International Market Analysis: A Comprehensive Guide
International Market Analysis
Introduction
Before starting export operations, few companies conduct thorough market research to select the most appropriate target markets. This analysis is crucial for assessing export capacity and potential.
Data Sources
All data sources can be grouped into:
- Secondary sources (desk research)
- Primary sources (specific surveys)
Market Research Outline
A basic international market research outline includes:
- The target market itself
- Factors influencing the market
- Market access conditions
Target Market Information
Market Overview
- Location
- Border limits
- Area
- Climate
- Distance from exporter
- Time difference
- Population
- Language
- Major cities
- Ports and airports
- Media landscape
- Roadways
Economy
- GDP
- Per capita income
- Resources
- Main products
- Major industries
- Foreign trade (imports and exports)
- International reserves
- External debt
- Currency
- Exchange rate
- Major banks
Services
- International transport options
- Frequency of transport modes
- Freight rates
- Container and refrigeration availability
- Insurance options
- Mandatory transport or insurance requirements
Regulations
- Tariffs
- Tariff preferences
- Import restrictions
- Anti-dumping measures, countervailing duties, safeguards
- Internal revenue
- Foreign exchange regulations
- Import zones
- Customs formalities
Product Information
Market
- Product description
- Tariff classification
- Consumption patterns and features
- Local production and dominant brands
- Imported product details (origin, quantity)
Competition
- National competitors
- Foreign competitors (sources and amounts)
- Substitute products
- Conditions of sale
- After-sales service
Marketing
- Distribution channels
- Purchase methods
- Order seasonality
- Required certificates
- Media used for distribution
Promotion
- Trade fairs and exhibitions
- Promotional systems
- Commonly used advertising materials
- Catalogs, brochures, samples
Identifying and Exploiting Trade Windows
A trade window represents the time period when a specific market is understocked, presenting an opportunity for exporters.
Contacting Potential Customers
Utilize various communication methods like web pages, emails, fax, and telephone to connect with potential customers and gather information about their address, establishment date, and operational flow.
Internationalization Strategies
Joint Ventures
Joint ventures involve long-term contractual agreements between companies from different countries with shared economic interests.
Licensing
Licensing is a long-term contractual agreement between companies from different countries.
Advantages for the grantor: Presence without capital investment, unlimited ROI potential.
Advantages for the receiver: Access to technology, trademarks, or other resources at a lower cost.
Licensing can be an alternative to foreign direct investment (FDI) under certain circumstances:
- High political risk
- Small market size
- Limited resources
- Unfavorable labor or competitive conditions
- Unwillingness to invest abroad
Franchising
Types of Franchises
Product Franchising: The franchisor supplies products to the franchisee (e.g., fuel sales).
Business Format Franchising: The franchisee receives a standardized business system, including product supply and competitive strategy.
Management Contracts
International companies provide management services to local businesses for a fee.
Contract Manufacturing
International firms hire local companies to manufacture products according to their specifications.
Pricing Strategies
Effective pricing is crucial for export marketing. Prices can be based on exporter costs or target market prices. Understanding price trends and seasonal variations is essential.