Definition of Business Research 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 best decision is made for the company. * Product Analysis Product analysis is the first step of business research. Companies must find a product that meets or exceeds consumer demand, or the product will fail in the economic market place. One type of analysis is to find an existing product that can be improved through design or features.
Another type of product analysis will find emerging markets with high demand and low supply, which allows for companies to sell new 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. Each stage has its own level of profitability, with the first stage being the highest and the last stage being the lowest profitability.
A market analysis will also determine the price points at which products can be sold; for example, high-quality products at a higher price may not tempt consumers to start buying the product based on quality itself. * Financial Analysis A financial analysis determines the cost of each production item used to produce goods and services. High costs may not allow companies to price goods or services competitively, leading to an unprofitable situation. Management will examine the costs of raw materials, labor, and manufacturing overhead to find the best raw goods available to produce the most profitable product.
Management will also review the best cost application methods, ensuring that all production costs are properly applied to each product or service produced. * Competitor Analysis Analyzing the current competitors of a market is an important 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. Proper business research will also indicate how financially stable companies are and if they can be purchased outright by a company wanting to enter the industry.
Buying a competitor may be cheaper than starting new operations for a company. * Growth Analysis Business research usually includes forecasting the growth and direction of the current industry or market. Knowing which direction the market is headed helps companies determine the stability of new business operations. Entering a slow-growth industry may be unprofitable early on but have better long-term growth potential. High-growth industries will sometimes face a quick downfall, such as the dot. com boom of 2000-2001.
Strong growth early in the business cycle quickly gave way to record losses, leading many businesses into bankruptcy from poor growth analysis. Definition of Business Research Methods A business research method is a careful and diligent study of a market, an industry or a particular company’s business operations, using investigative techniques to discover facts, examine theories or develop an action plan based on discovered facts. Businesses use a number of research methods to help grow their operations or to solve problems in the company. * Operational Research A study of a firm’s operational systems identifies each production step.
This type of business research helps a firm to “reduce waste, inefficiency and poor performance by examining procedures on a step-by-step basis — an approach sometimes called methods improvement,” according to the authors of the book “Business Essentials. ” * Case Studies One method of conducting business research is through case studies that allow for investigation of industries, companies and business situations. A firm’s patterns of action communicate business policies, conventions and practices. This type of research can uncover business trends and strategies. * Statistical Data
Examination of information and statistical data is another method of business research. Financial data is one important area of statistical analysis that helps a firm to evaluate performance and predict trends. It can lead to strategy revisions that translate into changes in a firm’s internal policies and procedures. * Surveys and Focus Groups Surveys and focus groups are a common business research method. It helps a firm to better understand the potential customer for its products and services. This includes understanding who the customer is, what the customer values and how the customer buys.
This type of research focuses on identifying demand trends. What Is the Business Research Method? The business research method is how companies collect information from consumers or business-to-business customers. Some business research is conducted among smaller groups of people, with the objective of clarifying research content. For example, a restaurant company may test six menu items but try to find the best two for further research. Other business research is for garnering explanations of customers’ purchases or buying habits. There are several key steps in the business research process. Defining the Objectives Companies that conduct business research must first define their key objectives. Objectives can include measuring satisfaction among customers, determining customer interest on a new product, or measuring the impact of advertising among consumers. Sometimes, the objective of business research is to find reasons and solutions for a particular problem. For example, a software company may experience a 10 percent loss in customers. Hence, the objective may be to find out why customers are purchasing products; and how to get the customers back.
Company managers should meet in groups to determine the key objectives for their business research. Subsequently, a marketing research manager or marketing professional will need to coordinate the efforts of the business research. * Developing the Questionnaire Business research almost always requires a questionnaire. A questionnaire contains a series of questions that researchers ask their consumer or business customers. Companies should ask question in business research that address their key objectives, according to the Free Management Library, an online reference site.
Most questionnaires will contain a qualifying question at the beginning, which ensures that the researcher is reaching the right person. For example, a qualifying question may state: “Are you the person who usually buys groceries in your household? ” If a consumer answers affirmatively, the company will know that they are talking to someone who can best answer their questions. Other questions in business research may include “How satisfied are you with your new cell phone,” or “How likely would you be to purchase one of our cars this year. In addition to questions, researchers must create specific answers to the questions. Qualifying questions can use the “yes/no” format. However, researchers also use various scales to discern the magnitude of a particular response. For example, having a customer rate their product satisfaction on a scale of one to 10 will tells the researcher more than simply asking “Do you like our products? ” * Conducting the Survey The survey process actually entails calling consumers and business customers. During the survey, a surveyor will ask customers questions from the questionnaire.
