughly reviewed to ensure that the business enterprise makes the best decision.

Steps of Business Research

These steps include, among others:

• Product analysis.
• Market analysis.
• Financial analysis.
• Competitor analysis.
• Growth analysis.

Product Analysis

Product analysis is the first step in business research.

Companies must find a product that meets consumer demand or exceeds consumer demand; otherwise, the product will fail in the economic marketplace.

One type of analysis is to find an existing product that can be improved through design and features.

Another kind of product analysis will find emerging markets with high demand and low supply, which allows companies to sell products to meet consumer demand.

Market Analysis

Companies will conduct a market analysis to determine how much profit may be earned from current demand.

Management will look at which stage of the business cycle the market is currently in, whether emerging, plateau, or declining. A market analysis will also determine the price points at which products can be sold.

Financial Analysis

The financial analysis determines the cost of each production item used to produce goods and services.

Management will also review the best cost application methods, ensuring that all production costs are adequately applied to each product manufactured or service rendered.

Competitor Analysis

A competitor analysis of a market is an essential part of business research. Knowing which companies have the best production methods or customer loyalty helps new companies understand how they can create a competitive advantage when entering a new market.

Growth Analysis

Growth analysis is crucial in understanding a business operation’s profitability.

Business research usually includes forecasting the growth and direction of the current industry or market. Knowing to which direction the market is headed helps companies determine the stability of new business operations.

A SWOT (strength, weakness, opportunity, and threat) analysis is often undertaken to understand a market.

Based on this analysis, a business enterprise can take strategic decisions or measures in a business venture.

What are the primary objectives of business research?

Business research seeks to understand all aspects of a business environment , including competitors, market structure, government regulations, economic trends, technological advances, and changing patterns in the business world.

How does business research differ from physical sciences regarding its development and methods?

The development of scientific methods in business research lags behind that in the physical sciences. Physical scientists have been more rigorous in their concepts, research procedures, and theory development. Additionally, physical research is often conducted under controlled laboratory conditions, whereas business research usually isn’t.

What are the steps involved in conducting business research?

Business research involves several steps, including product analysis, market analysis, financial analysis, competitor analysis, and growth analysis.

Why is a SWOT analysis often undertaken in business research?

A SWOT (strength, weakness, opportunity, and threat) analysis is undertaken to understand a market comprehensively. Based on this analysis, businesses can make strategic decisions or measures in their ventures.

Examples of Business Research

Here are five examples that illustrate what business research is.

Microcredit programs from institutional and non-institutional sources have been found to significantly impact raising the standard of living of rural people, especially women.

But there is ample evidence that these credit facilities are misused and misdirected in many instances.

This practice has led to a high default rate, putting institutions hesitant to finance rural people. In this context, it is imperative to examine the status of credit utilization and assess the extent and magnitude of misuse and diversion of credit in rural areas.

Human resource development has become an essential component of the development process. This is because the human factor drives any development process .

Since a firm’s human resources are an important potential source of sustained competitive advantage , managing them well helps create unique competencies that differentiate products and services and, in turn, drive competitiveness.

This link, in principle, facilitates successful corporate performance.

An increasing body of work argues that a positive relationship exists between the so-called high-performance work practices and different measures of company performance.

Such high-performance work practices include comprehensive employee recruitment and selection procedures, incentive compensation and performance management systems, and extensive employee involvement and training.

Several studies in Bangladesh and elsewhere have found a positive relationship between HRM practices and policies and different measures of company performance.

Keeping the above background in view, a research firm designed a study to focus on studying the relationship between rewards and recognition practices and firm performance, as well as between recruitment and retention systems and firm performance, using a survey instrument for traditional HRM activities (recruitment, selection, performance management, training, compensation , and employee relations) and using independently collected organizational performance data focusing on financial performance (assets, capital, deposits, and return on equity).

The researcher decided to restrict his sample to the banking industry of Bangladesh.

In one of her papers, Sultana (2012: 15) states that women entrepreneurs in SMEs have emerged as a new class both in Bangladesh’s urban and rural areas.

Though some studies were conducted on entrepreneurship development in Bangladesh, no significant research was done on women entrepreneurs’ performance, either in rural or urban areas.

Women entrepreneurship or women in business is considered a very recent phenomenon in Bangladesh. Many economists, sociologists, and political scientists have recognized entrepreneurship in small businesses as an essential gradient influencing the economic growth of a country.

Keeping this scenario in view, the author attempted to highlight the activities of women in small and medium enterprises (SMEs), particularly in urban areas, including Dhaka Metropolitan city.

The study also collected data relevant to the entrepreneurial qualities of women and their socioeconomic status to understand whether these facilitate or constrain women to emerge as successful entrepreneurs.

This example is drawn from an adventure travel survey in a US county, where many small firms operate on half-dozen rivers and provide half-day to multi-day trips to thousands of clients annually.

The managers of a group of county river basin outfitters wanted to know how to increase customers’ satisfaction and repeat business for their multi-day river trips.

They wanted to verify the hypothesis that customer satisfaction is related to concerns with the quality of food and amenities provided safety and lore about the natural and historical setting of the trips.

Financial statements, the critical parts of financial reporting , are the principal means of supplying accounting information to a wide range of users to evaluate the financial position, profitability, liquidity, and prospects of a company so that the users can make economic decisions.

The stability of the market economy largely depends on the user groups’ confidence in the fairness of the financial statements (Choudhury et el. 1996).

Generally, fair presentation refers to the ability of the economic conditions of a company. This relates to accounting accuracy and completeness (Sen, 2002).

Keeping these points in view, Jahan and Nahar (2012: 79) planned a study to examine to what extent the companies in Bangladesh follow or observe the adapted Bangladesh Accounting Standard 1 (BAS-1) and also analyze the compliance of BAS-1 in presenting the financial report of different companies in Bangladesh.

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Business Research: Definition, Types, and Methods

• February 7, 2022

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What is Business Research?

Business research refers to the process of gathering information on all areas of business with the purpose of leveraging this data to promote organizational growth, increase sales, and maximize profit. It involves the systematic management activities that help companies decide which products or services will perform well in the market and will therefore be most profitable to produce.

Exploratory Research Guide

Conducting exploratory research seems tricky but an effective guide can help.

Why is Business Research Important?

Business research provides companies with comprehensive data on the target customer’s preferences, purchasing behavior, demographics, and pain points. Such information allows the business to strategize and create more effective marketing plans that resonate with the target audience. A thorough overview of the overall market will also give the business an understanding of market trends and market demands so that plans and strategies can be devised accordingly. 

Another key use of business research is that it can bring attention to areas where costs can be minimized to increase profits. It provides businesses with a competitive edge in the market by ensuring that all identified opportunities are capitilized on and that decisions are made with customers in focus. 

Business Research Methodologies

We can categorize business research methods in two ways: 

• Quantitative and Qualitative
• Primary and Secondary 

Quantitative vs Qualitative Business Research

Before we can delve into the specific kinds of research, it is important to have an understanding of the distinctions between the two key types of research: quantitative and qualitative business research. 

Quantitative research involves data that is statistical and numerical in nature. Such data can be analysed using statistical techniques. Qualitative research, on the other hand, involves non-numeric data that generally takes a textual form. 

Primary vs Secondary Business Research

Another way in which research methods can be classified is by primary and secondary research. Primary research refers to the collection of first-hand data, generally directly from the source. Some common methods of primary research are surveys, interviews, and observations. 

Conversely, secondary research uses existing data that is already avalaible.

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Quantitative and Qualitative Research Methods

Quantitative research methods.

Some commonly used quantitative methods of business research are: 

• Experimental Research : Experimental research refers to research studies that adhere to the scientific research design. This type of research aims to prove or disprove a theory, or hypothesis. Businesses generally use experimental research to study consumers’ behavioral traits. 
• Survey Research : Survey research is one of the most commonly used methods of data collection because it is relatively easy and inexpensive to leverage. Surveys can be conducted in many different ways such as through social media polls or email surveys. 
• Existing Literature : Existing research papers and online research are other sources of gathering quantitative data. This method is economical, accessible, and allows for the collection of vast amounts of data. 

Qualitative Research Methods

Some commonly used qualitative methods of business research are: 

• Interviews : Interviews are structured conversations that take place between an interviewer and an interviewee face-to-face, over the internet, or even through the phone. Generally, interviews involve the use of open-ended questions that provide respondents the flexibility to express their thoughts, perceptions, and opinions on the topic. 
• Ethnographic Research : Ethnographic research where researchers immerse themselves in the participant’s real-life environment to observe and study their behaviour. It is generally used by organizations that want to understand cultural dynamics or factors. Although this method of research can help extract intensive and compelling data, it is extremely time-consuming and expensive. 
• Case Study Research : Case study research refers to the detailed study of a specific subject. This method is used to produce in-depth, multi-faceted information on complex issues in the real-world setting.

FAQs on Business Research

Business research involves gathering information on all areas of business with the goal of maximising sales and revenue.

Business research methodologies can be categorized in two ways; 

• Quantitative and qualitative
• Secondary and Primary

Some quantitative methods of business research are; 

• Survey Research 
• Experimental Research 
• Existing Literature

Some primary research methods are interviews, surveys, and focus groups. Some secondary research methods are public sources, educational sources, and commercial sources.

Some qualitative methods of business research are; 

• Ethnographic Research
• Case Study Research

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Introduction to Business Research

• First Online: 01 January 2013

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• S. Sreejesh 4 ,
• Sanjay Mohapatra 5 &
• M. R. Anusree 6  

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In the present fast track business environment marked by cut-throat competition, many organizations rely on business research to gain a competitive advantage and greater market share. A good research study helps organizations to understand processes, products, customers, markets and competition, to develop policies, strategies and tactics that are most likely to succeed.

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Sreejesh, S., Mohapatra, S., Anusree, M.R. (2014). Introduction to Business Research. In: Business Research Methods. Springer, Cham. https://doi.org/10.1007/978-3-319-00539-3_1

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Doing Research in Business and Management: An Essential Guide to Planning Your Project

Management Decision

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Berbegal‐Mirabent, J. (2013), "Doing Research in Business and Management: An Essential Guide to Planning Your Project", Management Decision , Vol. 51 No. 6, pp. 1311-1316. https://doi.org/10.1108/MD-06-2012-0505

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“Publish or perish”. We've all heard this expression referring to the need academic, but especially PhD students and young academics have to make their research results public in order to promote and improve their contractual position, consolidating their careers. Nevertheless, it is also well‐known that this is a long‐distance race conditioned to the capacity to publish the research findings.

This means that students whether undergraduate, postgraduate or enrolled in a PhD programme need to develop their research knowledge from the very begging in order to refine their writing skills, paying attention to a large list of details and requirements which may vary from one situation to another. Indeed, academics invest innumerable hours and resources in writing their research results to succeed when submitting them to a peer‐reviewed journal. Therefore, it is not surprising that planning and writing a research project is often considered by inexperienced students as a challenging, time‐consuming and a demanding task. Yet, despite all these constraints, writing up the findings in a form that can be published and read for others, constitutes a very rewarding effort.

Emerging from the necessity to instruct students in acquiring the appropriate skills and abilities to effectively complete a research project, many courses are now incorporating a research module in their syllabuses as a mean to improve students' probabilities to succeed when doing so.

