Identifying your target market
Choosing the best export target(s) for your business is critical because ‘getting it wrong’ can waste time, energy and money. This section provides ideas and information to help you understand the opportunities better and identify the best targets and marketplace.
Note that a target can either be a specific customer (like a large company or corporation) or a specific market (like the United Kingdom or Japan). If the customer is big enough they become a market on their own. In both cases you need to define your targets in as much detail as possible – the more detail, the easier it is to target them.
It is important to understand your product or service, your sector and your market. You will need to gather information on:
- your chosen country and market
- the competition
- relevant regulations and entry requirements in your market
- product liability in your market
- freight considerations
- required export documentation
- obtaining finance for export
- how to get paid for your exported products or services
- common terms of sale
- any risk considerations.
Which market and why?
You may have an export target in mind, but how easy will it be to enter into that market? Start by looking for market opportunities for your product or service where entry to the market will be less difficult and list some possible targets. Remember that you may hold a strong competitive advantage in your local market, but will this still be true when you take your product overseas? Look for markets where your advantage can be sustained.
Choosing low-risk targets first will allow you to check and develop the export potential of your products.
Researching export markets
There are many ways to find information about potential markets. The two main ways are:
- Secondary research (desk research). You can make a solid start from resources available locally.
- Primary research. Some market information will only be available in the market itself, so you may need to visit the market or employ others to find the information for you.
Information about export markets is widely available, including:
- basic economic activity
- political situation and general market conditions
- exports to the market
- transport and communications
- political involvement or exchange
Establishing your best target profile
Which target and why?
You need to be able to describe why a customer would purchase the product or service you offer. Focus on both the end user and your immediate customers. For example, if you sell to a distributor, you need to think about the advantages for them as well as their customers. What key competitive advantages does your product or service offer your customers?
Do not forget any cultural issues when entering a foreign market (even a country similar to your own can have crucial differences when it comes to the cultural market). Do you know the business and socio-cultural characteristics of your target markets? Your research should enable you to cross off those markets that have too many complexities and difficulties or are too risky for your business.
Once you have established your short-list, establish a ‘best targets’ list based on your business experience domestically. The critical success factors include markets that:
- return the highest profit
- are easy to enter
- show the highest export potential
- will yield returns on your investment immediately.
Those that don’t fit these criteria should not make the cut.