What is research and development? Plus features and benefits

By Indeed Editorial Team

Published 18 July 2022

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.

For businesses to stay relevant in the marketplace and remain competitive, it's essential for them to deliver valuable products and services that meet consumer demands continually. To do this, businesses have research and development (R&D) teams whose job is to understand what consumers want and develop products that fulfil their needs and desires. Knowing more about the tasks of an R&D department can help you understand how important they are and the benefits they bring to businesses. In this article, we explain what R&D is, discuss its features and benefits and outline the responsibilities of an R&D team.

Related: R and D: types and benefits of research and development

What is research and development in business?

Research and development is the process of creating new products that align with market trends and consumer demands. To initiate the process, businesses analyse markets to better understand what consumers want. Then they devise ways of meeting these demands through the development of new products and services. The following are some of the activities involved in R&D:

  • studying consumer data and extracting insights

  • manufacturing and testing prototypes

  • researching markets through surveys

  • using market research to inform improvements to products and services

Depending on the company's business needs, two distinct types of R&D departments exist. One focuses on developing products through scientific research, which may include beauty or health products that require testing before customers can safely use them. The other utilises an engineering-centred approach to R&D, which involves prototyping and testing products to assess how the market receives them.

Related: What is concurrent engineering in product development?

What does the R&D department do?

The primary responsibility of R&D departments is to determine which products and services are likely to succeed in the marketplace if the business offers them to customers. To achieve this, R&D departments gather and analyse relevant data and use the insights they extract to develop products and services that are in demand. Here are some of the primary responsibilities of these professionals:

Product research

Research is one of the most critical activities of the R&D department, as it's an essential step before the development process can begin. The process starts once the R&D department receives a product or service proposal. Research activities take multiple forms, such as surveying and testing. The objectives of the research stage are to determine how customers define value, the technical details of how to build a product, how the business can market it and how successful they predict the product may be.

Related: Correlation vs. causation in product design and development

Product development

This stage involves the actual development of the product using the insights gathered during the research stage. Following the research specifications ensures products align with customer needs and the technical details. As an example, if a company wants to develop a new mobile phone, the R&D department may look to figure out the most appropriate dimensions based on the size of users' hands. This helps them create an ergonomic design with appropriately placed buttons and a reasonable screen size. R&D staff may use these insights to develop prototypes to test so they can optimise a final design.

Related: Product manager vs. product owner: what are the differences?

Product updates

To continuously deliver value for customers, R&D departments also work on current products and analyse their performance to discover ways to improve them. They may do this by distributing surveys to consumers and studying other data to figure out what customers like and dislike about products. They can then create new prototypes or updates and test them in the field to see how customers respond.

Related: How to create product plans (with steps and best practices)

Quality control

Quality control is an essential part of product development, as it is a set of measures that ensure adherence to strict quality standards. R&D staff conduct tests to ensure products meet or exceed the requirements of the project brief. This may involve designing and performing tests on products within the department or speaking directly with customers to gather feedback. Quality control helps R&D departments finalise products according to feedback from tests and customers.

Related: Product quality: methodologies, benefits and classification

Market research

Market research is an essential part of R&D because it helps businesses identify gaps in markets and what's in demand. Here are some of the things they look out for when performing market research:

  • which shops may stock the product

  • how the business may reasonably price the product

  • ideas about how to successfully market the product

  • what quantities of the products to produce

  • ideas about packaging design to entice new consumers

Related: How to conduct market research (with types and benefits)

Benefits of R&D

Using an R&D department has multiple benefits for businesses. The following are some of the most significant ones for you to consider:

Promotes innovation

R&D is important for determining what clients and customers need. By understanding this, businesses can better determine whether current products on the market fulfil those needs. If there aren't any current products available, they can introduce an innovative new product or improve existing ones. For example, voice control on phones and applications is an innovative service that simplifies consumers' daily lives.

Related: Product manager vs. product marketing manager explained

Helps businesses stay relevant

R&D enables businesses to offer the most up-to-date products for consumers by developing new products or improving existing ones. In today's market, new products from other companies may offer minor improvements that consumers desire. R&D can find useful ways to implement those improvements in their company's products, such as developing a unique version of voice control for its brand of mobile phones.

Supports effective customer service

The R&D process helps businesses discover and deliver that which is most useful to customers. It allows businesses to offer improved usability of their products consistently, potentially increasing customer satisfaction. This helps businesses retain customers over the long term and encourage repeat purchases.

Ensures quality products

Through the process of R&D, the team often discovers the best way to build a product. The department completes testing to ensure the product is of high quality before it ever reaches the market. This ensures products are of a high standard and meet customer expectations without risking damaging the brand's reputation by releasing products early.

Offers potential tax breaks

Businesses can often deduct R&D costs for tax purposes. This depends on the tax jurisdiction in which the business operates, so it's important to understand the specific tax situation that applies to a business. You can learn more about this by searching for 'research and development tax relief' on the government website.

Helps with finding investors

Having an R&D department can be useful for attracting investment, as it offers investors an idea of how useful the product may be, how marketable it is and how much demand exists for the product. R&D can provide investors with the information they require to determine how much they stand to profit from investing. Businesses may fund the R&D of a product so they can use the data to attract investment to fund the manufacture of the products.

Helps with securing patents

R&D departments help businesses secure patents for product designs, giving them legal ownership of the designs. They can also use their expertise to design products in such a way that they qualify for patents, as it's essential for patented products to be unique. Even if products are new iterations of existing products, they can still qualify for patents if they differ significantly from the original. Patent laws vary by country, so it's important to consider where a business is registered and where it operates when filing for patents.

Related: What is a patent? (With types and how to apply for one)

Gaining a competitive edge

Businesses that use R&D effectively can gain a competitive edge over other businesses operating within the same market, especially those without an R&D department. The R&D process can help businesses produce successful products while minimising associated risks. R&D can also help businesses produce valuable intellectual property that generates revenue.

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