The editorial industry has also echoed these concerns and demands in the recent years, leading to the flowering of a large number of books and manuals addressing this issue (i.e. Bryman and Bell, 2011 ; Cooper and Schindler, 2011 ; Creswell, 2009 ; Flick, 2011 ; Sekaran, 2010 ). One of the most compelling books tackling this problem is Doing Research in Business and Management: An Essential Guide to Planning Your Project , written by Saunders and Lewis and published in 2012 by Pearson Education Limited.

Saunders and Lewis are experienced professors in teaching research methods in the fields of Business and Management. Indeed, they have published several books offering guidelines for students that need to conduct and produce a competent piece of research. According to the authors it is now fourteen years since their first book on research methods was printed. In 2009 the fifth edition was published ( Saunders et al. , 2009 ) and due to its popularity and good acceptance among academics and students they are now presenting this new and updated approach, providing a detailed coverage of all the relevant aspects (both theoretical and empirical) that may face students when carrying out a research project.

Combining their years of academic practice and their vast practical experience, with this book Andersen and Lewis aim at providing, in an accessible and friendly manner, some assistance to students and early career individuals who need to undertake an assessed research project by means of a written project report. This way, Doing Research in Business and Management provides a comprehensive and holistic overview of how to develop quality research in the fields of business and management, offering a detailed coverage of the relevant research approaches and methods used in these disciplines, and bringing together the essential components of the process of writing up a research project.

The authors take the reader through all the major stages involved in this process, introducing the different contexts and purposes that may guide a research project, as well as highlighting the key methods, strategies, tactics, programmes and processes that are recurrent in a management and business research context.

One noteworthy aspect of this book is that it takes extraordinary care to focus the reader on the logic and techniques of research methods using an accurate but simple language, that is, bearing in mind that the targeted audience is inexperienced students on undergraduate and postgraduate degree programmes in business, management or related disciplines, that may not yet be familiar with the language and style required by the scientific community. Therefore, employing a concise, highly accessible style and a logical structure, this book enables students that face for their first time the challenge of writing a research project to understand the practical relevance of research methods on business and management research. It also discusses the interrelationships of theoretical and empirical research, how these apply to practice, and the most recurrent software packages available in the market.

An important feature of this book is its clear structure and ease of reading. Furthermore, within each chapter, the use of illustrations, contemporary examples and key research terms placed in definition boxes to demystify their meaning, helps breaking up the text and brings it to life due to the practical perspective adopted. Certainly, it is presented in a logical and structured manner, organising the content in eight chapters that correspond to eight stages of the process of writing a research project.

Although the chapters follow a sequential order, the authors have written them in such a way that they stand alone, so any chapter in isolation make sense of it. Therefore, it is not necessary to read this book progressively from Chapter 1 through to Chapter 8, but allow readers to select those chapters that really match with their needs.

Each chapter follows a similar structure, starting with a brief summary that gives some ideas of the content and the approach adopted to afford the topic discussed (“Why read this chapter?”). Also each chapter contains a set of different examples to illustrate, from a practical point of view, some of the points addressed in the chapter (“Research in practice”). Every chapter ends with a “Thinking about” section, where the content is summarised in the form of concise and succinct bullets, and where authors make some suggestions on how to reinforce the contents learned.

Revising each chapter individually, Chapter 1 starts with some preliminary considerations on what is meant by a research process. Conducting research is something more than writing the findings using a formal language and a specific structure. It means to embark on a journey of discovery, where researchers have the chance to express their skills and resourcefulness demonstrating their abilities to carry out research projects of high quality.

Given these initial thoughts, Chapter 1 is then entirely devoted to the first matter academics come across: the selection of the research topic. As any process, a research project starts with the choice of a research theme. This is an issue entailing an extraordinary significance as the student/researcher should have to live with and live for, perhaps for a considerable period of time. Thus, it is important that the research topic matches with his/her expectations and motivations, contributing to the development of his/her personal skills and strengths, rather than being imposed by a supervisor.

The chapter follows with the main difficulties students face when choosing the research topic, and suggests novel ways in which to generate ideas, including for instance the use of relevant literature in the field to identify gaps that may constitute new research avenues. Discussions with friends and lecturers or drawing a concept map, are also listed as intermediate steps that may help filtering ideas, moving from the general to the specific question.

In the latter part of the chapter the authors focus on how to turn an idea into a research topic. At this point Sanders and Lewis recommend the use of the Russian doll principle ( Clough and Nutbrown, 2008 ), consisting of breaking down from the original statement to something which strips away all the complicated layers and obscurities until the heart of the question, in a similar fashion as the Russian doll is taken apart to reveal a tiny doll at the centre (p. 21).

Chapter 2 focuses on the subject of the literature review. A literature review is a very hard and time‐consuming process, as it should discuss relevant previous work and provide a comprehensive review of the major findings in the current area of study. This section is mandatory for any research project as it allows the researcher to demonstrate the need for a new study and that he/she has the appropriate background. Moreover, knowing what is known, it comes out easier to state what is still unknown, facilitating the identification of the gaps in the current understanding of the field, and making it simply to justify the research question(s) underlying the research and the context in which the study is going to be performed.

Thus, in this chapter the authors explain what constitutes an effective critical literature review, giving some ideas on how to start writing it and how to organise ideas and findings in a coherent logical argument.

A careful selection of the references to support statements and previous research findings is essential. In this sense, the authors make explicit differentiation of the main types and sources of literature available. A detailed description of the process of searching for obtaining the relevant literature is then provided, emphasising the use of an abstract to assess likely use of an article.

In accordance with the Harvard College Library (2006) , the authors also suggest that while reading, it is extremely important to take notes, summarise findings, compare information and contrast results. Likewise, they emphasise that a good literature review can lead to interesting insights into possible ways of collecting and analysing data.

Chapter 3 is concerned with how to manage the research process, focusing on four main aspects. First, questioning how to manage respondents, that is, how to access organisations for data collection. Here a set of six strategies are listed. Second, the authors focus on how to manage oneself in terms of keeping up the motivation, organising time and resources, and keeping in touch with individuals who may provide insightful comments on the work in progress. The relationship with the supervisor is believed to be indispensable, as he/she is expected to give advice at every stage of the process. But in order to succeed in this relationship, students are asked to report in a regular basis the partial results throughout the entire length of the project. A fourth issue deals with the management of the university context, that is, how to fit with the regulations, specific norms and other requirements imposed by the university. Paying special attention to the assessment criteria is also essential in order to guarantee that the research outcomes fulfil the requirements.

This chapter ends with a section covering the subject of research ethics, pointing out the key ethical principles and responsibilities that should be taken into account and that apply to all stages of any research process. This topic has perhaps been underexplored in the management and business literature; however it seems that it is now increasingly entering into the agendas of many academics ( Academy of Management, n.d. ; Frechtling and Boo, 2012 ; Payne, 2000 )).

Chapter 4 begins with a definition of what is meant by secondary data. A full definition is given, differentiating between qualitative and quantitative data and the possible transformation processes data may have suffered. Figure 4.1 (page 86) exhaustively summarises potential forms of secondary data according to their nature.

In this chapter the authors discuss the potential of using secondary data as a method for accessing large datasets and saving time and money, as they can often be found in the public domain as a result of the growth of the Internet. Nevertheless, secondary data also presents some pitfalls. For instance the authors emphasise that data are not always value‐neutral or only meet research needs partially. Although data available are rich and allows the creation of reliable variables, it is relevant to question whether the selected variables represent the core influential factors that match with the exact requirements of the study. The chapter ends with a list of some gateways to secondary data sources that are relevant for its broad scope and content.

Chapter 5 is entirely devoted to research strategy and design. Using the research onion metaphor presented in the authors' previous work ( Saunders et al. , 2009 ), Saunders and Lewis illustrate the different stages that conform the research process. Techniques and procedures for data collection and analysis are placed in the centre of the onion. As we move away from the centre we found the intermediate layers, where the strategies and choices have to be selected. Finally, the outer layers consider the research philosophies and approaches that embody the research. Building on this approach, the different layers of the onion are presented and complemented with readable examples. Definitions are also given, clarifying some terms that may be unknown for the freshman student, for instance, differences between inductive and deductive approaches, and alternative types of studies (exploratory, descriptive and explanatory).

This chapter also includes a section devoted to the description of different strategies that students may use in their attempt to answer their research question(s). Some useful insights are given on the use of experiments, surveys, case studies, action research methods, ethnography studies, grounded theory, archival research methods or the combination of any of the above. Although the aim of this book is not to in‐depth in the technical specifications behind these strategies, Saunders and Lewis provide the reader with the main features characterising each method. Further information on these approaches may be accompanied with the reading of the specific literature on each particular topic, such as Yin (2009) for case studies; the book of Berg and Lune (2008) with two chapters entirely focused on action research methods and ethnography studies; Corbin and Strauss (2008) and their approach to the grounded theory; or Ventresca and Mohr (2002) studying archival research methods. Correspondingly, the books of Miles and Huberman (1994) and Marshall and Rossman (2010) offer an exhaustive review of all aspects related to qualitative data analysis.

Chapter 6 pays attention to the methods used to collect data. The uses of different techniques and statistical procedures to obtain a sample that satisfies the research requirements, or how to draft an effective questionnaire, are some of the issues addressed in this chapter.

Part of this chapter is devoted to the importance of using a pilot test with a small group of respondents in order to corroborate the validity of a test/questionnaire before launching it to the whole sample. The chapter ends with some guidelines on how to successfully conduct interviews (either semi‐structured or unstructured), giving some examples on how to ask questions, how to interact with the respondent and how to prepare the material needed. A transcription of a potential interview is also provided.

The subject of Chapter 7 is about getting data ready for analysis, the use of different techniques for the analysis, and how to interpret the results obtained.

The chapter begins with the particularities of different types of data, namely quantitative and qualitative. Then the authors address each sort of data individually, first focusing on how to prepare and analyse quantitative data, and second, qualitative data. Essential statistical terms are defined, providing the reader with the basic instruments and techniques. Examples on how to interpret descriptives, correlation coefficients, associations between variables, predict cause‐effect relationships, or how to transcript an interview are provided, facilitating the understanding of those terms that the reader may not yet be familiar with. Screenshots of the most commonly used software packages for processing data are also introduced (i.e. SPSS, ATLAS.it, NVivo).

Writing an effective research proposal is a vital part of the research process. In the eighth and last chapter, the authors provide some insightful comments on the writing style students should adopt when compiling their research proposal and suggest some of the criteria against which the quality of the research project may be assessed.

Although each research process has its own particularities and layout, to a great extent, the content of a research project tends to follow a standardized structure: the title; an abstract; an introduction section presenting the research question(s); a review of the literature ending with the formulation of the hypotheses to be tested and the statement of the research objectives; a method section detailing how the research will be carried out; a discussion of the results; the conclusions and limitations of the study; and a list of the cited references. By way of conclusion, two research proposals are presented exemplifying all the aspects and issues discussed throughout the book.

Although the content of this book is quite predictable for a book of this type, it enables an effective learning process, representing a very useful guide for students planning or undertaking a research project or a dissertation in the fields of business and management. An eminently practical approach and a language free of an excessive use of technical terms helps students obtaining a thorough understanding of the main methodological issues a research project entails.

Therefore, taken as a whole, the value and rigour of this book is unquestionable, underpinning the strength of this publication.

