Market Research
The goal of market research is to identify the market best suited to your export endeavours (the target market) and to increase your understanding of this market in order to enable you to enter it most effectively for long-term success. Market research allows you to determine that an opportunity exists and minimizes the risk of going after it by uncovering and identifying potential problems. It helps you to gauge the market characteristics in relation to your products and plans, and to learn how a new market can be developed. Through market research, you can see who is presently supplying that market in your product area, your level of competitiveness (including if your product is up to standards, compliance etc.), potential partners, buyers and distributors and barriers to trade (tariff and non-tariff) among other things. Furthermore, when done correctly, it also enables you to gain an accurate, up to date picture of political, economic and cultural factors that influence that market.
Market research is an ongoing process. It assists you by guiding your business decisions and, in turn, your communication with current and potential customers. It helps you evaluate your success, identifying problems that are limiting your success and pointing out the strengths that are driving your success.
Market research is an activity that narrows a company’s focus from the broad to the specific, from initial determination of the most suitable type of market for your product, to review of a short list of potential markets within this category or type, and finally, to selection of one specific target market most suited to your product and capabilities. You then move into more detailed research regarding the selected market: the systematic, objective collection and analysis of data of the target market (market structure, economic trends, government regulations, competition, etc.).
Conducting Market Research
Because of the cost of launching your product in a new market, you should eventually be focusing your efforts on one market only and you should be prepared to stay in that market for the long term. At the outset of your research, it is important to consider a few potential target markets and analyze each prior to making a final selection. But you should proceed to reduce the target of your efforts to one chosen market at the end of your initial market research.
How do you select the right target market? While there is no one simple answer for every product and country, it is safe to say that the selection of a target market should only be made after considerable research. Too often the decision to export is made for very casual reasons and is not based on sound research and analysis. For instance, you may know about an export opportunity (possibly because your country’s government is organizing a trade mission to the country). In this case, you know about the opportunity but not much about the country and the market. Alternatively you may know about the country (perhaps because you have a friend of relative living there), but you may not know if there is any opportunity for your product. In any event, market research is needed to establish that the opportunity exists and to develop the knowledge of the market in which it is found.
Before commencing research on specific target markets, you should have a good understanding of what type or category of market you are interested in pursuing. There are three main types or categories of markets including:
- Efficient delivery;
- Fast, efficient communications;
- Excellent Quality Assurance;
- Good media profile (important for many consumer products);
- Good local partners if language a challenge.
- Good communications skills;
- Cultural sensitivity;
- Fluency in local language for close contacts;
- Building trust at senior level.
- Understanding of developing economies;
- Patience: Market penetration takes time;
- Flexibility to deal with different situations;
- Awareness of political situation;
- Experience working with aid or IFI funded projects.
- Business (cultural, legal) information
- Partnering options
- Support for market entry strategies
- General culture (business and other)
- National representation (your nation) in the target market
- Travel information (visas, permits, etc.)
- Incentives, financial assistance