Effective Ways to Research New Markets
Without the budget of a multinational, you can still get insights to make your market entry strategy successful.
You can understand a market better by simply talking to people you imagine might buy your product.
Entering a new export market is risky and failure in one market can result in small businesses abandoning their export programme altogether. Making informed decisions before entering new markets will reduce the risk and there are ways of getting information that won’t break the bank.
The internet has revolutionised the way in which small businesses are able to research overseas markets and an investment in time is the only thing that’s needed to formulate an effective market entry strategy without having the budget of a multinational company.
The UPS Export Toolkit is the perfect place to start in order to find information on the size of different markets and sectors and to establish how much trade takes place in certain commodities. Using the trade flow data tool will enable you to see how interested the importing country is in your commodity and to measure your country’s market share. More statistical information can be obtained from the websites of organisations like the United Nations, World Bank and CIA.
Emailing the commercial representatives at the embassies of the countries you’re considering can be very useful. If there are Chambers of Commerce from those markets in your country, then it would also be worth visiting them to see if you can get more information.
Governments around the world often have websites aimed at promoting exports, as do Chambers of Commerce, some of which can be helpful as sources of information about the countries you’re looking to export to. These are helpful in establishing if trade agreements exist, which could mean you qualify for discounted duties and excise.
When compiling a shortlist of countries you wish to target, you should consider the ease of doing business there. Are there language barriers or political risks to trading in a particular market? Having someone in your organisation who speaks the right language or can read documents in a particular alphabet can be enormously helpful to you when you’re negotiating with customers.
Identifying whether an opportunity exists for your product is more difficult to establish. Internet searches will help identify who the large companies are in the sector you’re planning to target. Their corporate websites can then be scanned to find their annual reports. A large amount of information can be gleaned from these, which helps you establish where those companies are located, what their long-term marketing plans are, and how they’re expanding or contracting.
Annual reports typically give insights into who the companies sell to and you’ll be able to gauge whether they sell to the consumers you think are most likely to buy your products. Once you’ve compiled a list of target companies, you can figure out where their markets are and what your distribution strategy will need to be.
Attending international trade shows will give you an opportunity to establish who some of the smaller companies are in your sector and you’ll be able to identify some competitors. You’ll be able to see what their products look like and, with a little bit of sleuth work, you should be able to find out how their products are priced in the market you’re targeting. This will give you an indication of what your products will need to sell for or if you’ll need to re-examine your pricing strategy to make your products more competitive.
Try to talk to potential customers at trade shows. Your task will to be to establish whether you’ll be competing against lots of other companies or if there are major barriers to selling to those customers, such as listing fees or policies to only buy from domestic suppliers. Try to find out who their existing suppliers are, which will give you the opportunity to establish how powerful your competitors are and to examine whether your products are any different.
It’s important to have realistic expectations. In mature markets where lots of competitors exist, it may be really difficult to penetrate the market unless you’ve identified a specific niche that had been ignored. Entering markets with more powerful competitors will mean you’ll have low visibility and brand recognition, which makes selling difficult.
When you’ve prioritised the markets you’d like to enter, then it’s probably advisable to visit that country. You’ll need to meet potential agents or customers and you’ll quickly see all the other brands you’ll be competing with. You’ll also see how they’re promoted and, with the help of an interpreter, you’ll be able to ask people what they buy and how your product needs to change to meet their needs. Insights into consumer benefits will help you create presentations to potential distributors or customers.
During your visit, you should spend some time at a library. The librarians may be able to direct you to existing research, directories or reference guides that might help you. Trade journals, magazines, newspapers and industry newsletters will also help you identify trends in your industry and find out about what your competitors are up to. Research data is sometimes published in trade magazines, which can give you great insights into your sector.
Be careful not to presume that consumers are the same all over the country. The needs of consumers can vary geographically and so it’s important to look at the data you’ve collected on population demographics and evaluate whether these are indicators of regional differences. Ask people if they think those living in other cities might be interested in your products. This will help you better size your target market and figure out how your products should be positioned.
You won’t have the scientific result that formal marketing can give you through focus groups, but by talking to people you’ll get an indication of whether consumers might respond to your products or not. You might also consider contacting the marketing department at a university in the target country to see if they can help you with formal research as a student project.
Gathering as much marketing information as possible on the country you’re going to target is the best way of minimising the risk when entering a new market. Armed with the right information, you’ll be able to better position your product, target the right customers, and promote your brand more effectively.