After the export plan, market research is the most important contributor to international success. With 190 countries to choose from, you want to pick the right market for your product or service. To do this you need to get a clear picture of the political, economic and cultural factors that can affect how you operate. You may need specific information to take advantage of an opportunity you already know about or may have a target market for which you need more detailed information on demand. The key to understanding these opportunities, confirming that they insist and developing market successfully lies in market research. There are three basic steps to international market research:
Market screening
To screen potential markets start by collecting statistics on exports to third countries within your sector. Identify between five and ten large, growing markets and see whether they have experienced consistent growth over the past three to five years. See how recession has affected growth. Check for opportunities in smaller emerging markets where you may have less competition. Then select three to five of the most promising markets for further study.
Assess target markets
With those markets, look at trends that could influence demand of your product or service. Work out overall consumption and identify how much has been imported. Study the competition and look at each competitor’s market share. Examine the channels of distribution, cultural differences and business practices that affect the marketing and use of a product or service in a particular market. Check for export controls and tariff or non-tariff barriers to imports. Look for government incentives which will help with export promotion.
Draw conclusions
Once you have completed your analysis, you may decide to limit your marketing efforts to a few countries. If you are new to exporting, it’s best to concentrate on fewer than ten markets — one or two countries are usually enough.
Market types
When you are screening markets it is important to understand the three types of markets exist. These are:
Type 1
Fast paced competitive economies such as the United States and Western Europe where you will only succeed with efficient delivery of products and services, excellent quality assurance and an in-depth marketing plan. Use local partners to handle linguistic and cultural differences.
Type 2
Relationship-based, affluent economies such as some South American countries. For these markets you will need interpersonal communication skills, cultural sensitivity and linguistic fluency to develop a business relationship with a local partner — and these should be developed at a senior level.
Type 3
International financial institution (IFI) funded economies such as Africa. In these developing economies market development can take time and it is important to be flexible and politically astute. Experience working with third party funding organisations is also very helpful.
Don’t ever feel that you can’t compete overseas. The market for your product or service may not be obvious but if your domestic market is healthy, why shouldn’t your products and services sell abroad? It’s not just price that is the selling point but need, utility, quality, service, credit and consumer taste can also help you to be competitive.
Types of market research
There are many ways to study a market. Some people call with gut feelings while others prefer to work with statistics. The more detailed your research is, the less likely you are to miss something important. There are two types of market research: secondary and primary.
Secondary research uses data from studies, market reports, books, periodicals, surveys and statistical analyses. Use information from Chambers of Commerce, economic development organisations, industry and trade associations and local businesses that are already working in your target market.
Once you have completed this step, move on to primary research. You collect this through direct contact with potential customers or other sources. You usually have to get personally involved in this process and you will need to have a clear idea of your company’s objectives and what you want to find out. For example, you should give a brief description of your company, its history, the markets it serves, professional affiliations and your product or service. Use your secondary research to help you describe one or more objectives for your proposed export product or service. Clearly describe that product or service and ask specific questions, basing this on your secondary research.
Source: www.exportsource.ca.
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