How to Research Export Markets
A guide to what small and medium enterprises should do before launching overseas
Exporting is one of the biggest steps your business will take, so it is vital you do your homework.
Exporting to a new market will be one of the most difficult and risky tasks your business will have to undertake. Exporting introduces a whole host of unknown variables into the equation, so it is absolutely vital you do your homework first and thoroughly research the market before you commit.
This article will help you conduct the research process in a structured and thorough manner, ensuring your first-time export operation maximises its chance of success. We cover how to identify markets with strong potential, assess whether your goods and services will fit, how to find and brief a research agency, and more.
How do I identify potential markets for export?
Follow these steps:
- Define your customer. The type of customer that buys your product in the UK is likely to be similar to your target audience in another country – so if your demographic is primarily well-off consumers for whom price is not a factor, exporting to third world countries is likely to be tricky. Consider how you could adapt your offering to suit customers in another culture.
- Examine your competition. Look at your competitors or market leaders in your field and examine where they successfully export. This may indicate that a certain market is a sure-fire route to export success, or that a competitor has already cornered the market in another country.
- Get advice from professional bodies. UK Trade & Industry is the government body responsible for promoting UK exports abroad – you can arrange a meeting with a UKTI trade adviser, who may be able to identify foreign markets with the best potential for growth and provide general advice on other aspects of exporting.
- Compile a provisional list. After following the steps above, draw up a shortlist of potential markets that hold promise for your business. You can then conduct in-depth research on these markets – following the guides below – in order to narrow down your options.
How do I know whether my goods or service will fit in another market?
Follow these steps:
- Examine the country’s GDP. Look first at overall GDP, then GDP per head of the population. This will give you an indication of how affluent the country is overall, as well as how the distribution of wealth pans out. An uneven distribution of wealth (common in developing countries) can still represent a significant opportunity, as you can target specific demographics with extremely high-end luxury products or a very basic budget offering.
- Assess the size of your target market. Examining metrics such as income, age and gender, find out the exact size of the market you expect to focus on. The UN Statistics Division has a list of national statistics offices in countries around the world, which should be able to provide you with the figures you need.
- Work out whether the market for your product is growing or shrinking. The best way to do this may be to contact a market research agency based in the country, which should be able to offer an insider’s view of the relative health of the market you wish to target. Additionally, look at how other companies in your proposed sector are faring currently.
- Assess the legal and regulatory situation. Especially when exporting products outside the EU, there may be a host of changes you may need to make to your product in order to comply with regulations – packaging, labelling and advertising are common areas in which red tape differs according to country.
- Work out the likely retail price of your product or service. Look at what comparable products or services already retail for in the country as a starting point. Use this to predict what your profit margins are likely to be.
- Assess your distribution options. Rather than entering the market directly, you could use a distributor based in the country; whilst they will obviously take a substantial cut on sales, this route can eliminate much of the uncertainty that comes from selling abroad.
- Assess what changes you might have to make to adapt your offering to another market. You will need a good understanding of the market to do this, so this might be something you do more fully when visiting the country itself (see here for more on this).
- Assess your export finance options. Read more about export finance here.