| Successful companies concentrate on one foreign
market at a time, moving on to the next only after succeeding in
the last. Demand and trend are the two key factors that determine
which countries to select first and how to set priorities.
Market research helps you identify promising markets through objective
analysis of available facts and statistics. Its true, many companies
start export whenever it receives unsolicited orders from abroad.
Although this type of selling is valuable, the company may discover
even more promising markets by conducting a systematic search.
Primary and Secondary Market Research
Market research is conducted by analysing primary
or secondary data resources. In conducting primary market research,
a company collects data directly from foreign marketplace through
interviews, surveys, feedback and other such direct contact with
potential buyers. Primary market research has the advantage of being
tailored to the company's needs and provides answers to specific
questions, but it is invariably time consuming and very expensive.
Secondary market research is based on analysis of statistical data
such as trade statistics. To be effective, the data should be reliable
and cover significant historical period. Though it is considerably
less expensive than primary research, one should be aware of its
limitations. For example, the most recent statistics for some countries
may be more than two years old. Moreover, the data may be too broad
to be of much value to a company. Statistics may also be distorted
by incomplete data-gathering techniques. Finally, statistics for
services are often unavailable. Yet, 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 needed if the company
decides to export indirectly through an intermediary, since the
later may have advanced research capabilities
Step 1 - Collect Data
Collect export statistics published by authentic
sources. In India, there are two major sources for reliable trade
statistics - DGCIS and Customs.
Directorate General of Commercial Intelligence and Statistics (DGCIS)
publishes 'Monthly Statistics of Foreign Trade of India' Its March
issue contains cumulative data for whole financial year (April to
March). After publishing extremely voluminous books for years -
DGCIS has started publishing this data in CD-ROM from 2004.
DGCIS statistics is extremely important for macro level data analysis.
One can find out product and country wise (as also country and product
wise) statistics for whole year from DGCIS publications. For more
information on DGCIS data including example - please read Faida
Article How to Sell your Product in International
Market - Part 2 : Sources and Evaluation of Indian Foreign Trade
Statistics
Customs department publishes port-wise 'Daily List of Export and
Import'. This list contains brief details of every shipment made
through a seaport or airport. For more information including demo
data - please visit Eximstat Database
Step 2 - Identify Promising Markets
Identify five to ten large and fast-growing markets
for products in your export basket. Check volume as well as trend
for a historical perspective of 5 to 10 years. Ask critical questions
- has market growth been consistent year to year ? Has there been
a shift in product choice ? Was there a seasonal bias ?
For example - analysis of spice export data for last few years may
show increasing sale of curry-type mixed powder spices and modest
or decreasing sale of whole seeds.
Another example - increased rice export to Bangladesh may be traced
to floods in that country rather than any long term change in demand
profile. Such spurt in demand is unlikely to sustain 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 shift in demand.
Step 3 - Identify Emerging Markets
Identify some smaller but 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. Growth rates should
be substantially higher in these countries to qualify as up-and-coming
markets, given the lower starting point.
Step 4 - Assess Target Markets
Ascertain the sources of competition, including the extent of domestic
industry production. Analyze factors affecting marketing and use of
the product in each market, such as end-user sectors, channels of
distribution, cultural factors and business practices. Finally, identify
tariff and non-tariff barriers (if any) for the product being imported
into the target country
Step 5 - Draw Final List
After analyzing the data, the company may conclude that its marketing
resources would be applied more effectively to a few countries. In
general, if the company is new to exporting, then efforts should be
directed to fewer than ten markets. Exporting to one or two countries
will allow the company to focus its resources without jeopardizing
its domestic sales efforts. The company's internal resources should
determine its level of effort.
Happy and Productive Surfing
Dr. Amit K Chatterjee
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