Which Countries Offer the Best Prospects for Your Product or Service?
Conducting Market Research
International market research is a key piece of successful export planning. It is important to critically review and assess if the potential export destination is suitable for your product or service. You need to determine if there is a market, if your product is competitive after determining the landed cost, and then the most cost-effective and time-efficient export strategy.
Start by collecting trade data to gauge market size. Look for where opportunities may exist, whether demand is increasing or decreasing, and if there is competition.
For smaller companies, identifying 3 to 5 potential markets might be a good number to explore. You may also group potential countries by largest markets, fastest growing markets, and smaller markets with high growth.
Then review country and industry reports to assess market conditions, opportunities and challenges. This will help you decide which markets represent the best opportunities and are worth the investment of additional resources.
Step 1: Develop Your Research Questions
If you are a new exporter, consider:
- How large are your potential markets?
- What countries/markets are currently buying products like yours?
- Who are your competitors, from which countries do they come, and how large are they?
- What are the required standards, testing, and certifications?
- Do your products (or their labeling or packaging) need to be modified for one or more markets?
- What duties, taxes, and other costs apply? What are the shipping costs and partner margins? What is the landed cost, or total export price?
- Is your price point appealing within the market? If not, what can you do to make it more appealing?
- What distribution channels are available?
If you are an active exporter considering a new export market, or re-assessing a current market, it is equally important to conduct this market research as conditions frequently change. For example, there could be different shipping costs, tariffs, and regulations affecting your business.
Step 2: Conduct Research
Primary market research is information collected directly from the foreign marketplace through interviews, surveys, and other direct contact with representatives and potential buyers. Attending trade shows (in the U.S. or in international locations), conferences or other industry venues can be useful places for many primary market research conversations.
Secondary market research is information obtained from other sources, such as trade statistics or reports for a country or a product. This information tends to be less expensive, and in some cases, free.
Step 3: Review Potential Markets
For most small businesses, 3-5 foreign markets are enough - initially. You may want to test one market and then move on to secondary markets as your experience level develops. Additionally, it can be more cost-effective to focus on geographic regions rather than markets scattered around the globe.
Using the resources from your market research, evaluate the potential based on your research questions (above) and these additional factors:
- Consistent market growth, and/or industry sector growth in the other country
- Free Trade Agreement with the U.S.
- Specific region within the country to target instead of the whole country
- Demand for your type of product or related products to gauge overall consumption trends
- Presence of local or other international competitors
- Environment for your marketing material (costs of translation, does your product’s name translate accurately?)
- Tariff or non-tariff barriers which might affect your product
Step 4: Develop an Export Plan
Once you have decided that your company is able to export and committed to it, develop your export plan with the data and insights you found. A customized export plan is a valuable strategic and operational tool for growing your export business.
It takes time to build an international business - often months, and sometimes years, to see a return on investment. By committing to the written plan, you can help ensure that your company continues to work towards long-term goals.