Six Steps of Business Research: Methods and Variables

The Six Steps of Business Research

The business research process is unique in that it may be tailored to individual types of organizations and their specific needs. For example, business research for a large, multinational pharmaceutical company would have slightly different requirements than that of a local fast-food franchise group. However, there are six basic steps that most business research projects should cover.

Appraisal. Before any research can be done, it is important to conduct an honest assessment of the organization. The business needs to know where it stands in terms of fiscal strength or weakness, what kinds of human and other resources are available, and what its goals are.

Competitive Analysis. Identifying the competitive landscape is important and can be accomplished through secondary research — including market share, market sales, number of employees, and key strengths. This can usually be done via the internet, using secondary sources or, in large organizations, their own annual reports.

Customer Analysis. It is vital to understand customer needs and wants prior to undertaking new product launches or improving the business. Typically, depending on the market niche, primary research methods such as questionnaires, phone surveys, mall intercepts, or focus groups are used to collect consumer information.

SWOT or Other Analysis. SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a simple framework used to analyze the information gathered from the above steps. Combining the current organizational assessment, the competitive landscape, and all available primary and secondary research provides a broad yet powerful overview of the organization.

Target and Strategic Goals. After a thorough SWOT analysis has been completed, study the target audience through primary research. Use this information to develop strategic and/or medium- to long-term goals.

Application and Tactics. Once this is done, use the information to develop specific tactics — such as securing funding, upgrading manufacturing processes, and similar measures (Bryman & Bell, 2007).

Theoretical Frameworks and Variables

Any theoretical framework is a collection of interrelated concepts — not always completely worked out, but intended to guide research and experimental design. Within each theoretical framework we find cases, which are the objects whose behavior, characteristics, and attributes we study. Research also requires the identification of dependent and independent variables.

The dependent variable is the outcome — the variable one is trying to explain or predict. The independent variable is the explanatory factor, or set of factors, that accounts for variation — in other words, the causes. These terms have meaning only in relation to each other: the dependent variable is reliant on the value of the independent variable (Understanding the Difference, 2010).

For example, if we were studying the relationship between price and sales volume for a pizza restaurant, we would try to predict sales based on price per slice or per pizza. Sales, then, are dependent upon price — the assumption being that sales will drop if the price becomes too high.

Demand Modeling: A Pizza Pricing Example

A standard or functional model of demand would hold that the dependent variable is the quantity demanded, and the independent variables are price, consumer income, the price of competitive pizza options, and consumer preferences. This can be expressed as:

A (Pizza) = D (Price, Income, Competitive Price, Tastes for Other Foods)

A functional model of demand places precise numbers into the equation to calculate how much pizza would be sold at a given price. Assuming all else is equal, consider a large pizza offered at four price points: A = $20, B = $15, C = $10, D = $5. The known cost of producing this pizza (ingredients and labor, excluding rent and overhead) is $4. A demand schedule would yield the following results:

Thus, despite demand rising as price decreases, the preliminary data show that the optimum price-to-profit point is $15. The general principle illustrated is straightforward: the lower the price of pizza, the greater the consumer demand. However, when one also accounts for the cost of goods and labor, the profit-maximizing price becomes clear (Adil, 2006; Supply and Demand, 2005).

The Internet in Business Research

Marketing is so ingrained in the modern way of life that we almost do not notice it — yet we are all influenced by its power and presence. In order for most marketing applications to be successful, data is needed to identify the best possible strategy and outcome. This aspect of marketing is called market research, and it is charged with gathering and interpreting information that helps businesses make better decisions by understanding consumer behavior (Hartman, 2003).

Using the internet allows businesses to collect data more quickly and at a lower cost, to make appropriate strategic and tactical adjustments to their products in ways that may benefit consumers, and to give more consumers a greater voice in shaping the direction of a product or service. Research using the internet is a tool, and like any tool it may be abused or used appropriately — it is up to the researcher to ensure that it is employed in an ethical way that benefits both consumers and organizations (Jones, 1999).

References

Adil, J. (2006). Supply and demand. Mankato, MN: Capstone Press.

Bradburn, N., et al. (2004). Asking questions: The definitive guide to questionnaire design. San Francisco: John Wiley and Sons.

Bryman, A., & Bell, E. (2007). Business research methods. New York: Oxford University Press.

Hartman, C. (2003). Marketing strategies and the search for virtue. Retrieved from http://www.springerlink.com/content/cux0lt0t1172v425/

Jones, S. (1999). Doing internet research. Thousand Oaks, CA: Sage.

Supply and demand. (2005). Oswego.edu. Retrieved from

Understanding the differences between independent and dependent variables. (2010). APEX Dissertations.

Wayde, D. (2006). Marketing ethics. Retrieved from http://www.marketingprofs.com/ea/qst_question.asp?qstID=12247