Market Research – What You Need to Know
After assessing if your business is ready for export, the next step of your market research is to understand which market to enter and the trends and developments in that market. Initial market research can be done through secondary sources such as the CIA World Factbook. However, in order to give strong recommendations and conclusions, using primary data is necessary.
Is There a Market for Your Product or Service?
Possibly the most important aspect of market research is to determine if there is a need for your product in your chosen market. Opportunities to extend a product lifecycle, exporting unused inventory, or even producing out-of-date technology may exist in new underdeveloped markets.
Key indicators to look at when determining a need for your product are:
- income levels;
- size and growth of the middle class;
- access to technology; and
Who Will Be Your Competitors?
Competition in an international market will be more dynamic than your domestic market. By completing a competitor analysis you will be able to determine the nature of your competitors, their likelihood to succeed, and opportunities for you to gain market share over them. The key questions you will need to ask are:
- Where are they located and how are they organized?
- Who are the key people and what are their experiences and skills?
- Do they have any strategic partners?
- What are their main products?
The easiest way to understand your competitors is by searching their website. However, a more in-depth analysis will be needed to determine your ability to succeed. This research should include looking into your competitor’s suppliers, employees, joint ventures, R&D facilities, and their competitive advantage in the market place. This information will help provide you with a more in-depth understanding of your competitors.
Understand the Marketing Mix
The Marketing Mix is a tool designed to organize your marketing plan. It’s commonly known as the 4 P’s (product, place, price and promotion). Although there are more detailed items to develop in your marketing mix, we have highlighted the basics below.
- Product: Ensure that you’re offering your product to the right people in the right market. In international markets it is likely that you will need to adapt your product in some way and this will add to your costs.
- Place (Distribution): The product needs to be delivered to the customer at the right place and the right time. Strong distribution ties will ensure that your product gets to your customers. In many markets the distribution system can be difficult to enter, particularly in mature markets or where there is already a high degree of competition.
- Pricing Strategy: Determining the right pricing strategy (e.g. skimming, penetration, bundling) is an important decision for entering new markets. Pricing is a strategic decision and will be determined by your decision on positioning, competitive pressures, legal considerations, and your determination of margins.
- Promotion: How you market and advertise is going to be determined by culture, regulation, and availability. Akin to your domestic market, creating the right targeted promotions, advertising, and sales to meet the consumer’s needs and persuade them to buy your product over the competitors is an important part of conducting business internationally.
There is a “fifth p” which is Perception or brand awareness. Unless you are Starbucks or Disney, it is unlikely that your target market will have heard of you, no matter how popular you are in your domestic market. Building brand awareness takes time and effort and should be part of your ongoing marketing activities. Keep in mind that branding is not just product branding. Positioning both your business and your products will require some creative strategic thinking. Understanding your market and competition will help lead you in the right direction.
When thinking about distribution channels it is important to think about both getting your product from your plant to a country, as well as how it is will be distributed within that country’s market. This will of course involve different types of transportation (e.g. rail, road, ship, air) and require different types of paperwork. Because this is a complicated process, it is advisable to work with a shipping agent in your city. They are trained in logistics, Incoterms (International Commercial Terms), and international documentation. They are also insured and it is their professional responsibility to ensure your goods get to their destination on time and in proper order.
Legal/Regulatory Constraints and Considerations
It is important to remember that you are subject to all governmental, political, legal and regulatory laws of the country you’re doing business in. Political stability, leaders, and attitude towards foreigners all need to be considered when deciding which markets to target.
Should you encounter problems between your business and another country’s governmental organization, contact the Canadian government for help with negotiations and problem solving.
Product Adaptation Requirements
Different countries have different standards when it comes to language, voltage, efficiency, safety, etc., and you will need to adjust your product accordingly. These laws often change over time, especially in developing nations where regulation may be lax now but will eventually increase.