A About the reviewer

Jasmina Berbegal‐Mirabent (PhD) received the MS degrees in Industrial Engineering and Industrial Scheduling, both from UPC BarcelonaTech (Spain) in 2008 and 2009, respectively. She is now working as an Associate Professor at the Department of Management at the UPC BarcelonaTech. She has been a Visiting Research Associate at the Institute of Education at the University of London. She has published her works in international and peer‐reviewed journals such as The Service Industries Journal , Management Decision , Journal of Technology Management & Innovation , Intangible Capital and Economía Industrial . She has recently been named Book Review Editor of Management Decision , and she is also on the editorial board of the Journal of Industrial Engineering and Management . Her research interests are in the areas of the management of higher education institutions and their role in regional development; academic entrepreneurship; and technology transfer. Jasmina Berbegal‐Mirabent can be contacted at: [email protected]

Academy of Management ( n.d. ), “Code of ethics”, available at: www.aomonline.org/aomPrint.asp?ID=268&page_ID=240 (accessed 19 July 2012).

Berg , B.L. and Lune , H. ( 2008 ), Qualitative Research Methods for the Social Sciences , 8th ed., international edition, , Person Education , Boston, MA .

Bryman , A. and Bell , E. ( 2011 ), Business Research Methods , 3rd ed. , Oxford University Press , New York, NY .

Clough , P. and Nutbrown , C. ( 2008 ), A Student's Guide to Methodology , 2nd ed. , Sage Publications , London .

Cooper , D.R. and Schindler , P.S. ( 2011 ), Business Research Methods , 11th ed. , McGraw‐Hill Companies , New York, NY .

Corbin , J. and Strauss , A. ( 2008 ), Basics of Qualitative Research: Techniques and Procedures for Developing Grounded Theory , 3rd ed. , Sage Publications , London .

Creswell , J.W. ( 2009 ), Research Design: Qualitative, Quantitative, and Mixed Methods Approaches , 3rd ed. , Sage Publications , Thousand Oaks, CA .

Flick , U. ( 2011 ), Introducing Research Methodology: A Beginner's Guide to Doing a Research , Sage Publications , Los Angeles, CA .

Frechtling , D.C. and Boo , S. ( 2012 ), “ On the ethics of management research: an exploratory investigation ”, Journal of Business Ethics , Vol. 106 No. 2 , pp. 149 ‐ 160 .

Harvard College Library ( 2006 ), “Interrogating text: 6 reading habits to develop in your first year at Harvard”, available at: http://hcl.harvard.edu/research/guides/lamont_handouts/interrogatingtexts.html (accessed 18 July 2012).

Marshall , C. and Rossman , G.B. ( 2010 ), Designing Qualitative Research , 5th ed. , Sage Publications , London .

Miles , M.B. and Huberman , A.M. ( 1994 ), Qualitative Data Analysis: An Expanded Sourcebook , 2nd ed. , Sage Publications , Beverly Hills, CA .

Payne , S.L. ( 2000 ), “ Challenges for research ethics and moral knowledge construction in the applied social sciences ”, Journal of Business Ethics , Vol. 26 No. 4 , pp. 307 ‐ 318 .

Saunders , M. , Lewis , P. and Thornhill , A. ( 2009 ), Research Methods for Business Students , 5th ed. , Pearson Education , Harlow .

Sekaran , U. ( 2010 ), Research Methods for Business: A Skill Building Approach , 5th ed. , John Wiley & Sons , New York, NY .

Ventresca , M.J. and Mohr , J.W. ( 2002 ), “ Archival research methods ”, in Baum , J.A.C. (Ed.), Companion to Organizations , Blackwell , New York, NY , pp. 805 ‐ 828 .

Yin , R.K. ( 2009 ), Case Study Research: Design and Methods , 5th ed. , Sage Publications , London .

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Business Research: It’s Meaning, Process and Objectives

Meaning of business research.

Business research is the process of studying a company’s competitors, stakeholders, and profit & loss to meet the company objectives and maximize revenue & profits. 

The research involves identifying the target market, estimating their current needs & wants, and then conducting product planning to meet those demands. 

Business research is neither a pre-product launch nor a post-product launch analysis. Companies continuously conduct market research relating to their political environment, social demands, technological needs, competitors’ entry, etc. so that they can keep improving their products and continue to survive even in the fiercest times. 

Objectives of Business Research

Understanding customer requirements, defining stakeholders.

Business research helps to differentiate between potential and non-potential customers. This way the company can quantify its market reach and conduct surveys amongst some of its customers related to their tastes and type. This will help them gain feedback from their customers which they can add back as features in their products! 

Pain & Gain Points

Rival study, scope of business research.

Business Research has wide scope in deciding a particular product’s journey in the market. 

Nature of Business Research

In a nutshell, it gives proposals to companies on expansion and growth in customer base.

Process of Business Research

Identification of challenge, creating research proposal, execution of research.

Once the plan is made and the research proposal is developed, the company can toss alternative ways they can execute the research. The company can forward with research by random sampling (mass media survey) or can rely on previously collected data too. 

Interpretation of Data

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research and development , in industry , two intimately related processes by which new products and new forms of old products are brought into being through technological innovation .

Research and development, a phrase unheard of in the early part of the 20th century, has since become a universal watchword in industrialized nations. The concept of research is as old as science; the concept of the intimate relationship between research and subsequent development, however, was not generally recognized until the 1950s. Research and development is the beginning of most systems of industrial production. The innovations that result in new products and new processes usually have their roots in research and have followed a path from laboratory idea, through pilot or prototype production and manufacturing start-up, to full-scale production and market introduction. The foundation of any innovation is an invention . Indeed, an innovation might be defined as the application of an invention to a significant market need. Inventions come from research—careful, focused, sustained inquiry, frequently trial and error. Research can be either basic or applied, a distinction that was established in the first half of the 20th century.

Basic research is defined as the work of scientists and others who pursue their investigations without conscious goals, other than the desire to unravel the secrets of nature. In modern programs of industrial research and development, basic research (sometimes called pure research) is usually not entirely “pure”; it is commonly directed toward a generalized goal, such as the investigation of a frontier of technology that promises to address the problems of a given industry. An example of this is the research being done on gene splicing or cloning in pharmaceutical company laboratories.

Applied research carries the findings of basic research to a point where they can be exploited to meet a specific need, while the development stage of research and development includes the steps necessary to bring a new or modified product or process into production. In Europe , the United States , and Japan the unified concept of research and development has been an integral part of economic planning , both by government and by private industry.

The first organized attempt to harness scientific skill to communal needs took place in the 1790s, when the young revolutionary government in France was defending itself against most of the rest of Europe. The results were remarkable. Explosive shells, the semaphore telegraph, the captive observation balloon, and the first method of making gunpowder with consistent properties all were developed during this period.

The lesson was not learned permanently, however, and another half century was to pass before industry started to call on the services of scientists to any serious extent. At first the scientists consisted of only a few gifted individuals. Robert W. Bunsen, in Germany, advised on the design of blast furnaces. William H. Perkin, in England, showed how dyes could be synthesized in the laboratory and then in the factory. William Thomson (Lord Kelvin), in Scotland, supervised the manufacture of telecommunication cables. In the United States, Leo H. Baekeland, a Belgian, produced Bakelite, the first of the plastics. There were inventors, too, such as John B. Dunlop, Samuel Morse, and Alexander Graham Bell , who owed their success more to intuition , skill, and commercial acumen than to scientific understanding.

While industry in the United States and most of western Europe was still feeding on the ideas of isolated individuals, in Germany a carefully planned effort was being mounted to exploit the opportunities that scientific advances made possible. Siemens, Krupp, Zeiss, and others were establishing laboratories and, as early as 1900, employed several hundred people on scientific research. In 1870 the Physicalische Technische Reichsanstalt (Imperial Institute of Physics and Technology) was set up to establish common standards of measurement throughout German industry. It was followed by the Kaiser Wilhelm Gesellschaft (later renamed the Max Planck Society for the Advancement of Science), which provided facilities for scientific cooperation between companies.

In the United States, the Cambria Iron Company set up a small laboratory in 1867, as did the Pennsylvania Railroad in 1875. The first case of a laboratory that spent a significant part of its parent company’s revenues was that of the Edison Electric Light Company, which employed a staff of 20 in 1878. The U.S. National Bureau of Standards was established in 1901, 31 years after its German counterpart, and it was not until the years immediately preceding World War I that the major American companies started to take research seriously. It was in this period that General Electric , Du Pont, American Telephone & Telegraph, Westinghouse, Eastman Kodak, and Standard Oil set up laboratories for the first time.

Except for Germany, progress in Europe was even slower. When the National Physical Laboratory was founded in England in 1900, there was considerable public comment on the danger to Britain’s economic position of German dominance in industrial research, but there was little action. Even in France, which had an outstanding record in pure science , industrial penetration was negligible.

World War I produced a dramatic change. Attempts at rapid expansion of the arms industry in the belligerent as well as in most of the neutral countries exposed weaknesses in technology as well as in organization and brought an immediate appreciation of the need for more scientific support. The Department of Scientific and Industrial Research in the United Kingdom was founded in 1915, and the National Research Council in the United States in 1916. These bodies were given the task of stimulating and coordinating the scientific support to the war effort, and one of their most important long-term achievements was to convince industrialists, in their own countries and in others, that adequate and properly conducted research and development were essential to success.

At the end of the war the larger companies in all the industrialized countries embarked on ambitious plans to establish laboratories of their own; and, in spite of the inevitable confusion in the control of activities that were novel to most of the participants, there followed a decade of remarkable technical progress. The automobile, the airplane, the radio receiver, the long-distance telephone, and many other inventions developed from temperamental toys into reliable and efficient mechanisms in this period. The widespread improvement in industrial efficiency produced by this first major injection of scientific effort went far to offset the deteriorating financial and economic situation.

The economic pressures on industry created by the Great Depression reached crisis levels by the early 1930s, and the major companies started to seek savings in their research and development expenditure. It was not until World War II that the level of effort in the United States and Britain returned to that of 1930. Over much of the European continent the depression had the same effect, and in many countries the course of the war prevented recovery after 1939. In Germany Nazi ideology tended to be hostile to basic scientific research, and effort was concentrated on short-term work.

The picture at the end of World War II provided sharp contrasts. In large parts of Europe industry had been devastated, but the United States was immensely stronger than ever before. At the same time the brilliant achievements of the men who had produced radar, the atomic bomb , and the V-2 rocket had created a public awareness of the potential value of research that ensured it a major place in postwar plans. The only limit was set by the shortage of trained persons and the demands of academic and other forms of work.

Since 1945 the number of trained engineers and scientists in most industrial countries has increased each year. The U.S. effort has stressed aircraft, defense, space, electronics , and computers. Indirectly, U.S. industry in general has benefited from this work, a situation that compensates in part for the fact that in specifically nonmilitary areas the number of persons employed in the United States is lower in relation to population than in a number of other countries.

Outside the air, space, and defense fields the amount of effort in different industries follows much the same pattern in different countries, a fact made necessary by the demands of international competition. (An exception was the former Soviet Union , which devoted less R and D resources to nonmilitary programs than most other industrialized nations.) An important point is that countries like Japan, which have no significant aircraft or military space industries, have substantially more manpower available for use in the other sectors. The preeminence of Japan in consumer electronics, cameras, and motorcycles and its strong position in the world automobile market attest to the success of its efforts in product innovation and development.

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Home Market Research

Market Research: What it Is, Methods, Types & Examples

Would you like to know why, how, and when to apply market research? Do you want to discover why your consumers are not buying your products? Are you interested in launching a new product, service, or even a new marketing campaign, but you’re not sure what your consumers want?

LEARN ABOUT: Market research vs marketing research

To answer the questions above, you’ll need help from your consumers. But how will you collect that data? In this case and in many other situations in your business, market research is the way to get all the answers you need.