Most companies hire professional marketing research agencies to conduct their surveys. Professional researchers are more experienced at asking questions and obtaining the information. Additionally, professional research agencies use computer-assisted survey systems that are more efficient than merely using paper and pencils. Business research surveys are usually conducted among large groups of consumers or business customers. The amount of surveys a company completes is called the sample size. A large sample size better ensures that all customer responses represent how the population feels as a whole. Analyzing and Reporting Results Market researchers must analyze survey results once the marketing research agency delivers the completed survey data. The analysis process involves studying all customer responses to the survey questions. For example, a market researcher for a consumer products company may find out that 90 percent of customers like their new shaving cream product. However, a small percentage of people may also want an unscented version of the product. Market researchers will typically write a report after analyzing the survey research data.
The report will usually be distributed to key members of the company management team. Subsequently, executives may use the research report as a guide for developing marketing strategies for the company. Types of Business Research Methods Business research functions to study the internal and external factors that affect profitability and market share for a company. There are several methods used in business research that helps executives to focus the energy of developers, production staff and distribution forces. * External Information
Industry data and competitor analysis is one strong method used in business research to determine if the products and services of one company will penetrate a market. This method uses external data from sources, such as Dun & Bradstreet, and competitor information sources to compare against its own set of products. * Case Study Case studies are comprehensive portrayal of how a product or service fulfills one client’s needs through that client’s experiences. This method reviews the strengths and weaknesses of the product or service through the course of use by a client. * Focus Groups
Focus groups are designed to get targeted consumers to provide honest feedback and suggestions on a product or service. Groups are generally hired by a third party to give potential customers’ the opportunity to express how the product does or does not meet their needs and desires. * Interview Design An interview often follows the actual consumer’s experience of the product. Consumers would opt in to answer a series of questions that express their level of satisfaction. * Listening Those who interact with the customer base can be trained to obtain valuable information by listening and interacting with clients and consumers.
This is an effective method of business research if personnel are trained properly to understand what customers are saying and properly relay that to management. * Questionnaires and Questioning Whether a consumer (or potential consumer) is being questioned via oral or written questionnaires, it is important to have the questions easy to read, understand and answer. If they are too in depth, consumers will be less likely to complete the questionnaire leaving the company with the expense of producing it with no results to work with. Methods of Research in Business
Business research is conducted to learn how a product can affect a company through profitability and market share. There are many different methods of business research, and the best method can be determined by asking what information the company is looking for. For example, if a company wants to know how profitable a product was in a certain market last year, it will use a different method than if it were trying to figure out how and why certain customers use a certain product. According to a study done by “USA Today,” there are four methods of research: Primary, secondary, quantitative and qualitative. Primary Primary research is research that is conducted by someone in the company or by an outsourced group; it is usually directed at target markets. Some examples of primary research are focus groups, interviews and consumer surveys or questionnaires. Although this type of research can be very useful when designing or marketing a product, it is very expensive and time-consuming. * Secondary Secondary research collects data compiled by others. Although less expensive than primary research, it is usually not as effective, because it was created with other products or similar target markets in mind.
Examples of secondary research include reports written by someone who conducted interviews, or a report written about the compilation of the U. S. Census. * Quantitative Quantitative research is based on numbers, statistics and facts. This can include financial facts or demographic numbers determined by surveys or data reports. Examples of this type of research include the past growth rates of a business, or the total amount consumers spent on a product in a year. Companies can use these numbers to determine how much inventory will be needed in the next year, or to forecast profits for the future by looking at trends. Qualitative Qualitative research looks at why people buy a product, instead of how much money a product can make. This type of research is subjective and open to interpretation. Case studies are an example of qualitative research; they determine how and why people behave the way they do. Experts in qualitative research can identify why people use a product and can forecast future needs of the target customer. Research Methods for a Business Student Research is an integral part of a business student’s academic career when he gets to college.
