| 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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