Observation is a natural way to gather data and can provide more real information than other methods. There are two types of observation: structured, where activities and characteristics are decided in advance; and unstructured, where the observer notes whatever is relevant. Participant observation involves the observer becoming part of the group, while non-participant observation keeps the observer outside the group. Advantages include efficiency and quick results, while disadvantages include potential for bias and limited information. Care must be taken to focus observations and record them objectively.