Last reviewed 22 July 2020
It’s a cliché, but it’s true, nonetheless: the world is changing fast. A business that trades internationally needs to be able to understand and anticipate changing market trends, and to change their business strategy accordingly.
The biggest challenge of international trade is to understand the needs of customers. This has become even more difficult as the pace of economic, technological and cultural change has accelerated. Assumptions that we made about a market even a few years ago might no longer be accurate, which can mean that our business is missing out on opportunities and is perhaps unaware of threats to current key markets.
Very few businesses are truly global - if a business exports to even a few dozen countries, we consider them to be active exporters. For some businesses, the active markets are carefully chosen according to accurate market knowledge, for many it’s really down to chance. Whatever the reasons, the pace of change means it’s vital for any business to regularly assess their own activity and consider what opportunities and threats are posed by new developments.
Fortunately, the age of the internet means that a lot of information is readily available to us that allows us to keep an eye on changes.
In a previous article we looked at ways of identifying opportunities in emerging markets. The process described is known as export market scoping and is a great way to do an initial sift of markets very quickly, in order to identify opportunities that could be interesting.
Don’t spread too thinly
From that quick analysis, dig deeper and investigate the detail of opportunities. Too many exporting companies limit their performance by spreading their sales efforts too thinly. It’s important not to overstretch resources and to commit to goals that are realistic. For most smaller companies seeking to build exports, it’s best to restrict activity to no more than three to five new markets at a time.
The export market scoping analysis does little more than produce a list of countries that might be interesting. Consider how to approach a market, and in doing so, think about who, if anyone, will be needed to reach the target customers there.
It’s helpful to find out more specific information about what’s going on in a market. What are customers buying? Which competitors are active there? Which products are preferred, who’s selling them and what prices are they offering? Information like this used to be available from a simple Google search, just by setting the search page to the country in question, eg by typing in google.it for Italy. As the web has become more sophisticated, that no longer works, but one tool that can help is www.isearchfrom.com. To find out who’s selling similar products in a given market, just select the country and enter some key words. Knowledge of local language can be helpful here, but with a host of increasingly reliable translation sites, this isn’t necessary.
Searches on this facility can provide some useful local knowledge. Ignore the adverts that apply at the top of the screen, they will most likely still be relevant to location anyway. The other items at the top of the search are usually among those that are most visited, so may well be links to some of the leading players. The names of known competitors may be there, or alternatively some active outlets such as retailers or distributors.
Finding a distributor
Often, when seeking a way to enter a market, the biggest breakthrough can come from finding a distributor, agent or similar representative appropriate to the products and target customers. The goal isn’t necessarily to talk to the distributor of a major competitors’ products (unless they can be persuaded to switch). What often works is finding someone who sells complimentary products to the desired customers. So, if a business makes footballs, a good match might be a distributor who already sells football boots, football kit, goal posts, referees’ whistles, etc. If the business is successful, it’s already selling related products to the desired market, so they know the target customers and the customers know the business. That’s likely to be the kind of information that will be useful.
It’s possible to find other useful information sources this way, such as local or national exhibitions or trade shows that are relevant to the products, or possibly trade associations or other representative bodies. A lot of trade journals are also published online and many are open to view without a subscription. This can help to pick up background information about the market, what local concerns are, as well as possibly finding more potentially useful contacts.
Interrogate the information
At this stage, it’s a learning curve about the target market. It’s important to interrogate the information that’s been gathered and seek answers (or at least partial answers) to basic questions such as the following.
Who are they key players in this market? (Retailers, distributors, influencers)
What market issues can we identify? (Changes in demand, innovations, customer concerns)
What can we find out about prices to end users?
It’s quite possible that the information gathered may put you off this market. Perhaps prices are too low, or there are local competitors who are too dominant. Information on how easy or difficult it is for products to enter the market might help with drawing conclusions.
The UK government recently launched a new website: https://www.gov.uk/check-duties-customs-exporting. This site shows, using the tariff code for our products, how much duty is payable on importing products, as well as information on import procedures and restrictions. This can give an indication of how price competitive to be in this market, information that in some cases might lead to the decision that this market isn’t for you. That’s fine, and it helps to slim down the search, but always remember that what has been concluded is that this market doesn’t look interesting at this time. Make a careful note of what has been found out and record the information for review at a later date. When this is reviewed in a few years’ time, it will help to know what was found and why the market was prioritised.
The more found out about a potential market this way, the more effective it will be to start making contacts. You might already start thinking that some products in your range have more potential than others or have some thoughts about the route to market, which might well be very different from other markets already covered. A reasonable idea about prices end users expect to pay can be useful for negotiating with a potential representative.
A lot of information can be gathered without setting foot in the target country, or even picking up the phone to speak to anyone there. Before going any further, it’s often a good idea to get some guidance from others. In the UK, the Department for International Trade employs a team of International Trade Advisors who are charged with helping to build British exports. They can be a useful contact to turn to, they can offer advice from their own personal experience as well as turning to others in their team and commercial officers working for the British Embassy in the target countries.
Think carefully about what the key success factors are and try to prioritise the markets that have been studied in order. Is the goal a quick win? Or a market with long-term potential? Remember that the strategy chosen must be one that’s right for the business, and therefore must be based on a thorough and honest evaluation of capabilities, strengths and weaknesses.
Most importantly, remember that any assumptions or decisions made are not cast in stone. Assumptions could be wrong, or they may be right now but quickly out-dated. Make evaluations an ongoing process, and always be open to learning something new.