In this ultimate guide about market research, you’ll find the definition, advantages, types of market research, and some examples that will help you understand this type of research. Don’t forget to download the free ebook available at the end of this guide!

LEARN ABOUT: Perceived Value

Content Index

Three key objectives of market research

Why is market research important.

• Types of Market Research: Methods and Examples

Steps for conducting Market Research

Benefits of an efficient market research, 5 market research tips for businesses, why does every business need market research, free market research ebook, what is market research.

Market research is a technique that is used to collect data on any aspect that you want to know to be later able to interpret it and, in the end, make use of it for correct decision-making.

Another more specific definition could be the following:

Market research is the process by which companies seek to collect data systematically to make better decisions. Still, its true value lies in the way in which all the data obtained is used to achieve a better knowledge of the market consumer.

The process of market research can be done through deploying surveys , interacting with a group of people, also known as a sample , conducting interviews, and other similar processes.  

The primary purpose of conducting market research is to understand or examine the market associated with a particular product or service to decide how the audience will react to a product or service. The information obtained from conducting market research can be used to tailor marketing/ advertising activities or determine consumers’ feature priorities/service requirement (if any).

LEARN ABOUT: Consumer Surveys

Conducting research is one of the best ways of achieving customer satisfaction , reducing customer churn and elevating business. Here are the reasons why market research is important and should be considered in any business:

• Valuable information: It provides information and opportunities about the value of existing and new products, thus, helping businesses plan and strategize accordingly.
• Customer-centric: It helps to determine what the customers need and want. Marketing is customer-centric and understanding the customers and their needs will help businesses design products or services that best suit them. Remember that tracing your customer journey is a great way to gain valuable insights into your customers’ sentiments toward your brand.
• Forecasts: By understanding the needs of customers, businesses can also forecast their production and sales. Market research also helps in determining optimum inventory stock.
• Competitive advantage: To stay ahead of competitors market research is a vital tool to carry out comparative studies. Businesses can devise business strategies that can help them stay ahead of their competitors.

LEARN ABOUT: Data Analytics Projects

Types of Market Research: Market Research Methods and Examples

Whether an organization or business wishes to know the purchase behavior of consumers or the likelihood of consumers paying a certain cost for a product segmentation , market research helps in drawing meaningful conclusions.

LEARN ABOUT: Behavioral Targeting

Depending on the methods and tools required, the following are the types:

1. Primary Market Research (A combination of both Qualitative and Quantitative Research):

Primary market research is a process where organizations or businesses get in touch with the end consumers or employ a third party to carry out relevant studies to collect data. The data collected can be qualitative data (non-numerical data) or quantitative data (numerical or statistical data).

While conducting primary market research, one can gather two types of information: Exploratory and Specific. Exploratory research is open-ended, where a problem is explored by asking open ended questions in a detailed interview format usually with a small group of people, also known as a sample. Here the sample size is restricted to 6-10 members. Specific research, on the other hand, is more pinpointed and is used to solve the problems that are identified by exploratory research.

LEARN ABOUT: Marketing Insight

As mentioned earlier, primary market research is a combination of qualitative market research and quantitative market research. Qualitative market research study involves semi-structured or unstructured data collected through some of the commonly used qualitative research methods like:

Focus groups :

Focus group is one of the commonly used qualitative research methods. Focus group is a small group of people (6-10) who typically respond to online surveys sent to them. The best part about a focus group is the information can be collected remotely, can be done without personally interacting with the group members. However, this is a more expensive method as it is used to collect complex information.

One-to-one interview:

As the name suggests, this method involves personal interaction in the form of an interview, where the researcher asks a series of questions to collect information or data from the respondents. The questions are mostly open-ended questions and are asked to facilitate responses. This method heavily depends on the interviewer’s ability and experience to ask questions that evoke responses.

Ethnographic research :

This type of in-depth research is conducted in the natural settings of the respondents. This method requires the interviewer to adapt himself/herself to the natural environment of the respondents which could be a city or a remote village. Geographical constraints can be a hindering market research factor in conducting this kind of research. Ethnographic research can last from a few days to a few years.

Organizations use qualitative research methods to conduct structured market research by using online surveys , questionnaires , and polls to gain statistical insights to make informed decisions.

LEARN ABOUT: Qualitative Interview

This method was once conducted using pen and paper. This has now evolved to sending structured online surveys to the respondents to gain actionable insights. Researchers use modern and technology-oriented survey platforms to structure and design their survey to evoke maximum responses from respondents.

Through a well-structured mechanism, data is easily collected and reported, and necessary action can be taken with all the information made available firsthand.

Learn more: How to conduct quantitative research

2. Secondary Market Research:

Secondary research uses information that is organized by outside sources like government agencies, media, chambers of commerce etc. This information is published in newspapers, magazines, books, company websites, free government and nongovernment agencies and so on. The secondary source makes use of the following:

• Public sources: Public sources like library are an awesome way of gathering free information. Government libraries usually offer services free of cost and a researcher can document available information.
• Commercial sources: Commercial source although reliable are expensive. Local newspapers, magazines, journal, television media are great commercial sources to collect information.
• Educational Institutions: Although not a very popular source of collecting information, most universities and educational institutions are a rich source of information as many research projects are carried out there than any business sector.

Learn more: Market Research Example with Types and Methods

A market research project may usually have 3 different types of objectives.

• Administrative : Help a company or business development, through proper planning, organization, and both human and material resources control, and thus satisfy all specific needs within the market, at the right time.
• Social : Satisfy customers’ specific needs through a required product or service. The product or service should comply with a customer’s requirements and preferences when consumed.
• Economical : Determine the economical degree of success or failure a company can have while being new to the market, or otherwise introducing new products or services, thus providing certainty to all actions to be implemented.

LEARN ABOUT:  Test Market Demand

Knowing what to do in various situations that arise during the investigation will save the researcher time and reduce research problems . Today’s successful enterprises use powerful market research survey software that helps them conduct comprehensive research under a unified platform, providing actionable insights much faster with fewer problems.

LEARN ABOUT:  Market research industry

Following are the steps to conduct effective market research.

Step #1: Define the Problem

Having a well-defined subject of research will help researchers when they ask questions. These questions should be directed to solve problems and must be adapted to the project. Make sure the questions are written clearly and that the respondents understand them. Researchers can conduct a marketing test with a small group to know if the questions are going to know whether the asked questions are understandable and if they will be enough to gain insightful results.

Research objectives should be written in a precise way and should include a brief description of the information that is needed and the way in which it will obtain it. They should have an answer to this question “why are we doing the research?”

Learn more: Interview Questions

Step #2: Define the Sample

To carry out market research, researchers need a representative sample that can be collected using one of the many sampling techniques . A representative sample is a small number of people that reflect, as accurately as possible, a larger group.

• An organization cannot waste their resources in collecting information from the wrong population. It is important that the population represents characteristics that matter to the researchers and that they need to investigate, are in the chosen sample.
• Take into account that marketers will always be prone to fall into a bias in the sample because there will always be people who do not answer the survey because they are busy, or answer it incompletely, so researchers may not obtain the required data.
• Regarding the size of the sample, the larger it is, the more likely it is to be representative of the population. A larger representative sample gives the researcher greater certainty that the people included are the ones they need, and they can possibly reduce bias. Therefore, if they want to avoid inaccuracy in our surveys, they should have representative and balanced samples.
• Practically all the surveys that are considered in a serious way, are based on a scientific sampling, based on statistical and probability theories.

There are two ways to obtain a representative sample:

• Probability sampling : In probability sampling , the choice of the sample will be made at random, which guarantees that each member of the population will have the same probability of selection bias and inclusion in the sample group. Researchers should ensure that they have updated information on the population from which they will draw the sample and survey the majority to establish representativeness.
• Non-probability sampling : In a non-probability sampling , different types of people are seeking to obtain a more balanced representative sample. Knowing the demographic characteristics of our group will undoubtedly help to limit the profile of the desired sample and define the variables that interest the researchers, such as gender, age, place of residence, etc. By knowing these criteria, before obtaining the information, researchers can have the control to create a representative sample that is efficient for us.

When a sample is not representative, there can be a margin of error . If researchers want to have a representative sample of 100 employees, they should choose a similar number of men and women.

The sample size is very important, but it does not guarantee accuracy. More than size, representativeness is related to the sampling frame , that is, to the list from which people are selected, for example, part of a survey.

LEARN ABOUT: Behavioral Research If researchers want to continue expanding their knowledge on how to determine the size of the sample consult our guide on sampling here.

Step #3: Carry out data collection

First, a data collection instrument should be developed. The fact that they do not answer a survey, or answer it incompletely will cause errors in research. The correct collection of data will prevent this.

Step #4: Analyze the results

Each of the points of the market research process is linked to one another. If all the above is executed well, but there is no accurate analysis of the results, then the decisions made consequently will not be appropriate. In-depth analysis conducted without leaving loose ends will be effective in gaining solutions. Data analysis will be captured in a report, which should also be written clearly so that effective decisions can be made on that basis.

Analyzing and interpreting the results is to look for a wider meaning to the obtained data. All the previous phases have been developed to arrive at this moment. How can researchers measure the obtained results? The only quantitative data that will be obtained is age, sex, profession, and number of interviewees because the rest are emotions and experiences that have been transmitted to us by the interlocutors. For this, there is a tool called empathy map that forces us to put ourselves in the place of our clientele with the aim of being able to identify, really, the characteristics that will allow us to make a better adjustment between our products or services and their needs or interests. When the research has been carefully planned, the hypotheses have been adequately defined and the indicated collection method has been used, the interpretation is usually carried out easily and successfully. What follows after conducting market research?

Learn more: Types of Interviews

Step #5: Make the Research Report

When presenting the results, researchers should focus on: what do they want to achieve using this research report and while answering this question they should not assume that the structure of the survey is the best way to do the analysis. One of the big mistakes that many researchers make is that they present the reports in the same order of their questions and do not see the potential of storytelling.

To make good reports, the best analysts give the following advice: follow the inverted pyramid style to present the results, answering at the beginning the essential questions of the business that caused the investigation. Start with the conclusions and give them fundamentals, instead of accumulating evidence. After this researchers can provide details to the readers who have the time and interest.

Step #6: Make Decisions

An organization or a researcher should never ask “why do market research”, they should just do it! Market research helps researchers to know a wide range of information, for example,  consumer purchase intentions, or gives feedback about the growth of the target market. They can also discover valuable information that will help in estimating the prices of their product or service and find a point of balance that will benefit them and the consumers.

Take decisions! Act and implement.

Learn more: Quantitative Research

• Make well-informed decisions: The growth of an organization is dependent on the way decisions are made by the management. Using market research techniques, the management can make business decisions based on obtained results that back their knowledge and experience. Market research helps to know market trends, hence to carry it out frequently to get to know the customers thoroughly.

LEARN ABOUT: Research Process Steps

• Gain accurate information: Market research provides real and accurate information that will prepare the organization for any mishaps that may happen in the future. By properly investigating the market, a business will undoubtedly be taking a step forward, and therefore it will be taking advantage of its existing competitors.
• Determine the market size: A researcher can evaluate the size of the market that must be covered in case of selling a product or service in order to make profits.
• Choose an appropriate sales system: Select a precise sales system according to what the market is asking for, and according to this, the product/service can be positioned in the market.
• Learn about customer preferences: It helps to know how the preferences (and tastes) of the clients change so that the company can satisfy preferences, purchasing habits, and income levels. Researchers can determine the type of product that must be manufactured or sold based on the specific needs of consumers.
• Gather details about customer perception of the brand: In addition to generating information, market research helps a researcher in understanding how the customers perceive the organization or brand.
• Analyze customer communication methods: Market research serves as a guide for communication with current and potential clients.
• Productive business investment: It is a great investment for any business because thanks to it they get invaluable information, it shows researchers the way to follow to take the right path and achieve the sales that are required.