All of the papers a business student writes and the presentations he gives must be backed up and supported by research. Since a variety of research methods exist, students must select the most appropriate method to meet the needs of the project. * Interviews Interviews are an interactive research method that business students use when they want to get direct quotes from experts and professionals. Interviews are question-and-answer sessions with experts and professionals where the student records information he intends to use for a thesis or presentation.
Students must attribute the information they use, such as quotes or theories, back to the original source, which is the interviewee. * Surveys A business student may wish to develop and administer a survey as his research method. A survey research method involves soliciting feedback, opinions and perceptions from people in a randomly selected sample. The information that the business student wants to obtain is turned into questions on the survey. The survey can be administered either orally or on a piece of paper.
It is important for students to realize that in order for a survey to be effective, it must be quantitative. That is, the student must be able to measure or score survey answers to produce a statistic that is used to support a particular argument. An example of a quantitative question is “Rate the importance of customer service on a scale of 1 through 5, with 1 being ‘very important’ and 5 being ‘not Important. ‘” A scale is an effective and accurate way to collect quantitative information. * Visual Observation Depending on the topic at hand, a business student may perform a visual observation as his method of research.
This type of research method is best used when studying things such as consumer buying behaviors. A business student goes into a store and visually observes how random consumers behave when they make a purchase or pick out products. Witnessing consumers complain about prices, talk about the store’s competitors or comment about the quality of the products is information that a business student may use for a thesis on consumer buying patterns. * Literary References The most traditional way for business students to conduct research is through literary references.
Literary references, such as business journals, magazines, encyclopedias, textbooks and newspapers, serve as sources for information needed to support a thesis or point. Students quote these sources to substantiate their arguments. Literary references are often full of information, and can be searched for in libraries or on the Internet for added convenience. Essentials of Business Research Methods When companies want to determine what sales will be like during the holiday season or if consumers will respond well to the latest album by a musician, they undergo extensive business research.
Though some aspects of business research entail reviewing consumer comments, most of it involves statistical modeling and quantitative research methods. Thus, the essentials of this field focus primarily on math and statistics. * Qualitative Research Qualitative research is one of the first stages of conducting business research. James P. Neelankavil, author of “International Business Research” states qualitative research is a form of exploration: Analysts gather information surrounding the task at hand.
For instance, if a shoe company wants to assess how urban teens in New York City will respond to a new design, the researchers have test groups of teens and gauge their emotional reactions to the product. Neelankavil lists focus groups, thematic apperception tests and interviews as types of qualitative research. * Inputting Variables Creating a business model used to formulate a theory or hypothesis starts with inputting variables. Variables consist of quantitative information, such as past sales figures, number of purchases, inventory turnover and profit or loss figures.
Uma Sekaran and Roger Bougie, authors of “Research Methods for Business,” explain that researchers assess different variables including dependent, independent, moderating and mediating. Researchers also assess a time frame in which to record the data. For example, a 20-year old company will likely discard data from the first few years of its operations because such information is no longer relevant to its current business model and organizational structure. The best and most accurate models include many variables.
Data specific to the company might also be assessed against competitor and industry-related data. For example, a sharp decline in sales one month might be reviewed against performance in the industry. Comparisons of data indicate whether the trend is specific to the company or is an industry-wide trend. * Weighting the Data Business models designed to make a projection about the future must weigh some data with greater importance than others. For example, a card company trying to determine its Valentine’s Day sales will weigh sales in February with more importance than May’s figures.
Likewise, home construction companies that believe an economic recession will continue into the upcoming year will place more emphasis on construction figures from the last three months than it would from construction figures during the housing boom. The weighting process involves educated guesses by research analysts. However, these educated guesses can create many different results. This leeway is one reason why economic and business forecasts can display vastly different projections despite using the same data and variables. * Formulating Theories
Analysts develop theories and projections from the model’s results. However, theories must be carefully formulated to avoid misinterpretation of the data. For instance, a researcher might incorrectly theorize that sales are dropping because of a lack of consumer interest instead of major retailers no longer distributing the product. J. K. Sharma, author of “Business Statistics,” explains that researchers use a three-prong test to assess the relationship between variables: Chance coincidence, the possibility of a third variable influencing the data and mutual influence.
Research Techniques for Business Management Business management involves planning, coordinating, leading and controlling a company in order to produce profitable products and services. Research methods include conducting interviews, running focus group meetings, sending out surveys and analyzing the results to make informed decisions. The goal of research is to improve business operations. Use a combination of techniques to obtain comprehensive results in order to make your business successful. * Planning Effective business management depends on making good decisions based on facts.
