Choosing The Right Markets

• What can be good markets?
  The most important reasons for failure to meet the export ambitions, is the weak preparation, or the wrong choice of target market. We can help you with a basic assessment based on several criteria to select the best market, like economic growth, ease of doing business, import grade, etc.
• In the best scenario, the desk research precedes field research. Market studies should give you some answers to following points:
  • Market segments for your products or services
  • Fastest growing or promising segments
  • Trends and outlooks
  • Limitations and habits
  • Competitors

Of the several countries that will be the shortlist, a ranking based on economical, social, political, cultural and technical data will assist the selection process. Quick exclusions based on

• • Countries with low purchasing power
  • Countries that are too far away, increasing the transport costs and risks for damage or expiry dates
  • Countries with climatology adverse to your products
  • Entry levels are high due to import rules, taxes, tariffs or currency limitations

The selection criteria are in the best case defined on macro economic level, sectorial information and on company or product level. The first information is relatively easy to find, it gets harder when you drill down to industry or company level. Then again, those can be very important to narrow down the list of possible target countries.

• How to divide market into customers segments?
  There are a few standard criteria to handle when analyzing different segments you want to target:
  • Accessibility: geographical location, but also product, price and promotions
  • Measurability: you need to know the buying power, turnover and consumptions.
  • Stability
  • Homogeneity
  • Size: is your target segment big enough?
  • Growth potential: by what speed will this segment grow?

You can evaluate different market or customer segments based on their attraction on your company, the size, growth expectations, number of competitors, ease of access, presence of distribution channels, access to resources…

Of course projections of sales and profits are taken into account as well. The best judgement is to measure how much of your customers’ needs you can satisfy. This allows you to sort per expected turnover and profit, and to select the most attractive segments.

• What are the selection criteria for market selection?
  If the plan is to invest in the targeted country, in the way of setting up a sales office or a production unit, an extensive analysis through the five forces model of Porter is advised. His SWOT analysis investigates the attraction of a market using 5 forces, or external factors.
  • STRENGTH: how strong is competition?
    When there’s not much competition, you are more prone to attend local demands. Advantageous parameters are for market growth and low production capacity.  Heavy competition can become a threat in the future.
  • WEAKNESSES: will new players jump into the market?
    Examples of high entry risks for new competitors can be: high financial burden to enter the market, high regulations, sticky customers by cost or critical processes, strong brands, or a limited number of distribution channels.
    Too many alternatives to your offering can also become a real threat to your profitability of your product or service in that market.
  • THREATS: How much do you depend on your suppliers?
    Do alternatives exist and how much is the cost of change?
  • OPPORTUNITIES: How strong are your customers?
    The stronger your own position, the more leverage you have in negotiating best deals. When your customers dominate the negotiations, you will need to water down your expectations.