LEARN ABOUT: Total Quality Management

The following tips will help businesses with creating a better market research strategy.

Tip #1: Define the objective of your research.

Before starting your research quest, think about what you’re trying to achieve next with your business. Are you looking to increase traffic to your location? Or increase sales? Or convert customers from one-time purchasers to regulars? Figuring out your objective will help you tailor the rest of your research and your future marketing materials. Having an objective for your research will flesh out what kind of data you need to collect.

Tip #2: Learn About Your Target Customers.

The most important thing to remember is that your business serves a specific kind of customer. Defining your specific customer has many advantages like allowing you to understand what kind of language to use when crafting your marketing materials, and how to approach building relationships with your customer. When you take time to define your target customer you can also find the best products and services to sell to them.

You want to know as much as you can about your target customer. You can gather this information through observation and by researching the kind of customers who frequent your type of business. For starters, helpful things to know are their age and income. What do they do for a living? What’s their marital status and education level?

Learn more: Customer Satisfaction

Tip #3: Recognize that knowing who you serve helps you define who you do not.

Let’s take a classic example from copywriting genius Dan Kennedy. He says that if you’re opening up a fine dining steakhouse focused on decadent food, you know right off the bat that you’re not looking to attract vegetarians or dieters. Armed with this information, you can create better marketing messages that speak to your target customers.

It’s okay to decide who is not a part of your target customer base. In fact, for small businesses knowing who you don’t cater to can be essential in helping you grow. Why? Simple, if you’re small your advantage is that you can connect deeply with a specific segment of the market. You want to focus your efforts on the right customer who already is compelled to spend money on your offer.

If you’re spreading yourself thin by trying to be all things to everyone, you will only dilute your core message. Instead, keep your focus on your target customer. Define them, go deep, and you’ll be able to figure out how you can best serve them with your products and services.

Tip #4: Learn from your competition.

This works for brick-and-mortar businesses as well as internet businesses because it allows you to step into the shoes of your customer and open up to a new perspective of your business. Take a look around the internet and around your town. If you can, visit your competitor’s shops. For example, if you own a restaurant specializing in Italian cuisine, dine at the other Italian place in your neighborhood or in the next township.

As you experience the business from the customer’s perspective, look for what’s being done right and wrong.

Can you see areas that need attention or improvement? How are you running things in comparison? What’s the quality of their product and customer service ? Are the customers here pleased? Also, take a close look at their market segment. Who else is patronizing their business? Are they the same kinds of people who spend money with you? By asking these questions and doing in-person research, you can dig up a lot of information to help you define your unique selling position and create even better offers for your customers.

Tip #5: Get your target customers to open up and tell you everything.

A good customer survey is one of the most valuable market research tools because it gives you the opportunity to get inside your customer’s head. However, remember that some feedback may be harsh, so take criticism as a learning tool to point you in the right direction.

Creating a survey is simple. Ask questions about what your customer thinks you’re doing right and what can be improved. You can also prompt them to tell you what kinds of products and services they’d like to see you add, giving you fantastic insight into how to monetize your business more. Many customers will be delighted to offer feedback. You can even give customers who fill out surveys a gift like a special coupon for their next purchase.

Bonus Tip: Use an insight & research repository

An insight & research repository is a consolidated research management platform to derive insights about past and ongoing market research. With the use of such a tool, you can leverage past research to get to insights faster, build on previously done market research and draw trendlines, utilize research techniques that have worked in the past, and more.

Market research is one of the most effective ways to gain insight into your customer base , competitors , and the overall market. The goal of conducting market research is to equip your company with the information you need to make informed decisions.

It is especially important when small businesses are trying to determine whether a new business idea is viable, looking to move into a new market, or are launching a new product or service.  Read below for a more in-depth look at how market research can help small businesses.

• COMPETITION According to a study conducted by Business Insider, 72% of small businesses focus on increasing revenue. Conducting research helps businesses gain insight into competitor behavior. By learning about your competitor’s strengths and weaknesses, you can learn how to position your product or offering. In order to be successful, small businesses need to have an understanding of what products and services competitors are offering, and their price point.

Learn more: Trend Analysis

• CUSTOMERS Many small businesses feel they need to understand their customers, only to conduct market research and learn they had the wrong assumptions. By researching, you can create a profile of your average customer and gain insight into their buying habits, how much they’re willing to spend, and which features resonate with them. Additionally, and perhaps more importantly, you can learn what will make someone use your product or service over a competitor.

Learn more: Customer Satisfaction Survey

• OPPORTUNITIES Potential opportunities, whether they are products or services, can be identified by conducting market research. By learning more about your customers, you can gather insights into complementary products and services. Consumer needs change over time, influenced by new technology and different conditions, and you may find new needs that are not being met, which can create new opportunities for your business.

Learn more: SWOT Analysis 

• FORECAST A small business is affected by the performance of the local and national economy, as are its’ customers. If consumers are worried, then they will be more restrained when spending money, which affects the business. By conducting research with consumers, businesses can get an idea of whether they are optimistic or apprehensive about the direction of the economy, and make adjustments as necessary. For example, a small business owner may decide to postpone a new product launch if it appears the economic environment is turning negative.

Learn more: 300+ Market Research Survey Questionnaires

Market research and market intelligence may be as complex as the needs that each business or project has. The steps are usually the same. We hope this ultimate guide helps you have a better understanding of how to make your own market research project to gather insightful data and make better decisions.

LEARN ABOUT: Projective Techniques

We appreciate you taking the time to read this ultimate guide. We hope it was helpful! 

You can now download our free ebook that will guide you through a market research project, from the planning stage to the presentation of the outcomes and their analysis.

Sign up now, and download our free ebook: The Hacker’s Guide to Advanced Research Methodologies 

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Methodology

Research Methods | Definitions, Types, Examples

Research methods are specific procedures for collecting and analyzing data. Developing your research methods is an integral part of your research design . When planning your methods, there are two key decisions you will make.

First, decide how you will collect data . Your methods depend on what type of data you need to answer your research question :

• Qualitative vs. quantitative : Will your data take the form of words or numbers?
• Primary vs. secondary : Will you collect original data yourself, or will you use data that has already been collected by someone else?
• Descriptive vs. experimental : Will you take measurements of something as it is, or will you perform an experiment?

Second, decide how you will analyze the data .

• For quantitative data, you can use statistical analysis methods to test relationships between variables.
• For qualitative data, you can use methods such as thematic analysis to interpret patterns and meanings in the data.

Table of contents

Methods for collecting data, examples of data collection methods, methods for analyzing data, examples of data analysis methods, other interesting articles, frequently asked questions about research methods.

Data is the information that you collect for the purposes of answering your research question . The type of data you need depends on the aims of your research.

Qualitative vs. quantitative data

Your choice of qualitative or quantitative data collection depends on the type of knowledge you want to develop.

For questions about ideas, experiences and meanings, or to study something that can’t be described numerically, collect qualitative data .

If you want to develop a more mechanistic understanding of a topic, or your research involves hypothesis testing , collect quantitative data .

You can also take a mixed methods approach , where you use both qualitative and quantitative research methods.

Primary vs. secondary research

Primary research is any original data that you collect yourself for the purposes of answering your research question (e.g. through surveys , observations and experiments ). Secondary research is data that has already been collected by other researchers (e.g. in a government census or previous scientific studies).

If you are exploring a novel research question, you’ll probably need to collect primary data . But if you want to synthesize existing knowledge, analyze historical trends, or identify patterns on a large scale, secondary data might be a better choice.

Descriptive vs. experimental data

In descriptive research , you collect data about your study subject without intervening. The validity of your research will depend on your sampling method .

In experimental research , you systematically intervene in a process and measure the outcome. The validity of your research will depend on your experimental design .

To conduct an experiment, you need to be able to vary your independent variable , precisely measure your dependent variable, and control for confounding variables . If it’s practically and ethically possible, this method is the best choice for answering questions about cause and effect.

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Your data analysis methods will depend on the type of data you collect and how you prepare it for analysis.

Data can often be analyzed both quantitatively and qualitatively. For example, survey responses could be analyzed qualitatively by studying the meanings of responses or quantitatively by studying the frequencies of responses.

Qualitative analysis methods

Qualitative analysis is used to understand words, ideas, and experiences. You can use it to interpret data that was collected:

• From open-ended surveys and interviews , literature reviews , case studies , ethnographies , and other sources that use text rather than numbers.
• Using non-probability sampling methods .

Qualitative analysis tends to be quite flexible and relies on the researcher’s judgement, so you have to reflect carefully on your choices and assumptions and be careful to avoid research bias .

Quantitative analysis methods

Quantitative analysis uses numbers and statistics to understand frequencies, averages and correlations (in descriptive studies) or cause-and-effect relationships (in experiments).

You can use quantitative analysis to interpret data that was collected either:

• During an experiment .
• Using probability sampling methods .

Because the data is collected and analyzed in a statistically valid way, the results of quantitative analysis can be easily standardized and shared among researchers.

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If you want to know more about statistics , methodology , or research bias , make sure to check out some of our other articles with explanations and examples.

• Chi square test of independence
• Statistical power
• Descriptive statistics
• Degrees of freedom
• Pearson correlation
• Null hypothesis
• Double-blind study
• Case-control study
• Research ethics
• Data collection
• Hypothesis testing
• Structured interviews

Research bias

• Hawthorne effect
• Unconscious bias
• Recall bias
• Halo effect
• Self-serving bias
• Information bias

Quantitative research deals with numbers and statistics, while qualitative research deals with words and meanings.

Quantitative methods allow you to systematically measure variables and test hypotheses . Qualitative methods allow you to explore concepts and experiences in more detail.

In mixed methods research , you use both qualitative and quantitative data collection and analysis methods to answer your research question .

A sample is a subset of individuals from a larger population . Sampling means selecting the group that you will actually collect data from in your research. For example, if you are researching the opinions of students in your university, you could survey a sample of 100 students.

In statistics, sampling allows you to test a hypothesis about the characteristics of a population.

The research methods you use depend on the type of data you need to answer your research question .

• If you want to measure something or test a hypothesis , use quantitative methods . If you want to explore ideas, thoughts and meanings, use qualitative methods .
• If you want to analyze a large amount of readily-available data, use secondary data. If you want data specific to your purposes with control over how it is generated, collect primary data.
• If you want to establish cause-and-effect relationships between variables , use experimental methods. If you want to understand the characteristics of a research subject, use descriptive methods.

Methodology refers to the overarching strategy and rationale of your research project . It involves studying the methods used in your field and the theories or principles behind them, in order to develop an approach that matches your objectives.

Methods are the specific tools and procedures you use to collect and analyze data (for example, experiments, surveys , and statistical tests ).

In shorter scientific papers, where the aim is to report the findings of a specific study, you might simply describe what you did in a methods section .

In a longer or more complex research project, such as a thesis or dissertation , you will probably include a methodology section , where you explain your approach to answering the research questions and cite relevant sources to support your choice of methods.

