Research overseas markets

High-quality research is essential before you commit to trading overseas. Exporting to a new market is a serious undertaking, and getting it wrong can be extremely costly. Fortunately, carrying out market research need not be intimidating or difficult. Much of the information is readily available, and business support organisations are keen to help. But it will be time consuming and you will probably have to make some sort of investment over and above your time. Following a logical procedure, and making sure that you're on top of all the details you need to know, can boost your chances of success enormously.

The first step is to identify which markets you could successfully sell your products to. The basics of this are similar to selling in the UK - understanding customers and why they buy from you. Once you have an idea of possible export locations, it's time to check the details. At the end of this initial research process, you should know everything from local customs and business practices through to potential market size and how best to serve it.

Your need for research doesn't end when you start trading overseas. You'll need to keep on top of developments in your new market just as much as you do at home.

1 Identify possible markets

1.1 Define where you may be able to sell your products or services - and why.

  • Establish what defines your potential customers in overseas markets in the same way as for existing markets. For example, consider what sort of consumers or businesses they are, what need your product satisfies, and how your market position is defined.
  • Think about which markets most closely match these criteria.
  • Do not rely on preconceptions. Thorough research may show that a market you thought was a sure-fire success will not work for you, while countries you had not considered initially are more attractive.

1.2 Decide which markets you are prepared to consider.

  • You may want to research countries where you think there is a potentially lucrative market, or where you have existing contacts or experience.
  • You might prefer to restrict yourself to countries that you expect to be relatively easy to deal with, for example, other EU countries.

1.3 Assess your competitors' overseas markets.

  • Do not assume these markets are automatically promising. Your competitors may have a dominant position, or may be struggling in these markets themselves.

2 Build a research checklist

2.1 Assess the potential market in each territory.

  • Potential business customers are usually easy to identify and research, for example using sector statistics and trade directories.
  • For consumer products, find out what the gross domestic product (GDP) and GDP per head is as a rough guide to spending power. Check how evenly income is distributed.
  • Identify the key market segments, and what their different product or service requirements are.
  • Look for information on market trends and growth prospects.

2.2 Look at customers' purchasing behaviour.

  • Find out what distribution channels are used. For example, some business customers might concentrate their purchases with wholesalers rather than dealing directly with manufacturers.
  • Investigate the local culture. For example, what kind of relationship customers expect with their suppliers, and what their attitudes are to overseas suppliers and foreign products.
  • Identify competing products and suppliers. Look at the quality of their products and services, and their strengths and weaknesses.
  • Research competitors' strategy: which customers they target, what they charge, and how they market and distribute their products.
  • Be wary if you cannot identify competitors: there may not be the demand.
  • For example, your product or service may need to meet local safety standards.
  • Check what taxes and duties will be charged.
  • Check if you will need to comply with legal packaging requirements.
  • Find out if you need an export licence, and if so, how long it will take to obtain.

2.3 Find out about logistical and financial requirements.

  • Logistical issues include agreeing who takes responsibility for every stage of the product's journey from you to the customer.
  • Consider how you will transport your goods. How quickly will they need to be delivered? Are they perishable or will they require protective packaging? Is it possible to reduce costs by arranging for your goods to be shipped with good from other companies?
  • Consider who will arrange and pay for insurance. Depending on the trading terms you choose responsibility could fall on the importer or exporter.
  • You may need to conform to local payment practices such as offering competitive credit terms.

2.4 Identify the key risks pf trading in your target market.

  • Key risks typically include the non-payment by the customers (and that enforcing payment may prove difficult or impossible).
  • You may find it hard to keep up to date with changes in the market.
  • The extra costs of supplying customers overseas may put you at a competitive disadvantage against local suppliers.

3 Use existing data

3.1 Use UK Trade & Investment's services.

  • The government-backed UK Trade & Investment information centre is a free self-service centre for exporters. It offers marketing, statistical and contact information for more than 200 countries, as well as sector reports for particular industries.

Find market reports, country profiles and advice on developing your trade potential on the UK Trade & Investment website

3.2 Check with your trade association

  • Your trade association may have market data available, including information specific to your sector. This information is generally only open to members.

Find a trade association for your sector, on the Trade Association Forum website at www.taforum.org

3.3 Buy reports from commercial providers.

  • A wealth of companies provides market and sector data for countries across the world. You will have to pay for the reports, but they can provide information quickly and save you duplicating effort.

You can search for international market research reports on the Euromonitor International website at www.euromonitor.com

3.4 Search the internet.

  • Check local retailers' and distributors' websites to see how they price and market similar products.
  • Overseas government websites provide information on local legal requirements, taxes and duties.
  • Check the UK websites of foreign consulates for further trading information.

3.5 Check with embassies in the UK.

  • Many embassies in the UK offer market data for businesses looking to export to their country. Much of the information will be free or subsidised.

