Choosing an export market
With global markets becoming ever more accessible, exporting skill lies in identifying which opportunities offer the best chance of success. Research is key to identifying the best overseas market for your business. So what do you need to consider?
To export successfully, there has to be a need and demand for the product or service you want to sell into that particular country. Other things to consider are how your product might need to be modified to suit local requirements, regulations and standards, and also any changes you may need to make in marketing and advertising to appeal to different markets.
If you are selling consumer products or services, looking at the demographic make-up of potential export countries will help you assess the market for your product. What age group does your product appeal to and would there be sufficient customers in your chosen countries? What’s the gender split in the country? Is the population shrinking or growing? How does the local population split their expenditure between food, housing, leisure, etc.? What trends are there in current spending patterns – is an increasing amount of money being spent on leisure activities, for example?
Who else, if anyone, is selling your product in your chosen country? Are local suppliers able to produce what you have to offer? Look at whether you can make your product competitive and at whether your competitors are already exporting to that country. If so, would this market still be viable for you? Do you have enough of a unique-selling-point (USP) to make your product stand out there?
Ease of trade
It can be better to start trading in a market where there are minimal trade barriers and tariffs, and where the logistics of supplying your product are manageable. Is foreign investment incentivised or are imports restricted in your country of choice? What are the tax and administration costs you need to be aware of? What distribution methods are used?
Many exporters start by identifying and targeting a small number of nearby key markets with low entry barriers.
You may also want to consider how payment terms are managed in your chosen export market and how this could impact your business. Figures from 2019 show wide variation on ‘debtor days’ outstanding – the average number of days it takes a company to collect payment after a sale has been made – in different countries. For example, in Greece the average is 66 days, whereas in the UK, it’s 20 days.
Political and social environment
Research the political system of the country as there will potentially be social and political considerations that will influence trade with that country. Is the country politically stable? How bureaucratic is it? Does it have strong trade unions? Are there any trade sanctions in place? A country might be stable and easy to do business in, but there may not be growth opportunities for your product, so there may be a balance to be struck.
All potential exporters will need to research the cultural considerations that come with doing business with a particular country. Cultural preferences with regard to your product will also come into play, particularly if you are exporting consumer goods. Also consider languages spoken in the country, and the religious and ethical landscape. What impact might this have on the way you present and market your product?
Export market research resources
You can get the background knowledge to plan with confidence, plus practical resources, from targeting the right market to making your first shipment when you sign-up to our International Trade Portal.
Market visits are an excellent way to personally experience the local cultural environment and help you understand how to conduct business in a particular area.
Lloyds Bank International Trade Portal – a valuable online resource available free to all UK businesses at every stage of the trade lifecycle, from researching your first overseas venture to helping evaluate your current trading strategy.
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