Why do market research?
Your market research will play four very important roles in your decision making process, it can:
- act as a selection tool for potential markets allowing you to contrast and compare different countries
- allow you to gauge the potential for business within a particular country
- let you to make an informed decision about what market, or markets, you should approach
- fine tune your business instinct if this particular country or market is one you want to enter.
How to identify a target country market
Choosing the best target country market for your product or service will be one of the most important decisions you make. Smaller markets such as Australia are easier and cheaper to enter, while larger markets such as China or the US are more complex. The trick is to find the balance between opportunity and your chance of success.
Factors about a country to consider include:
- country demographics, market size and segmentation
- political stability and security
- economic situation
- regulations and entry requirements for your market
- distribution channels
- required export documentation
- customers – who are they, what do they want and why do they want it and how the company’s products/service fill a need in the market
- competitors’ products or services and performance
- market entry models of other exporters and market entry strategies that best fit your business
- market trends.
If you are a first time exporter it makes sense to concentrate your efforts on one export market before expanding into other markets. Focus on low risk, high potential return markets. If you have a competitive advantage in New Zealand, look for markets where this can be sustained.
Researching potential challenges and issues
An important part of assessing your target market(s) is to consider all the possible challenges to exporting. These include:
- import barriers
- import quotas and currency restrictions
- taxation
- health regulations
- CE marking for exports to Europe
- safety regulations
- environmental standards
- accreditation issues
- how you will be paid for your exported products or services
- legal agreements.
There may also be country specific constraints you need to be aware of, including:
- tariffs or duties
- industry regulations
- political instability
- business laws
- intellectual property protection
- product to market logistics
- quarantine and regulatory requirements.
Profiling potential markets
Based on your initial research choose the most suitable targets so you can do more specific research. The market profile checklist below will help you summarise your research and make country comparisons to see which provides the best opportunity.
Which target and why?
You need to be able to describe why a customer would purchase the product or service you offer (your unique selling point). Focus on both the end user and your immediate customers. For example, if you sell to a distributor, think about the advantages for them and their customers. What competitive advantages does your product or service offer your customers?
Do not ignore the importance of cultural issues when entering a foreign market. Even a familiar market such as Australia or the United Kingdom can be critically different to the New Zealand market. Do you know the business and socio-cultural characteristics of your target markets? Research should allow you to reject markets that are too complex or difficult, or that carry too many risks for your business.
