*Disclaimer: This post was originally found on export.gov. Website: https://www.export.gov/article2?id=Developing-a-Marketing-Plan
As you develop your export plan and conduct global market research, you will be looking to narrow down your selection to your best export destinations. Selecting Initial Export Markets is the second of five videos in the Plan Your Market Entry set. The video will help you prioritize your research by outlining the importance of researching similar products in foreign markets, language and local cultural issues, and topics such as product certification, pricing, and regional approaches to exporting.
As noted in the video, narrowing your market research will help to identify specific differences in foreign markets that you should be aware of, including any or all of the following:
- Climatic and environmental factors
- Social and cultural factors
- Local availability of raw materials or product alternatives
- Lower wage costs
- Varying amounts of purchasing power
- Availability of foreign exchange
- Government import controls
A Step-by-Step Approach to Market Research
Your company may find the following approach useful. It involves screening potential markets, assessing the targeted markets, and drawing conclusions.
Screening Potential Markets
Once you have obtained your export statistics your company might find the following approach useful.
Step 1: Identify Potential Markets
- First, identify 5 to 10 large and fast-growing markets for your company’s product. Look at trends over the past 3 to 5 years. Has market growth been consistent year-to-year? Did import growth occur even during periods of economic recession? If not, did growth resume with economic recovery?
- Then, take a look at some smaller, fast-emerging markets that may provide ground-floor opportunities. If the market is just beginning to open up, there may be fewer competitors than in established markets. To qualify as up-and-coming markets, these countries should have substantially higher growth rates. Burma (which recently opened its economy after years of economic sanctions) and Morocco (which entered into a free trade agreement with the United States in 2005) are good examples of such markets.
- Look also at groupings of countries such as those with which the United States has free trade agreements within Latin America. Or look at regions within large countries such as western Canada or far eastern Russia. The U.S. Commercial Service has regional services that will help you find buyers in multiple countries in, for example, East Asia. If you’re targeting Hong Kong and the Pearl River Delta area, why not stop in nearby Thailand or Singapore?
Step 2: Target the Most Promising Markets
- Of the markets you have identified, select three to five of the most statistically promising for further assessment. Consult with a U.S. Commercial Service trade specialist, business associates, freight forwarders, and others to further evaluate targeted markets.
Assessing Targeted Markets
Step 1: Examine Product Trends
- Look at your products as well as related products that could influence demand. Calculate overall consumption of the product and the amount imported. The U.S. Commercial Service offers market research reports that provide economic background and market trends by country and industry. Demographic information (such as population and age) can be obtained from the U.S. Census Bureau (https://www.census.gov/population/international/) and from the United Nations Statistics Division (https://unstats.un.org/home/).
Step 2: Research the Competition
- Sources of competition include the domestic industry in each targeted market and competitors from other foreign countries. Look at each competitor’s U.S. market share, as well as its share in the targeted market. U.S. Commercial Service market research reports and other competitive assessments are available athttps://www.export.gov/Market-Intelligence.
Step 3: Analyze Marketing Factors
- Analyze factors affecting the marketing and use of your product in each market, such as end-user sectors, channels of distribution, cultural idiosyncrasies (for example, when translated into the local language, does your product’s name mean something inappropriate?), and business practices. Again, the market research reports and customized market research offered by the U.S. Commercial Service are useful.
Step 4: Identify Any Barriers
- Foreign barriers to imports can be tariff or non-tariff. U.S. barriers could include export controls. If you make a product that may have both civilian and military uses, you may need an export license. The U.S. Commercial Service can help you determine whether a license is necessary.
Step 5: Identify Any Incentives
- The U.S. or foreign government may offer incentives that promote exporting of your particular product or service.
- After analyzing the data, you may conclude that your marketing resources would be applied more effectively to a few select countries. In general, if your company is new to exporting, then efforts should be directed to fewer than 10 markets. Exporting to a manageable number of countries allows you to focus your resources without jeopardizing your domestic sales efforts.
- Your company’s internal resources should determine what choices you make. The U.S. government, though, has programs that can assist you with exporting to multiple markets within the same region. The U.S. Commercial Service, for example, has regional export promotion programs in Asia, Europe, the Middle East, and the Americas, in addition to country-and-industry-specific resources.