What are the main overseas market research questions I should consider when considering entering an overseas market?

I think that at the point of deciding whether to enter a market, there are three main questions to consider:

i. Are there any legal or other barriers that make this market either impossible or not worth considering right now? It saves an awful lot of time and effort if we can get to a firm ‘no’ or ‘not yet’ quickly. For less experienced exporters, the most effective strategy is to concentrate on the markets that look like giving the quickest and most reliable return. So as well as discounting anywhere that may be inaccessible through export controls or local import restrictions, always aim to identify the obvious factors that are going to make it too expensive or difficult. This might include language issues, or technical/cultural norms and standards. Another typical knock-out factor is the extent of competition in the market. Very strong, dominant competitors are often the biggest barrier of all to smaller exporters.

ii. Having decided not to rule the market out, my next question would be ‘how’? This is going to involve finding out how my products are distributed in the target country, where people buy them, how the sector operates and any special factors that might need me to vary the product, the packaging or the mode of delivery. This is often a question of identifying the end point, such as the physical point of sale where I would need my product to be and working back from there. This can be the most detailed question of all. This stage of researching the market means looking at what target customers actually do, as well as understanding the competition and any legal, cultural or technical questions. Seeking answers to the question of ‘how’ will help to answer the third question…

iii. Who? Most typically, this is about the sort of representation (if any) I will be looking for. For many exporting companies, this may be almost a given, and is unlikely to vary between markets. Some types of products, such as low value consumer goods are often most effectively introduced to the market via distributors, people who buy the products themselves and re-sell them to retailers or other outlets. For other products, for example high value, bespoke capital items, the most effective representation might be a commission agent. It’s helpful to bear in mind that there are no absolute rules about the sort of route to market, in fact for smaller companies this is often a question of who can we find who is sufficiently interested and motivated to take the product on. Personally, I would never rule out a potential representative just because their method of working didn’t necessarily fit my preconceived ideas. But I’d urge caution on this. The choice of local representative is invariably the biggest single success factor in any international market.

 

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