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What Is Research and Development (R&D)? Definition and Guide

Learn the definition of research and development, the types of R&D, and the benefits and risks of investing in research and development for your business

When it comes to the products and ideas that revolutionize and reshape our world, it can be tempting to imagine them springing from a singular moment of inspiration (think Isaac Newton and the apple).

The truth, however, is that in any industry, the most innovative and successful products are typically the result of years of study, experimentation, and hard work. That process is known as research and development—and whether you're running a high-tech Fortune 500 company or a small online store, it can be the first step to incredible success.

In this guide, you'll learn the definition of research and development, as well as the potential benefits and risks of investing in the practice.

What is research and development?

Research and Development is a systematic activity that companies undertake to innovate and introduce new products and services or to improve their existing offerings. 

Many people think of pharmaceutical and technology companies when they hear “R&D,” but other firms, including those that produce consumer products, invest time and resources into R&D as well. For example, a spaghetti sauce brand's many variations on the original product – “Chunky Garden,” “Four Cheese,” and “Tomato Basil Garlic”– are the results of extensive R&D.

Any business that creates and sells a product or service, whether it's software or spark plugs,  invests in some level of R&D .

Basic vs. applied research

Research and development comes in two main types: basic, and applied.

Basic research

Basic research (also known as fundamental research) is focused on improving our understanding of a particular problem or phenomenon through exploration of big questions. Some examples of basic research questions are:

• Why do mice get caught in traps?
• Why are some people allergic to gluten?

While basic research can certainly help a company acquire new knowledge, its focus on research for its own sake means that the financial benefits are uncertain. Consequently, this type of research and development is primarily performed by large corporations, universities, and government agencies.

Applied research

Applied research is also done to acquire knowledge. But unlike basic research, it's done with a specific goal, use, or product in mind. Where basic research is theoretical, applied research is practical, with a focus on finding workable solutions for current problems. Some examples of applied research questions include:

• How can we build a better mousetrap?
• What combination of flours will produce the best gluten-free pie crust?

Why invest in research and development?

While the overarching goal of research and development is to add to a company's bottom line, companies undertake R&D for a variety of reasons.

• Create new and improved products: Whether you're starting a new company, or looking to expand your existing offerings, innovation research can help you meet customer demands for new and better products that solve their problems more quickly and easily.
• Increase business efficiency: R&D can help you gain knowledge about your production processes, business structure, and place in the market, providing insights that increase productivity by eliminating time-consuming inefficiencies and allocating resources to the most impactful projects.
• Reduce costs: Profits aren't the only way that research and development can pay off. In fact, many companies focus their R&D on improving existing technologies and processes for internal use, reducing the overall cost of bringing your products to market.
• Remain competitive: Research and development is a great way to stay ahead of the competition . By investing in emerging technologies that improve your products, you can gain a competitive edge over even the most established firms.
• Secure investment: Even if your research efforts aren't immediately profitable, they may point to future innovations or developments that investors are excited to support.

Who handles research and development?

Often, research and development is handled in house by an internal department in a company, but it can also be outsourced to a specialist or a university. Large multinational companies might do all three, and some of the outsourced work might be done in another country so that the company leverages both the talent and local market knowledge there.

Outsourced R&D is especially appealing to the small business owner who has a new product concept but lacks the design or engineering staff needed to create and test options. Solopreneurs who offer software as a service are an example on the smallest scale, as they sometimes outsource the R&D and resulting software development.

R&D and accounting

There are no guarantees when it comes to research and development, and it's very unlikely to lead to an immediate profit. Often, a company will spend a large amount of money in search of a better method, material, or medication, and never see a return on the investment. In this sense R&D is not an asset: it's a business  expense . For that reason, general  accounting  standards and practices dictate that most (but not all) costs associated with research and development be charged to expense as incurred.

That said, businesses can mitigate some of the impacts of research and development by leveraging federal tax breaks and deductions focused on promoting R&D.

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Research and development FAQ

What does r&d stand for, why is research and development important, what are the challenges of research and development, what is the difference between r&d and product development.

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What Is Research and Development?

• Understanding R&D
• Types of R&D
• Pros and Cons
• Considerations
• R&D vs. Applied Research
• R&D Tax Credits

The Bottom Line

• Business Essentials

What Is Research and Development (R&D)?

Investopedia / Ellen Lindner

Research and development (R&D) is the series of activities that companies undertake to innovate. R&D is often the first stage in the development process that results in market research product development, and product testing.

Key Takeaways

• Research and development represents the activities companies undertake to innovate and introduce new products and services or to improve their existing offerings.
• R&D allows a company to stay ahead of its competition by catering to new wants or needs in the market.
• Companies in different sectors and industries conduct R&D—pharmaceuticals, semiconductors, and technology companies generally spend the most.
• R&D is often a broad approach to exploratory advancement, while applied research is more geared towards researching a more narrow scope.
• The accounting for treatment for R&D costs can materially impact a company's income statement and balance sheet.

Understanding Research and Development (R&D)

The concept of research and development is widely linked to innovation both in the corporate and government sectors. R&D allows a company to stay ahead of its competition. Without an R&D program, a company may not survive on its own and may have to rely on other ways to innovate such as engaging in mergers and acquisitions (M&A) or partnerships. Through R&D, companies can design new products and improve their existing offerings.

R&D is distinct from most operational activities performed by a corporation. The research and/or development is typically not performed with the expectation of immediate profit. Instead, it is expected to contribute to the long-term profitability of a company. R&D may often allow companies to secure intellectual property, including patents , copyrights, and trademarks as discoveries are made and products created.

Companies that set up and employ departments dedicated entirely to R&D commit substantial capital to the effort. They must estimate the risk-adjusted return on their R&D expenditures, which inevitably involves risk of capital. That's because there is no immediate payoff, and the return on investment (ROI) is uncertain. As more money is invested in R&D, the level of capital risk increases. Other companies may choose to outsource their R&D for a variety of reasons including size and cost.

Companies across all sectors and industries undergo R&D activities. Corporations experience growth through these improvements and the development of new goods and services. Pharmaceuticals, semiconductors , and software/technology companies tend to spend the most on R&D. In Europe, R&D is known as research and technical or technological development.

Many small and mid-sized businesses may choose to outsource their R&D efforts because they don't have the right staff in-house to meet their needs.

Types of Research and Development (R&D)

There are several different types of R&D that exist in the corporate world and within government. The type used depends entirely on the entity undertaking it and the results can differ.

Basic Research

There are business incubators and accelerators, where corporations invest in startups and provide funding assistance and guidance to entrepreneurs in the hope that innovations will result that they can use to their benefit.

M&As and partnerships are also forms of R&D as companies join forces to take advantage of other companies' institutional knowledge and talent.

Applied Research

One R&D model is a department staffed primarily by engineers who develop new products —a task that typically involves extensive research. There is no specific goal or application in mind with this model. Instead, the research is done for the sake of research.

Development Research

This model involves a department composed of industrial scientists or researchers, all of who are tasked with applied research in technical, scientific, or industrial fields. This model facilitates the development of future products or the improvement of current products and/or operating procedures.

The largest companies may also be the ones that drive the most R&D spend. For example, Amazon has reported $1.147 billion of research and development value on its 2023 annual report.

Advantages and Disadvantages of R&D

There are several key benefits to research and development. It facilitates innovation, allowing companies to improve existing products and services or by letting them develop new ones to bring to the market.

Because R&D also is a key component of innovation, it requires a greater degree of skill from employees who take part. This allows companies to expand their talent pool, which often comes with special skill sets.

The advantages go beyond corporations. Consumers stand to benefit from R&D because it gives them better, high-quality products and services as well as a wider range of options. Corporations can, therefore, rely on consumers to remain loyal to their brands. It also helps drive productivity and economic growth.

Disadvantages

One of the major drawbacks to R&D is the cost. First, there is the financial expense as it requires a significant investment of cash upfront. This can include setting up a separate R&D department, hiring talent, and product and service testing, among others.

Innovation doesn't happen overnight so there is also a time factor to consider. This means that it takes a lot of time to bring products and services to market from conception to production to delivery.

Because it does take time to go from concept to product, companies stand the risk of being at the mercy of changing market trends . So what they thought may be a great seller at one time may reach the market too late and not fly off the shelves once it's ready.

Facilitates innovation

Improved or new products and services

Expands knowledge and talent pool

Increased consumer choice and brand loyalty

Economic driver

Financial investment

Shifting market trends

R&D Accounting

R&D may be beneficial to a company's bottom line, but it is considered an expense . After all, companies spend substantial amounts on research and trying to develop new products and services. As such, these expenses are often reported for accounting purposes on the income statement and do not carry long-term value.

There are certain situations where R&D costs are capitalized and reported on the balance sheet. Some examples include but are not limited to:

• Materials, fixed assets, or other assets have alternative future uses with an estimable value and useful life.
• Software that can be converted or applied elsewhere in the company to have a useful life beyond a specific single R&D project.
• Indirect costs or overhead expenses allocated between projects.
• R&D purchased from a third party that is accompanied by intangible value. That intangible asset may be recorded as a separate balance sheet asset.

R&D Considerations

Before taking on the task of research and development, it's important for companies and governments to consider some of the key factors associated with it. Some of the most notable considerations are:

• Objectives and Outcome: One of the most important factors to consider is the intended goals of the R&D project. Is it to innovate and fill a need for certain products that aren't being sold? Or is it to make improvements on existing ones? Whatever the reason, it's always important to note that there should be some flexibility as things can change over time.
• Timing: R&D requires a lot of time. This involves reviewing the market to see where there may be a lack of certain products and services or finding ways to improve on those that are already on the shelves.
• Cost: R&D costs a great deal of money, especially when it comes to the upfront costs. And there may be higher costs associated with the conception and production of new products rather than updating existing ones.
• Risks: As with any venture, R&D does come with risks. R&D doesn't come with any guarantees, no matter the time and money that goes into it. This means that companies and governments may sacrifice their ROI if the end product isn't successful.

Research and Development vs. Applied Research

Basic research is aimed at a fuller, more complete understanding of the fundamental aspects of a concept or phenomenon. This understanding is generally the first step in R&D. These activities provide a basis of information without directed applications toward products, policies, or operational processes .

Applied research entails the activities used to gain knowledge with a specific goal in mind. The activities may be to determine and develop new products, policies, or operational processes. While basic research is time-consuming, applied research is painstaking and more costly because of its detailed and complex nature.

R&D Tax Credits

The IRS offers a R&D tax credit to encourage innovation and significantly reduction their tax liability. The credit calls for specific types of spend such as product development, process improvement, and software creation.

Enacted under Section 41 of the Internal Revenue Code, this credit encourages innovation by providing a dollar-for-dollar reduction in tax obligations. The eligibility criteria, expanded by the Protecting Americans from Tax Hikes (PATH) Act of 2015, now encompass a broader spectrum of businesses. The credit tens to benefit small-to-midsize enterprises.

To claim R&D tax credits, businesses must document their qualifying expenses and complete IRS Form 6765 (Credit for Increasing Research Activities). The credit, typically ranging from 6% to 8% of annual qualifying expenses, offers businesses a direct offset against federal income tax liabilities. Additionally, businesses can claim up to $250,000 per year against their payroll taxes.

Example of Research and Development (R&D)

One of the more innovative companies of this millennium is Apple Inc. As part of its annual reporting, it has the following to say about its research and development spend:

In 2023, Apple reported having spent $29.915 billion. This is 8% of their annual total net sales. Note that Apple's R&D spend was reported to be higher than the company's selling, general and administrative costs (of $24.932 billion).