Research allows you to uncover these facts. First, decide what problem you are trying to solve by conducting research for your business. Then, determine how you will use the results. Next, identify who has the information you need to perform your studies. For example, contact customers, suppliers, employees and vendors. Determine what kind of information you need. When redesigning a product, contact customers about their use of your current product or perhaps a competitor’s product. Decide how to collect the information so you can easily analyze the results to draw some useful conclusions.
Set a time frame for conducting your research. Schedule a date to present your findings. Once you have planned your research strategy, you can begin to use a variety of techniques to accomplish your goal. * Interviewing Customers or Employees When interviewing customers or employees, get their reactions and feelings, perceptions, examples of how your product or service has changed the way they work, and examples of how your product or service has improved their workplace. Focus on learning about what works. Ask interviewees to visualize what they want in future products and services.
This input should influence your design. * Conducting Focus Group Meetings Conduct a one- to two-hour focus group meeting for five to 10 people to get their collective feedback. Before the meeting, identify your objective and develop two or three questions to help you meet that objective. Invite your participants and encourage their candid feedback. Consider creating an audio or video recording of the meeting, with the participants’ permission. During the meeting, allow each participant to respond to the questions. Then, allow for discussion.
Make sure to allow enough time to thoroughly debate each question. Conclude your meeting by summarizing the general consensus. Produce a follow-up report. * Sending Surveys Decide who you want to participate in the survey, the questions you want to ask (the shorter your survey the more likely it will be completed) and what tool you want to use to distribute the questions. Targeting a particular population interested in your results increases the participation rates. Generally speaking, 30% of your invited participants should complete your survey to ensure that your results reflect the population.
Set a time frame for conducting your survey. Typically, responses occur within a day or two of receiving the invitation. Analyze the results to determine a course of action. Using these research techniques produces analysis that enables good business decision making. How to Apply Quantitative Analysis to the Hospitality Industry Quantitative analysis techniques such as descriptive statistics, regression analysis, time-series regression and input-output analysis provide useful methods for analyzing the challenges faced by hospitality-oriented businesses.
These techniques allow managers of hospitality and tourism-reliant businesses to monitor customer satisfaction and analyze the growth of their business over time. In addition, hospitality managers, chamber of commerce officials, and economic analysts can use quantitative techniques to estimate the impact of tourism industries on the local economy. * Instructions 1 Measure customer satisfaction by using satisfaction surveys. A high level of customer satisfaction is an important outcome measure for hospitality-related businesses, such as hotels, restaurants, and resorts.
Satisfaction surveys can be printed on a postcard-sized form with questions asking customers to rate their satisfaction with various aspects of their visit, such as quality of accommodations, food and service. The surveys can ask customers to rate their experience with a Likert scale of responses (e. g. , excellent, good, fair, poor). These responses can be numerically coded in a spreadsheet and analyzed with frequency distributions and descriptive statistics. 2 Estimate the impact of the hospitality and tourism industry by using input-output analysis.
This matrix-based method of economic analysis shows how parts of a system are affected by changes in one part of a system. The hospitality industry consists of different sectors, including hotels, restaurants, resorts, convention facilities, airlines, and other sectors. Each of these sectors can be thought of as inputs that combine to produce a local or regional economic impact. 3 Use longitudinal methods of analysis, such as time-series regression techniques, to analyze the hospitality industry over time.
Managers of hospitality and tourism-related businesses are likely to encounter longitudinal data, such as sales figures over multiple years, average daily hotel rates compared to other hotels, restaurant and hotel sales figures over a number of years, or hotel occupancy rates. Regression, which analyzes the impact of one of more independent variables over an outcome (dependent variable) of interest, such as sales or occupancy rates, provides a useful technique of analysis. Application of Regression Analysis in Business Linear regression analysis is a method of analyzing data that has two or more variables.
By creating the “best fit” line for all the data points in a two-variable system, values of y can be predicted from known values of x. Linear regression is used in business to predict events, manage product quality and analyze a variety of data types for decision-making. Linear regression analysis is an excellent management tool. * Trend Line Analysis Linear regression is used in the creation of trend lines, which uses past data to predict future performance or “trends. ” Usually, trend lines are used in business to show the movement of financial or product attributes over time.
