What Is Research in Business? (With Definition and Types)

By Indeed Editorial Team

Published April 20, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Research is an essential part of operating an effective business. By researching the market, industry and customers, a company can make an effective business plan or marketing strategy. Learning more about business research could help you start a new company or improve an existing one. In this article, we explain what business research is, list the types of business research methods and provide the advantages and disadvantages of conducting business research.

What is research in business?

Business research refers to the process of conducting research to assist with the launch or operation of a company. Business research involves gathering data and using it to make business predictions, plans or decisions. It may involve analyzing market trends, collecting consumer information or comparing competitors within the industry.

Read more: How To Conduct Market Research

Types of research in business

A company may choose to conduct one or multiple types of business research. Here are some of the common research types:

Market analysis

Market research involves analyzing the current market trends. By analyzing the current market, you can help understand how the potential risks and rewards in the market. Typically, business owners conduct market analysis when moving into a new market. For example, if business owners are starting a new business or creating a product in a different sector, they may analyze the new market when making the business plan.

Read more: What Is a Market Analysis?

Product research

Product research is when a business tests a new product design. For example, if a technology company is launching a new software design, they may test it before they produce the product. This can help them refine their design before producing the item. Product research can include:

  • Consumer surveys: Companies can ask existing consumers for their feedback on a new product design.

  • Focus groups: A business can gather a focus group, or a select group of people, to answer questions or test a product.

  • Test launches: A company can also test the product by releasing samples to a select group of consumers.

Companies usually conduct this type of business research during the early stages of production so they can make improvements. They may use multiple types of tests during the development process to gather more accurate data.

Financial analysis

Financial analysis involves evaluating the current financial processes within a company. It may include reviewing costs, profits and cash flows. For example, a business might analyze its current financial statement by looking at its costs and profits. This can help business leaders find areas where they can reduce costs.

Read more: 7 Types of Financial Analysis (With Definition and Examples)

Consumer data

Companies can gather consumer data during any stage of the business cycle. They can use this data to target an audience, launch new products or refine existing systems. For example, a business can use consumer feedback surveys to determine what additional services customers want. This can help the company plan its next product design. A marketing team can also gather consumer data, such as who is buying the products, to create or refine a marketing strategy.

Competitive analysis

Competitive analysis involves researching the other businesses within your company's industry or market. By analyzing the competition, you can help your company find areas of improvement or growth. For example, by analyzing your competitors' marketing campaigns, you can help design a more efficient campaign.

Read more: What Is a Competitive Analysis?

Industry research

Industry research is similar to market research but involves researching the entire industry rather than a specific market. Business owners may conduct industry research when starting a new company or moving into a new industry. They analyze the current industry trends, strengths and weaknesses. For example, a new clothing company would research other apparel companies to learn how the industry is performing. By analyzing the industry, the company can make growth predictions and plans.

Why is research in business important?

Research in business is important because it helps business owners and managers make important decisions. By learning more about their strengths and weaknesses, they can identify areas for improvement and growth.

Business research can help companies during any stage. For example, professionals starting a new company can research the market to identify potential market gaps. This can help them design a product that customers need. An existing company can conduct research to find areas to improve. For example, a business might ask customers for feedback and use this data to make changes.

Advantages of business research

Here are some of the potential advantages of conducting business research:

  • Helps a business identify opportunities and improvements: Business research can help business owners identify opportunities for improvement or growth. For example, product research can help a design team refine a product before a large launch. This can help the company improve and potentially earn more profits.

  • Reveals customer information: By researching the market and customer information, businesses can learn more about their target audience. For example, through conducting market research, a marketing team can make a more efficient marketing plan that reaches their customers effectively.

  • Can lead to improved risk strategies: A business can research its competition and industry to help minimize risk. For example, by analyzing the industry and effective product launches, they can make a more effective business plan.

  • Helps business leaders make decisions: Business leaders, including managers, owners and investors, can use business research to make financial and operational decisions. For example, by analyzing the current market, they might decide to expand the company's services.

Disadvantages of business research

Here are some of the potential disadvantages of conducting business research

  • Costs money: Conducting business research costs money initially. However, by identifying areas for improvement and room for growth, companies may make this money back and earn more profits over time.

  • Takes time: Successful business research can take time and careful planning.

  • Can become outdated quickly: As markets change quickly, companies may need to conduct multiple rounds of research as information changes.

  • Can be inaccurate: Some methods of researching may lead to inaccurate results. For example, if a company selects a small focus group size, they might not have access to complete information. This is why it's important to design an extensive research plan.

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