Note that the company doesn't go into length about what exactly the R&D spend is for. According to the notes, the company's year-over-year growth was "driven primarily by increases in headcount-related expenses". However, this does not explain the underlying basis carried from prior years (i.e. materials, patents, etc.).

Research and development refers to the systematic process of investigating, experimenting, and innovating to create new products, processes, or technologies. It encompasses activities such as scientific research, technological development, and experimentation conducted to achieve specific objectives to bring new items to market.

What Types of Activities Can Be Found in Research and Development?

Research and development activities focus on the innovation of new products or services in a company. Among the primary purposes of R&D activities is for a company to remain competitive as it produces products that advance and elevate its current product line. Since R&D typically operates on a longer-term horizon, its activities are not anticipated to generate immediate returns. However, in time, R&D projects may lead to patents, trademarks, or breakthrough discoveries with lasting benefits to the company. 

Why Is Research and Development Important?

Given the rapid rate of technological advancement, R&D is important for companies to stay competitive. Specifically, R&D allows companies to create products that are difficult for their competitors to replicate. Meanwhile, R&D efforts can lead to improved productivity that helps increase margins, further creating an edge in outpacing competitors. From a broader perspective, R&D can allow a company to stay ahead of the curve, anticipating customer demands or trends.

There are many things companies can do in order to advance in their industries and the overall market. Research and development is just one way they can set themselves apart from their competition. It opens up the potential for innovation and increasing sales. However, it does come with some drawbacks—the most obvious being the financial cost and the time it takes to innovate.

Amazon. " 2023 Annual Report ."

Internal Revenue Service. " Research Credit ."

Internal Revenue Service. " About Form 6765, Credit for Increasing Research Activities ."

Apple. " 2023 Annual Report ."

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What is decision making?

Decisions, decisions. When was the last time you struggled with a choice? Maybe it was this morning, when you decided to hit the snooze button—again. Perhaps it was at a restaurant, with a miles-long menu and the server standing over you. Or maybe it was when you left your closet in a shambles after trying on seven different outfits before a big presentation. Often, making a decision—even a seemingly simple one—can be difficult. And people will go to great lengths—and pay serious sums of money—to avoid having to make a choice. The expensive tasting menu at the restaurant, for example. Or limiting your closet choices to black turtlenecks, à la Steve Jobs.

Get to know and directly engage with senior McKinsey experts on decision making

Aaron De Smet is a senior partner in McKinsey’s New Jersey office, Eileen Kelly Rinaudo  is McKinsey’s global director of advancing women executives and is based in the New York office, Frithjof Lund is a senior partner in the Oslo office, and Leigh Weiss is a senior adviser in the Boston office.

If you’ve ever wrestled with a decision at work, you’re definitely not alone. According to McKinsey research, executives spend a significant portion of their time— nearly 40 percent , on average—making decisions. Worse, they believe most of that time is poorly used. People struggle with decisions so much so that we actually get exhausted from having to decide too much, a phenomenon called decision fatigue.

But decision fatigue isn’t the only cost of ineffective decision making. According to a McKinsey survey of more than 1,200 global business leaders, inefficient decision making costs a typical Fortune 500 company 530,000 days  of managers’ time each year, equivalent to about $250 million in annual wages. That’s a lot of turtlenecks.

How can business leaders ease the burden of decision making and put this time and money to better use? Read on to learn the ins and outs of smart decision making—and how to put it to work.

Learn more about our People & Organizational Performance Practice .

How can organizations untangle ineffective decision-making processes?

McKinsey research has shown that agile is the ultimate solution for many organizations looking to streamline their decision making . Agile organizations are more likely to put decision making in the right hands, are faster at reacting to (or anticipating) shifts in the business environment, and often attract top talent who prefer working at companies with greater empowerment and fewer layers of management.

For organizations looking to become more agile, it’s possible to quickly boost decision-making efficiency by categorizing the type of decision to be made and adjusting the approach accordingly. In the next section, we review three types of decision making and how to optimize the process for each.

What are three keys to faster, better decisions?

Business leaders today have access to more sophisticated data than ever before. But it hasn’t necessarily made decision making any easier. For one thing, organizational dynamics—such as unclear roles, overreliance on consensus, and death by committee—can get in the way of straightforward decision making. And more data often means more decisions to be taken, which can become too much for one person, team, or department. This can make it more difficult for leaders to cleanly delegate, which in turn can lead to a decline in productivity.

Leaders are growing increasingly frustrated with broken decision-making processes, slow deliberations, and uneven decision-making outcomes. Fewer than half  of the 1,200 respondents of a McKinsey survey report that decisions are timely, and 61 percent say that at least half the time they spend making decisions is ineffective.

What’s the solution? According to McKinsey research, effective solutions center around categorizing decision types and organizing different processes to support each type. Further, each decision category should be assigned its own practice—stimulating debate, for example, or empowering employees—to yield improvements in effectiveness.

Here are the three decision categories  that matter most to senior leaders, and the standout practice that makes the biggest difference for each type of decision.

• Big-bet decisions are infrequent but high risk, such as acquisitions. These decisions carry the potential to shape the future of the company, and as a result are generally made by top leaders and the board. Spurring productive debate by assigning someone to argue the case for and against a potential decision can improve big-bet decision making.
• Cross-cutting decisions, such as pricing, can be frequent and high risk. These are usually made by business unit heads, in cross-functional forums as part of a collaborative process. These types of decisions can be improved by doubling down on process refinement. The ideal process should be one that helps clarify objectives, measures, and targets.
• Delegated decisions are frequent but low risk and are handled by an individual or working team with some input from others. Delegated decision making can be improved by ensuring that the responsibility for the decision is firmly in the hands of those closest to the work. This approach also enhances engagement and accountability.

In addition, business leaders can take the following four actions to help sustain rapid decision making :

• Focus on the game-changing decisions, ones that will help an organization create value and serve its purpose.
• Convene only necessary meetings, and eliminate lengthy reports. Turn unnecessary meetings into emails, and watch productivity bloom. For necessary meetings, provide short, well-prepared prereads to aid in decision making.
• Clarify the roles of decision makers and other voices. Who has a vote, and who has a voice?
• Push decision-making authority to the front line—and tolerate mistakes.

Introducing McKinsey Explainers : Direct answers to complex questions

How can business leaders effectively delegate decision making.

Business is more complex and dynamic than ever, meaning business leaders are faced with needing to make more decisions in less time. Decision making takes up an inordinate amount of management’s time—up to 70 percent for some executives—which leads to inefficiencies and opportunity costs.

As discussed above, organizations should treat different types of decisions differently . Decisions should be classified  according to their frequency, risk, and importance. Delegated decisions are the most mysterious for many organizations: they are the most frequent, and yet the least understood. Only about a quarter of survey respondents  report that their organizations make high-quality and speedy delegated decisions. And yet delegated decisions, because they happen so often, can have a big impact on organizational culture.

The key to better delegated decisions is to empower employees by giving them the authority and confidence to act. That means not simply telling employees which decisions they can or can’t make; it means giving employees the tools they need to make high-quality decisions and the right level of guidance as they do so.

Here’s how to support delegation and employee empowerment:

• Ensure that your organization has a well-defined, universally understood strategy. When the strategic intent of an organization is clear, empowerment is much easier because it allows teams to pull in the same direction.
• Clearly define roles and responsibilities. At the foundation of all empowerment efforts is a clear understanding of who is responsible for what, including who has input and who doesn’t.
• Invest in capability building (and coaching) up front. To help managers spend meaningful coaching time, organizations should also invest in managers’ leadership skills.
• Build an empowerment-oriented culture. Leaders should role model mindsets that promote empowerment, and managers should build the coaching skills they want to see. Managers and employees, in particular, will need to get comfortable with failure as a necessary step to success.
• Decide when to get involved. Managers should spend effort up front to decide what is worth their focused attention. They should know when it’s appropriate to provide close guidance and when not to.

How can you guard against bias in decision making?

Cognitive bias is real. We all fall prey, no matter how we try to guard ourselves against it. And cognitive and organizational bias undermines good decision making, whether you’re choosing what to have for lunch or whether to put in a bid to acquire another company.

Here are some of the most common cognitive biases and strategies for how to avoid them:

• Confirmation bias. Often, when we already believe something, our minds seek out information to support that belief—whether or not it is actually true. Confirmation bias  involves overweighting evidence that supports our belief, underweighting evidence against our belief, or even failing to search impartially for evidence in the first place. Confirmation bias is one of the most common traps organizational decision makers fall into. One famous—and painful—example of confirmation bias is when Blockbuster passed up the opportunity  to buy a fledgling Netflix for $50 million in 2000. (Actually, that’s putting it politely. Netflix executives remember being “laughed out” of Blockbuster’s offices.) Fresh off the dot-com bubble burst of 2000, Blockbuster executives likely concluded that Netflix had approached them out of desperation—not that Netflix actually had a baby unicorn on its hands.
• Herd mentality. First observed by Charles Mackay in his 1841 study of crowd psychology, herd mentality happens when information that’s available to the group is determined to be more useful than privately held knowledge. Individuals buy into this bias because there’s safety in the herd. But ignoring competing viewpoints might ultimately be costly. To counter this, try a teardown exercise , wherein two teams use scenarios, advanced analytics, and role-playing to identify how a herd might react to a decision, and to ensure they can refute public perceptions.
• Sunk-cost fallacy. Executives frequently hold onto underperforming business units or projects because of emotional or legacy attachment . Equally, business leaders hate shutting projects down . This, researchers say, is due to the ingrained belief that if everyone works hard enough, anything can be turned into gold. McKinsey research indicates two techniques for understanding when to hold on and when to let go. First, change the burden of proof from why an asset should be cut to why it should be retained. Next, categorize business investments according to whether they should be grown, maintained, or disposed of—and follow clearly differentiated investment rules  for each group.
• Ignoring unpleasant information. Researchers call this the “ostrich effect”—when people figuratively bury their heads in the sand , ignoring information that will make their lives more difficult. One study, for example, found that investors were more likely to check the value of their portfolios when the markets overall were rising, and less likely to do so when the markets were flat or falling. One way to help get around this is to engage in a readout process, where individuals or teams summarize discussions as they happen. This increases the likelihood that everyone leaves a meeting with the same understanding of what was said.
• Halo effect. Important personal and professional choices are frequently affected by people’s tendency to make specific judgments based on general impressions . Humans are tempted to use simple mental frames to understand complicated ideas, which means we frequently draw conclusions faster than we should. The halo effect is particularly common in hiring decisions. To avoid this bias, structured interviews can help mitigate the essentializing tendency. When candidates are measured against indicators, intuition is less likely to play a role.

For more common biases and how to beat them, check out McKinsey’s Bias Busters Collection .

Learn more about Strategy & Corporate Finance consulting  at McKinsey—and check out job opportunities related to decision making if you’re interested in working at McKinsey.

