Importance of research in business

Ever heard of the toy company LEGO? Did you know that this renowned brand was geared towards boys for decades, so much that only 9% of their primary users were female? The company took to sending out researchers to conduct a four-year study involving over 3,500 girls, focusing on their playing habits, and gathering feedback to better understand how to increase the percentage of female users.

With results from the intensive research process, the team worked on a new line of toys involving vibrant colours, additional figurines, and manufactured them in a larger size to cater as an add-on to kids’ accessories. The line, “Friends”, first launched in 2012, has since been a hit with girls and continues to have an inclining market share in construction toys. In addition, research firm NPD Group found that the value of girls’ construction toys tripled to a whopping $900 million in 2014, showing a significant difference from three years prior. This is evident that the direction taken by LEGO in conducting in-depth research has propelled them to remarkable heights and is a building block for their success.


What is Research defined as?

It is acquiring details in all aspects of the business, then using scientific methods to break the information down. Results from the findings would then be distributed through various mediums, such as reports, presentations, and strategic initiatives. Often, research is done in many forms and conducted internally or by an external consultant or firm.

Research is further defined as the capture of accurate data through a systematic approach, using actual observations to deduce real-time data. Generally, the goal is to understand which direction to pump funds into for better sales, profits, and market share.


Types of Research methods:

Qualitative

Think of it as getting coffee with somebody for the first time, where you ask questions to find out more about their hobbies and interests. This method involves structuring open-ended questions in a way where a precise conclusion can be drawn. The goals of this are to get in-depth knowledge about the subjects of the research and to better understand the beliefs of the responders through their behaviour and response.

Data of this research method is collected through the following:

        In-depth Interviews

        Case Study Research

        Focus Groups

        Ethnographic Research

Quantitative

It aims to test theories by objectively collecting and analyzing numerical and statistical data to predict variables of interest. The main goal of it is to test a theory and hypothesis for it to be confirmed. An example is coming up with a questionnaire to understand the percentage of people who play sports on a weekly basis.

 This research method includes:

        Experiments

        Numerical Observations

        Closed-ended Surveys

While the approaches provide a vast difference in insights and perspectives, many companies engage in the combination of both to attain the most vital information. This enables them to work smarter in delivering benefits, comparing results, as well as gain deeper insights.


Why is Research important?

Builds credibility

Customers should not be purchasing products with the benefit of the doubt. Having sufficient facts from valuable data provides a solid foundation for findings and leaves them with lesser room for contemplation.

Provides a clear breakdown of what you are up against

With evolving competition all around, there is no guarantee for a business to remain at the peak of its lifespan. One framework used is the SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) to first evaluate a company’s competitive position to move ahead strategically.

Helps to narrow your scope

It identifies the most unique themes to provide a working direction to go in. This helps in decision making when you want to dive into the specifics, such as the target audience and goal-setting. Doing so helps businesses to understand the supply and demand of the market, helping them reduce costs on what may not be as necessary.

Provides the latest information and updates

Change happens constantly and it is important to keep up with trends. Having research set in place keeps the business well-informed to relay the best information and meet customer demands.

Retains and introduces customers

To keep a business alive, knowledge of key demographics is important in creating a product or driving it in a certain direction. This data obtained will help the businesses to better understand the brand value and measure customer satisfaction. This piques interest from early adopters and strengthens customer loyalty.


Impact of insufficient research

Without sufficient research done, businesses stand a big chance in missing market opportunities and may face a decline in success rates. They may also place emphasis on the wrong aspects, throwing away meaningful time and resources. Coors, the company behind Coors Rocky Mountain Sparkling Water, is one such example.

Coors originated as a beer company and was known particularly for their alcoholic products prior to expanding into water products. Wanting to go big and ramp up sales of the newly-launched sparkling water product with their mature market presence, they decided to distinctively slap the company’s name and logo on it, selling it under the same line as its beer beverages. Unfortunately, this did not sit right with its consumers as they did not see it as just a bottled water product, but instead, an infusion of water and beer altogether.

This led to failure in sales as customers placed their trust in the already big names in the bottled water industry, leaving no room to consider Coors’ launch. The mistake is still referred to by many businesses as “one of the biggest flops”, simply because they did not do the necessary amount of research to better understand their consumer base. Additionally, they did not reflect on customer satisfaction, moving ahead with it and only discontinuing the line many years later.


Conclusion

The main reason for such research is to help businesses grow in terms of revenue, market share and brand value. A lack of it would lead to inadequate information and unreliable findings, thus resulting in poor decisions made. Based on the success of LEGO and failure of Coors, it is evident that research is of utmost importance when driving a business to higher growth and avoiding mistakes in the process.

Do you want to improve your research game without increasing headcount? Ravenry has a network of professional on-demand talents that can help you with the laborious research work. Sign up now and submit your research projects to gain an edge over your competition! 

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