Stock prices, oil prices, or product specifications can all be analyzed using trend lines. * Risk Analysis for Investments The capital asset pricing model was developed using linear regression analysis, and a common measure of the volatility of a stock or investment is its beta–which is determined using linear regression. Linear regression and its use is key in assessing the risk associated with most investment vehicles. * Sales or Market Forecasts Multivariate (having more than two variables) linear regression is a sophisticated method for forecasting sales volumes, or market movement to create comprehensive plans for growth.
This method is more accurate than trend analysis, as trend analysis only looks at how one variable changes with respect to another, where this method looks at how one variable will change when several other variables are modified. * Total Quality Control Quality control methods make frequent use of linear regression to analyze key product specifications and other measurable parameters of product or organizational quality (such as number of customer complaints over time, etc). * Linear Regression in Human Resources
Linear regression methods are also used to predict the demographics and types of future work forces for large companies. This helps the companies to prepare for the needs of the work force through development of good hiring plans and training plans for the existing employees. How to Use Qualitative Research Methods in Business Research Qualitative research methods in business research focus on the “why” factors that influence consumer behavior. This is a big change from normal quantitative research, which relies on hard data and statistics to draw conclusions.
Qualitative research analyzes unstructured information to help business owners make informed decisions about everything from policy changes to communication. Some of the more structured forms of qualitative research include focus groups, open-ended surveys, in-depth interviews, case studies and content analysis. To use qualitative research methods in business research, the company must first decide what it wishes to learn from the research and choose a research model accordingly. * Instructions 1 Design the research approach to use for the qualitative study.
Use the following guidelines to create an effective qualitative study. Define the purpose of the study in terms of the decisions that need to be made with the results and/or the aspect of the business you need to analyze. Consider the intended audience for the results of the study. For example, investors need different information than managers. Identify the type of information needed to make the necessary decisions defined earlier and to make the desired impact on the intended audience. Identify where the information will be gathered. Possible sources include employees, customers, management or similar groups.
Identify possible forms of qualitative data collection based on the factors discussed above and the deadline for obtaining the information. In addition to the common forms mentioned in the introduction, qualitative research also includes the analysis of customer reviews, media clips and reports. 2 Create the materials for the chosen research method as determined by the factors discussed in the previous step. For example, an open-ended survey requires the creation of the survey questions and the format in which the survey will be administered.
This may be in a traditional paper format or an online format, depending on the intended source of the information. 3 Conduct the qualitative research. Execute the chosen method with the target group for the source of the information. For example, provide a feedback form to each customer who buys a product, or administer the survey to the workers in a specific department. 4 Gather the data and analyze the results. Revisit the research design created in the first step to help organize the data collected.
Reviewing the goals and intended audience for the research design is the key to analysis. Read through the data to identify recurring themes such as strengths, weaknesses and suggestions. Organize the data according to the themes identified. Identify any causal relationships, patterns or associations. For example, customers who bought widget B came from the same ZIP code or everyone who attended the weekend seminar expressed doubts about the company’s goals. 5 Interpret the data based on the results of the analysis. Put the results of the analysis in perspective whenever possible.
This may include describing the program or product’s strengths and weaknesses or comparing the actual results to any predicted outcomes. The perspective depends largely on the factors discussed during the research design phase. Draw conclusions and make recommendations based on the information provided by the research. This includes suggestions for improving a product or a process and the current state of company goals, if applicable. Reference the conclusions and recommendations with specific information from the data analysis wherever possible.
For example, the presentation materials for the weekend seminar need to be revised to explain the company goals more clearly, because everyone who attended the last seminar expressed serious concern about the direction of the company. 6 Report the data. The intended audience identified during the research design phase determines how the data must be reported. Internal reports for upper-level management use different language than a document seeking external funding, for example. Allow employees to review the report and its conclusions. Create action plans based on the conclusions drawn in the report.
These action plans will attempt to correct any weaknesses or flaws exposed by the results of the qualitative research. Create a presentation that discusses the report and the resulting action plans for potential investors and management teams. Outline the exact process used to create the research results for duplication at a later date. Conducting the same study will provide major insights regarding the effectiveness of the action plans. What Are Qualitative Research Methods? Qualitative research seeks to explain intangible elements that are not easily measured with numbers and statistics.