Articles referenced include:

• “ Bias busters: When the crowd isn’t necessarily wise ,” McKinsey Quarterly , May 23, 2022, Eileen Kelly Rinaudo , Tim Koller , and Derek Schatz
• “ Boards and decision making ,” April 8, 2021, Aaron De Smet , Frithjof Lund , Suzanne Nimocks, and Leigh Weiss
• “ To unlock better decision making, plan better meetings ,” November 9, 2020, Aaron De Smet , Simon London, and Leigh Weiss
• “ Reimagine decision making to improve speed and quality ,” September 14, 2020, Julie Hughes , J. R. Maxwell , and Leigh Weiss
• “ For smarter decisions, empower your employees ,” September 9, 2020, Aaron De Smet , Caitlin Hewes, and Leigh Weiss
• “ Bias busters: Lifting your head from the sand ,” McKinsey Quarterly , August 18, 2020, Eileen Kelly Rinaudo
• “ Decision making in uncertain times ,” March 24, 2020, Andrea Alexander, Aaron De Smet , and Leigh Weiss
• “ Bias busters: Avoiding snap judgments ,” McKinsey Quarterly , November 6, 2019, Tim Koller , Dan Lovallo, and Phil Rosenzweig
• “ Three keys to faster, better decisions ,” McKinsey Quarterly , May 1, 2019, Aaron De Smet , Gregor Jost , and Leigh Weiss
• “ Decision making in the age of urgency ,” April 30, 2019, Iskandar Aminov, Aaron De Smet , Gregor Jost , and David Mendelsohn
• “ Bias busters: Pruning projects proactively ,” McKinsey Quarterly , February 6, 2019, Tim Koller , Dan Lovallo, and Zane Williams
• “ Decision making in your organization: Cutting through the clutter ,” McKinsey Quarterly , January 16, 2018, Aaron De Smet , Simon London, and Leigh Weiss
• “ Untangling your organization’s decision making ,” McKinsey Quarterly , June 21, 2017, Aaron De Smet , Gerald Lackey, and Leigh Weiss
• “ Are you ready to decide? ,” McKinsey Quarterly , April 1, 2015, Philip Meissner, Olivier Sibony, and Torsten Wulf.

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Open(AI) and shut: What ChatGPT deals with media outlets mean for the future of news

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By Joe Arney Photo of Patrick Ferrucci, below, by Kimberly Coffin (CritMedia, StratComm’18)

A former reporter and current chair of the journalism department at the University of Colorado Boulder’s College of Media, Communication and Information, Ferrucci studies the institutions, businesses and technologies that are rapidly reshaping the discipline.

So when he learned The Atlantic and Vox Media agreed last week to license their journalism to ChatGPT creator OpenAI, he thought back to agreements traditional publishers once signed with Facebook, Google and Twitter—deals that augmented audiences while wrecking revenue.

“I don’t get it,” he said.

“Maybe they see a monetary infusion at what’s undeniably a difficult financial time for the media. But we’ve seen this before, and each time, that financial infusion doesn’t benefit the actual journalism.”

ChatGPT was hailed as a breakthrough when it arrived in the winter of 2022, able to respond to questions and create content that was seen as a value add for businesses and individuals. Some of the shine has since worn off as creators and artists have accused the company of stealing their work to train the chatbot to write more convincingly—the large-language models ChatGPT are trained on enormous amounts of data that come from novelists, poets, journalists, even regular users of social media platforms who post content and comments.

“We’ve seen this before, and each time, that financial infusion doesn’t benefit the actual journalism.” Patrick Ferrucci, chair, journalism

While he criticized the short-term benefits at the potential cost of long-term viability, Ferrucci said there could be other advantages for media companies that sign up with OpenAI.

“It could allow the journalism industry to get an understanding of what those tools can do,” he said. “And if they get a head start with those tools, and learn to implement them into their processes early on, it will give them a leg up on companies that fought against it.”

A different tactic: See you in court

Representing those companies fighting against it is The New York Times , which last year sued OpenAI after changing its terms of service to prevent A.I. systems from scraping its work . At the time, Robin Burke , a professor of information science at CMCI, called ChatGPT’s honeymoon period “a free ride, because nobody was paying attention to what they were doing. Now, I think it makes sense that the organizations producing content are thinking, ‘Do I really agree with this as a usage of my work?’”

It’s a fair question, but Ferrucci said he expects we’ll see more deals like this going forward.

“There are companies that can do investigative journalism because it doesn’t matter if you sue them,” he said. “And there are others who essentially self-censor because the threat of a lawsuit, no matter how frivolous, could destroy the business. If you show these news companies some money, I don’t think all of them can afford to look away.”

But for her, the most interesting issue isn’t copyright.

“I think the more profound thing is this idea that you used my work to build a technology that will replace me,” she said. “That’s why so many people are upset. It feels like a violation—you’re using my art to build this technology so that you don’t have to pay artists anymore.”

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• Celiac disease

Your small intestine is lined with tiny hairlike projections called villi, which absorb sugars, fats, proteins, vitamins, minerals and other nutrients from the food you eat. Gluten exposure in people with celiac disease damages the villi, making it hard for the body to absorb nutrients necessary for health and growth.

Celiac disease is an illness caused by an immune reaction to eating gluten. Gluten is a protein found in foods containing wheat, barley or rye.

If you have celiac disease, eating gluten triggers an immune response to the gluten protein in your small intestine. Over time, this reaction damages your small intestine's lining and prevents it from absorbing nutrients, a condition called malabsorption.

The intestinal damage often causes symptoms such as diarrhea, fatigue, weight loss, bloating or anemia. It also can lead to serious complications if it is not managed or treated. In children, malabsorption can affect growth and development in addition to gastrointestinal symptoms.

There's no definite cure for celiac disease. But for most people, following a strict gluten-free diet can help manage symptoms and help the intestines heal.

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The symptoms of celiac disease can vary greatly. They also may be different in children and adults. Digestive symptoms for adults include:

• Weight loss.
• Bloating and gas.
• Abdominal pain.
• Nausea and vomiting.
• Constipation.

However, more than half the adults with celiac disease have symptoms that are not related to the digestive system, including:

• Anemia, usually from iron deficiency due to decreased iron absorption.
• Loss of bone density, called osteoporosis, or softening of bones, called osteomalacia.
• Itchy, blistery skin rash, called dermatitis herpetiformis.
• Mouth ulcers.
• Headaches and fatigue.
• Nervous system injury, including numbness and tingling in the feet and hands, possible problems with balance, and cognitive impairment.
• Joint pain.
• Reduced functioning of the spleen, known as hyposplenism.
• Elevated liver enzymes.

Children with celiac disease are more likely than adults to have digestive problems, including:

• Chronic diarrhea.
• Swollen belly.
• Pale, foul-smelling stools.

The inability to absorb nutrients might result in:

• Failure to thrive for infants.
• Damage to tooth enamel.
• Irritability.
• Short stature.
• Delayed puberty.
• Neurological symptoms, including attention-deficit/hyperactivity disorder (ADHD), learning disabilities, headaches, lack of muscle coordination and seizures.

Dermatitis herpetiformis

Gluten intolerance can cause this blistery skin disease. The rash usually occurs on the elbows, knees, torso, scalp or buttocks. This condition is often associated with changes to the lining of the small intestine identical to those of celiac disease, but the skin condition might not cause digestive symptoms.

Health care professionals treat dermatitis herpetiformis with a gluten-free diet or medicine, or both, to control the rash.

When to see a doctor

Consult your health care team if you have diarrhea or digestive discomfort that lasts for more than two weeks. Consult your child's health care team if your child:

• Is irritable.
• Is failing to grow.
• Has a potbelly.
• Has foul-smelling, bulky stools.

Be sure to consult your health care team before trying a gluten-free diet. If you stop or even reduce the amount of gluten you eat before you're tested for celiac disease, you can change the test results.

Celiac disease tends to run in families. If someone in your family has the condition, ask a member of your health care team if you should be tested. Also ask about testing if you or someone in your family has a risk factor for celiac disease, such as type 1 diabetes.

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Your genes, combined with eating foods with gluten and other factors, can contribute to celiac disease. However, the precise cause isn't known. Infant-feeding practices, gastrointestinal infections and gut bacteria may contribute, but these causes have not been proved. Sometimes celiac disease becomes active after surgery, pregnancy, childbirth, viral infection or severe emotional stress.

When the body's immune system overreacts to gluten in food, the reaction damages the tiny, hairlike projections, called villi, that line the small intestine. Villi absorb vitamins, minerals and other nutrients from the food you eat. If your villi are damaged, you can't get enough nutrients, no matter how much you eat.

Risk factors

Celiac disease tends to be more common in people who have:

• A family member with celiac disease or dermatitis herpetiformis.
• Type 1 diabetes.
• Down syndrome, William syndrome or Turner syndrome.
• Autoimmune thyroid disease.
• Microscopic colitis.
• Addison's disease.

Complications

Celiac disease that is not treated can lead to:

• Malnutrition. This occurs if your small intestine can't absorb enough nutrients. Malnutrition can lead to anemia and weight loss. In children, malnutrition can cause slow growth and short stature.
• Bone weakening. In children, malabsorption of calcium and vitamin D can lead to a softening of the bone, called osteomalacia or rickets. In adults, it can lead to a loss of bone density, called osteopenia or osteoporosis.
• Infertility and miscarriage. Malabsorption of calcium and vitamin D can contribute to reproductive issues.
• Lactose intolerance. Damage to your small intestine might cause you abdominal pain and diarrhea after eating or drinking dairy products that contain lactose. Once your intestine has healed, you might be able to tolerate dairy products again.
• Cancer. People with celiac disease who don't maintain a gluten-free diet have a greater risk of developing several forms of cancer, including intestinal lymphoma and small bowel cancer.
• Nervous system conditions. Some people with celiac disease can develop conditions such as seizures or a disease of the nerves to the hands and feet, called peripheral neuropathy.

Nonresponsive celiac disease

Some people with celiac disease don't respond to what they consider to be a gluten-free diet. Nonresponsive celiac disease is often due to contamination of the diet with gluten. Working with a dietitian can help you learn how to avoid all gluten.

People with nonresponsive celiac disease might have:

• Bacterial overgrowth in the small intestine.
• Poor pancreas function, known as pancreatic insufficiency.
• Irritable bowel syndrome.
• Difficulty digesting sugar found in dairy products (lactose), table sugar (sucrose), or a type of sugar found in honey and fruits (fructose).
• Truly refractory celiac disease that is not responding to a gluten-free diet.

Refractory celiac disease

In rare instances, the intestinal injury of celiac disease doesn't respond to a strict gluten-free diet. This is known as refractory celiac disease. If you still have symptoms after following a gluten-free diet for 6 months to 1 year, you should talk to your health care team to see if you need further testing to look for explanations for your symptoms.

Celiac disease care at Mayo Clinic

• Rubio-Tapia A, et al. American College of Gastroenterology guidelines update: Diagnosis and management of celiac disease. American Journal of Gastroenterology. 2023; doi:10.14309/ajg.0000000000002075.
• Catassi C, et al. Coeliac disease. The Lancet. 2022; doi:10.1016/S0140-6736(22)00794-2.
• Singh P, et al. Who to screen and how to screen for celiac disease. World Journal of Gastroenterology. 2022; doi:10.3748/wjg.v28.i32.4493.
• What is celiac disease? Celiac Disease Foundation. https://celiac.org/about-celiac-disease/what-is-celiac-disease/. Accessed April 26, 2023.
• Feldman M, et al., eds. Celiac disease. In: Sleisenger and Fordtran's Gastrointestinal and Liver Disease: Pathophysiology, Diagnosis, Management. 11th ed. Elsevier; 2021. https://www.clinicalkey.com. Accessed April 26, 2023.
• Celiac disease. National Institute of Diabetes, Digestive and Kidney Diseases. https://www.niddk.nih.gov/health-information/digestive-diseases/celiac-disease. Accessed April 26, 2023.
• Ami TR. AllScripts EPSi. Mayo Clinic. March 24, 2023.
• Khanna S (expert opinion). Mayo Clinic. May 12, 2023.

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