Find a list of foreign embassies in the UK on the Foreign and Commonwealth Office website at www.gov.uk/government/publications/foreign-embassies-in-the-uk

4 Commission your own research

4.1 Consider using UK Trade & Investment's research services.

  • The Export Marketing Research Scheme includes free advice and subsidies of up to 50% of the costs of researching overseas markets.
  • The Overseas Market Introduction Service includes preliminary research and advice, together with support when you visit the market. The service is tailored to your individual requirements and costs from as little as £500, depending on your individual requirements.

4.2 Consider using an agency.

  • An agency based in your target market is likely to be able to get information faster and more easily.
  • You may find it easier to work with and control a UK-based agency which subcontracts the work to an agency in the target market.

4.3 Write a clear brief.

  • To get the most of your commissioned research, set out exactly what you expect. The brief should: Describe your company and what you want to export. Give the geographical scope. State the reason for the research and the information you need. Provide a deadline for the research. Describe how you want the report formatted and presented.

4.4 Manage the relationship.

  • Choose an agency whose response to your brief shows that they understand the project and your requirements.
  • Make sure they include the background and qualifications of the researchers involved and give full costings, including a breakdown of anticipated expenses and fees.
  • Agree milestones and deadlines that ensure the agency sticks to them.
  • Include a confidentiality agreement.

5 Visit target markets

5.1 Decide what visits you need to make.

  • Visiting your target markets can give you some essential insight that paper-based research can't match.
  • You may want to use visits to start building relationships with potential agents and customers, or to negotiate sales directly.
  • A partenariat event, organised by the British Chambers of Commerce, allows you to meet companies in your business sector from several different countries in one visit.

5.2 Plan your agenda to make the most of a visit.

  • Consider joining any subsidised trade mission organised by a business support organisation.
  • Consider building your visit around a local trade exhibition. This will enable you to see your competition at close quarters, as well as making useful contacts.
  • Set up meetings in advance with key contacts such as potential retailers, distributors and agents.

5.3 Get advice on the local customs before you go.

  • Make sure you understand local business etiquette.
  • Make an effort to learn the local language. Potential partners and customers appreciate it if you at least know some key greetings and business phrases.

5.4 Contact the UK Trade & Investment representative in your target market.

  • UK Trade & Investment has representatives based at many British diplomatic missions. They provide an essential point of contact and can offer practical advice and support.

5.5 Find out about any financial support available.

  • Check if UK Trade & Investment can provide financial assistance for visits, trade missions and exhibiting at overseas trade shows.
  • Your trade association may offer discounted travel and accommodation for international trade events.

6 Refine your offer

6.1 Tailor your product and service.

  • It's unlikely that your domestic business practices will directly transfer to overseas markets.
  • It's unlikely that your domestic business practices will directly transfer to overseas markets.
  • You may need to alter product specifications, such as packaging, to suit local customer requirements and regulations.

6.2 Plan how you will market and sell.

  • Your choice of sales and distribution method will be crucial. For example, appointing a local distributor may be more cost-effective than setting up a local office.
  • Consider ways of organising the logistics to make your business more competitive. For example, it might be cheaper to ship in bulk and pay for warehousing, rather than supplying on an on-demand basis.

6.3 Review your budget and pricing.

  • Your pricing needs to cover extra costs such as shipping, local overheads, and local taxes and duties.

7 Keep up to date

7.1 Keep up to date with market developments.

  • Your need for research will not end once you start trading in your new market. You will probably need even more local knowledge as the business progresses.
  • Keep in regular contact with local representatives, agents and customers, or make regular visits.

7.2 Continually refine your offer and business processes.

  • You need to keep your business sharp and competitive. This will often involve making changes to reflect shifting market needs.

8 Use sources of help

8.1 Use UK Trade & Investment's resources.

  • The British Chambers of Commerce offers a range of support services for exporters.
  • Your local chamber of commerce may run an export club or offer training events to help you research target markets more effectively.
  • Your trade association may offer tailored export market reports and organise trade missions.
  • Some local authorities offer financial support to businesses in their area which want to start exporting.

Find market reports, information and advice for exporters on the UK Trade & Investment website at www.ukti.gov.uk

Find your local UK Trade & Investment trade team on www.ukti.gov.uk/export/unitedkingdom/contactus.html

Visit the British Chambers of Commerce website to find your local chamber of commerce at www.britishchambers.org.uk

8.2 Check what help other business support organisations can provide.

  • The British Chambers of Commerce offers a range of support services for exporters.
  • Your local chamber of commerce may run an export club or offer training events to help you research target markets more effectively.
  • Your trade association may offer tailored export market reports and organise trade missions.
  • Some local authorities offer financial support to businesses in their area which want to start exporting.

Visit the British Chambers of Commerce website to find your local chamber of commerce at www.britishchambers.org.uk

8.3 Use your target market's UK diplomatic mission.

Find foreign embassies and detailed country profiles on the Foreign and Commonwealth Office website at www.gov.uk/government/organisations/foreign-commonwealth-office

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