Last week I shared five key planning and decision-making areas to get right before you progress too far down the export launch and marketing track.
This week I thought I would elaborate a little on the topic of Export Market Research.
3 Key Areas of Export Market Research
There is no end to the time that you can spend researching and getting to know your target export markets.
The following are three key areas that I find most relevant and time-urgent when preparing your export marketing planning implementation activities:
1. The Export End-User or Consumer
One of the first places to start is understanding the End-User or Consumer within your target export market.
We often assume that because a targeted export market is large, prosperous or westernised there is a significant demand for our Australian produced products or services. Sadly, this is not always the case.
Some key end-user/consumer related questions to answer include:
- Which market segment is most attractive to your brand and products?
- What are their needs and wants in relation to your product or service category?
- What are their purchasing and usage behaviours and/or volumes?
This area of export market research is where you determine if there actually is a demand for what you have to offer in the first place.
Your research may identify that the market size is not large enough or does not have the buying power or overall demand for your product/service offering. This is a good indicator that you may never generate the sales and profits that you require to justify the upfront investment required to enter the new marketplace.
2. Export Trade Customers or Channel Partners and Payment Terms
This is where you get to know the distribution channels for your product or service and also how quickly you are likely to get paid in your target export market.
Until you understand the Trade Customers, Channel Partners and Payment Terms in a new export market you will not understand how difficult or profitable this market will be for you.
Key questions to answer here include:
- Who are the most appropriate importer, distributor, wholesaler and/or retail trade customers and channel partners?
- What are the margin structures associated with each level of distribution?
- What payment terms can you expect to negotiate and will this be profitable and acceptable to your business?
This is where you identify your best route to market and key profitability factors.
Payment terms themselves are often a ‘Go/No-go’ factor as many business operators are not in a position to fund extended payment terms or able to take on the associated risk.
3. Competitor Promotions and Pricing Activity
Understanding who is already operating in your target export market and what their activities are is also a critical factor.
Key competitor questions to answer include:
- Who are your competitors and what is their product or service offering in this new export market?
- What are the regular end-user or consumer price points for the products/services that you have identified as competitor benchmarks?
- What is the approach to price discounting and other competitor promotional activity?
This is where you find out how much you are going to be able to command for your product or service offering in your new export market.
You will also be able to gauge just how competitive the new marketplace is within your product/service category.
Pricing is a major ‘Go/No-go’ decision area. If you are not able to command the price points that you need to make a profit in an intended export market then this is a good indicator that you should not proceed.
Unfortunately, many business operators often proceed with their export activities before fully understanding the impact of pricing dynamics.
Other Export Market Research
There are numerous other areas of export market research that will benefit you when preparing your exporting activities.
Other important export market research areas include:
- Export market logistics issues
- Export market legal issues
- Regulatory and labelling issues
- The political environment
- Numerous other export market dynamics that impact on the profitability and complexity of your export marketing activities
All of the above areas can also be ‘Go/No-go’ planning and decision making areas.
However, the three areas summarised above are what I have found to be the most time-urgent and relevant when making the early export marketing decisions.
[The image I used is of an in-store ‘Cherry Day’ promotion at a Korean discount chain store. Photo by US Department of Agriculture via Flickr, licensed under Creative Commons]