Those who practice qualitative research use different methods to attain information about the subjects they seek to study. Qualitative methods are used in various fields to attain information about how people act in specific situations. A researcher’s approach, subject and discipline all determine the type of qualitative method used to attain information. * Approaches to Research There are a number of different approaches to qualitative research. Approaches are dependent on the type of research question or situation a researcher chooses to investigate.
Ethnography and field research are approaches that seek to describe a situation. Phenomenology and grounded theory are approaches that seek a theoretical understanding of a topic and focus on explaining rather than describing. Different approaches require the use of different methods for researchers to accomplish their goals. * Observational Methods Observational methods are used most often in conjunction with ethnography and field research. They can also be used with grounded theory and phenomenological approaches but it is less common.
There are two types of observational methods. Participant observation is observation in the research participant’s natural habitat. Participants often know that they are being observed. Direct observation implies that the researcher is less involved in the situation being observed and may be observing unbeknownst to the participants. * Interviews and Focus Groups Researchers set criteria for participants in order to obtain usable information. Interviews and focus groups yield very detailed information but rely on the participants to provide information about their own experiences.
Interviews consist of specific questions developed to gather information about the research topic. Researchers recruit many participants for individual interviews to gather as much information as possible about a subject. Focus groups consist of a group of people asked to provide information on a specific topic, and are most often used in marketing research. * Data Obtained Qualitative research methods leave the researcher with data. For observational methods, researchers take field notes on what they see and hear. These notes are transcribed, analyzed and coded for information relevant to the researcher’s topic.
Interviews and focus groups are recorded then transcribed and analyzed in the same way as field notes. Researchers look for common themes in their data that add understanding to the situation they are seeking to explain or describe. How Is Statistical Research Used in Business Decisions? Having the right information and being able to act on it is sometimes the difference between life and death for a small business. Firms need to be able to identify their target consumers and respond to their needs effectively or they risk fading away in an increasingly fast-paced business climate.
Statistical research arms managers with some of the important information they need to make more informed and more successful business decisions. Understanding how statistics can be applied to describe markets, develop advertising, set prices and respond to changing consumer demands is an integral part of becoming an effective business manager. * Defining Target Consumers Statistical research helps inform business decisions by defining the target consumer. Market research — statistical analysis of consumer trends, buying power and preferences — helps business managers develop products that better meet the needs of their customers.
Using statistical research, businesses can get a better idea of what sorts of products consumers need, how they will use them and what they will be able to pay. * Advertising Products Statistical research is also used to decide how to brand and advertise products or services. Statistical analysis helps to define target consumers, provide information about the industry and describe buying trends. All of this information can be very helpful to business managers and advertisers when making decisions about what sorts of messages to use and what products to feature in advertising.
Statistical research about media circulation — or what kinds of consumers use a certain type of media, and how many — can help inform decisions about where to purchase advertising. * Pricing Decisions One of the most important ways that statistical research is used in business decisions is to inform pricing decisions. Pricing a product for success can be difficult, so it’s often very important for business managers to be armed with statistical information that can help guide this process.
Statistics can help managers determine pricing trends, the sensitivity of consumers to higher or lower prices and the ratio of production costs to price. * Environmental Considerations According to the Missouri Small Business & Technology Development Centers, businesses’ decision-making practices are becoming increasingly reliant on statistics regarding their environmental impact. This is because a serious adverse effect on the environment has the potential to attract both regulatory and press attention and potentially damage a brand’s reputation among target markets.
Making decisions that help limit a firm’s environmental impact requires managers to have information about the potential environmental effects of a given production, distribution or sales method. Firms also use statistical information to determine the potential costs associated with more environmentally friendly business initiatives and to assess their feasibility. Quantitative Methods for Business Decisions Successful business decisions rely on quantitative methods to narrow possibilities and help predict what options will have the greatest chance of success.
Whether you are making purchasing, marketing or financing decisions, it is essential to obtain a quantitative foundation to assist in the decision-making process. Using math and numbers to back up your business decisions helps you make more informed choices and can help increase your company’s success. * Probability Use probability to determine the long-term chance of profitability on products you offer and to help allocate resources. For example, in the insurance field business decisions on rates can be set by the probability of claims based on variables such as demographic and geographic differences.
