Successful companies focus on one foreign market at a time, moving on to the next only after being successful in the last. Demand and trend are the two key factors that determine which countries
select first and how to prioritize.
Market research helps you identify promising markets through objective analysis of available data and statistics. True, many companies start exporting whenever they receive unsolicited orders from abroad. Although this type of sale is valuable, the company can discover even more promising markets by conducting systematic research.
Primary and Secondary Market Research
Market research is carried out by analyzing primary or secondary data resources. When conducting primary market research, a company collects data directly from the foreign market through interviews, surveys, feedback, and other direct contact with potential buyers. Primary market research has the advantage of being tailored to the needs of the business and providing answers to specific questions, but it is invariably time consuming and expensive.
Secondary market research is based on the analysis of statistical data, such as business statistics. To be effective, the data must be reliable and cover a significant historical period. Although it is considerably less expensive than primary research, one must be aware of its limitations. For example, the most recent statistics for some countries may be more than two years old. Also, the data may be too large to be of much value to a business. Statistics can also be distorted by incomplete data collection techniques. Finally, service statistics are often not available. However, even with these limitations, secondary research is a valuable and relatively easy first step for a company to take. It may be the only step necessary if the company decides to export indirectly through a broker, as the broker may have advanced investigative capabilities.
Step 1: collect data
Collect export statistics published by authentic sources. In India, there are two main sources of reliable trade statistics: the Directorate General of Trade Intelligence and Statistics (DGCIS) and Customs.
DGCIS publishes ‘India Monthly Foreign Trade Statistics’ Its March issue contains cumulative data for the entire fiscal year (April to March). After publishing extremely voluminous books for years, the DGCIS began publishing these data on CD-ROM starting in 2004.
DGCIS statistics are extremely important for data analysis at the macro level. Product and country (as well as country and product) statistics for the entire year can be found in DGCIS publications.
You can find more information about the DGCIS data, including examples, at Sources and evaluation of foreign trade statistics of India
The customs department publishes the port “Daily List of Export and Import”. This list contains brief details of each shipment made through a seaport or airport. For more information, including demo
data verification Eximstat database
Step 2: Identify promising markets
Identify five to ten large, fast-growing markets for the products in your export basket. Check volume and trend for a 5-10 year historical perspective. Ask critical questions: Has the market growth been consistent year over year? Has there been a change in product choice? Was there a seasonal bias?
For example, analysis of spice export data from recent years may show increasing sales of curry-type mixed spice powders and modest or decreasing sales of whole seeds.
Another example: the increase in rice exports to Bangladesh can be attributed to the flooding in that country rather than any long-term change in the demand profile. Such an increase in demand is unlikely to be sustained for long and should be considered a temporary phenomenon.
In both cases, historical analysis of foreign trade statistics can help you identify seasonal bias or change in demand.
Step 3: Identify emerging markets
Identify some smaller but fast-growing markets that can provide basic opportunities. If the market is just beginning to open up, there may be fewer competitors than in established markets. Growth rates would need to be substantially higher in these countries to qualify as promising markets, given the lower starting point.
Step 4: Evaluate Target Markets
Determine the sources of competition, including the scope of production of the national industry. Analyze the factors that affect product marketing and usage in each market, such as end-user sectors, distribution channels, cultural factors, and business practices. Finally, identify the tariff and non-tariff barriers (if any) for the product being imported into the destination country.
Step 5 – Draw the final list
After analyzing the data, the company may conclude that its marketing resources would be more effectively applied to a few countries. In general, if the company is new to exporting, the efforts should be directed at less than ten markets. Exporting to one or two countries will allow the company to focus its resources without jeopardizing its domestic sales efforts.