You also can use probability to determine which of your products or services have the greatest potential for profits. Make the business decision to allocate financial and employee resources based on profit potential. * Forecasting Apply forecasting techniques such as moving average, exponential smoothing and linear regression to predict future business events based on prior data. Most forecasting methods assume that future events will be similar to prior events, given that no major changes occur. Forecasting can be used to help make financing decisions, product decisions and even staffing decisions.
Forecasting is one of the most powerful quantitative methods for assisting with business decisions. Use forecasting information as a foundation and modify based on known changes to increase business decision reliability. * Data Mining Use data mining techniques such as averaging, stacking or meta-learning to discover patterns or relationships in your business data. Look for customer buying patterns, feature preferences, seasonal variations and any variable that can be used to pinpoint future customer choices.
If you sell dresses, you may find that half of your customer purchases are for black dresses and that sales spike at the beginning of December. Armed with this information, you can make the business decision to stock more black dresses and to increase your dress inventory in December to maximize sales. * Time Analysis Apply time series analysis methods to make financial business decisions. Time value of money is a foundational concept in finance and helps you determine what investments will be worth in the future.
These methods can be used for standard financial instruments like bonds, but also can be applied to capital investments like building decisions. Make business decisions by comparing the future value of a capital investment to alternative investments. For example, you can compare the future value of a new production plant versus investing in a high-yield bond to see if the plant investment would beat a standard market return. Applications for Quantitative Techniques in Business Decision Making Quantitative techniques use surveys, tests, experiments and other data-gathering methods to assemble information.
The facts gathered in this way can be used to help make business decisions about marketing, advertising, packaging, assembly techniques, financial decisions, which services to offer and many other business considerations. Both gathering and analyzing information is crucial to applying quantitative data to good business decisions. * Finances One area where quantitative techniques are applied in business is in the area of finances. Some of the models that financial managers and analysts use are return on investment, decision trees and net present value.
Financial analysts determine how much profit a particular product brings in versus the costs of producing that product. They run regressions and analyses to note trends over time and determine how much to invest in a particular business line. Financial analysts also use quantitative methods to determine productivity and whether or not to hire, retain or lay off workers. They use quantitative data to manage risk and create investment vehicles. * Advertising Advertisers use quantitative data to determine how many viewers or readers will see a particular advertisement in a particular medium.
They use data from rating services to find out how many people click on a certain website or watch a particular television show at any time. Advertisers also use quantitative data to do pre- and post-testing of advertisements. Advertisers use surveys to test ad recall in viewers, and attitudes about proposed advertisements, among other things. * Marketing Companies make heavy use of statistics to determine how to market their products, which markets their products and services will do best in and which consumers will buy their products.
There are thousands of companies in the United States that gather and analyze data about consumer interests, desires, likes, dislikes, motivations and concerns. Marketers use this data to focus sponsorships, direct mail campaigns and position their companies in the general culture. Marketers also use data from UPC codes at stores (often in combination with shopper discount cards) to determine who is buying their products, how often and where. This also gives them important information to use in making decisions about stocking, delivery and promotions. * Insurance Insurance companies have a multitude of applications for quantitative data.
Although many of these applications could transfer to other businesses, insurance companies have dozens of statisticians or actuaries on staff. Therefore, they have the manpower and know-how to analyze mountains of data. For example, insurance companies gather data about each salesperson in each line of business. They then analyze the data to see if there are similarities in the top salespeople so they can recommend improvements to those not doing so well. They also see which lines of business produce profit and which should be closed down because they are unprofitable.
Insurance company actuaries also analyze data on accidents, fires, floods and other mishaps that require them to pay out money and use these analyses to set insurance rates for their customers. The Advantages of Using Quantitative Methods in Nursing Research When doing any kind of research, it is important to decide whether you will use qualitative data, quantitative data or a mixed methods approach. A lot of research that is done in the medical field is quantitative. * Function The function of quantitative data is to use an accurate approach to collect and analyze any data that has been measured.
It is generally precise and based upon numbers. One of the purposes of quantitative research is to be deductive, rather than inductive. * Benefits Quantitative research is numbers-based. This can make it very precise, which is important when you are doing research in the medical field. When used appropriately, the results of quantitative research can be generalized. * Considerations When you are doing quantitative research, you will need a hypothesis. You should select your approach to research based on what is suitable for your topic.