If you’re accepting our challenge to get started exporting in 2012, a few quiet days over the Christmas break can be well spent in thinking about how you will decide on how to select your target markets. I see from Doug’s recent blog that he has gone through some options for route to market. I sometimes refer to this as entry mode and it is my strong contention that you cannot look at market selection in isolation, particularly from entry mode. The two decisions are inter-dependent and you will need to make sure that you are answering not just the question of which markets you’re going to have a go at but also how you will set up your market entry plan.
All of this is important primarily to give yourself the best chance of success but also to avoid costly mistakes. The cost of getting it wrong can be enormous and measured in poor sales v budget, money spent on having to dismantle distributorship/agency arrangements, legal costs involved in extricating from agreements and sometimes the enormous cost of stock holdings in the wrong place. You could follow a passive approach to selecting markets and use orders as a way of establishing where there is demand. This is not necessarily such a bad idea but it is my contention that you need to be more systematic, consider the factors of success and get into shape so that 2012 will be where you put your plans into effect.
What are the key things you will need to look at? The following is far from exhaustive but a good starting point:
Market Potential
- Size of the market, in both volume and value
- Market growth - getting in nearly when growth is about to happen will help enormously
- Barriers to Entry
- Competition - what are your competitors doing? What substitute products/ services are available?
- Price levels, standards and quality expectations
- Demographics in market
Geography
- Are any trading blocs applicable (see my exporting in figures blog)
- Will distance affect shipping costs?
- Will you have to resort to airfreight rather than seafreight to ensure speedy delivery
- To provide quality service, will you have to consider stocking in market? Consignment stock and issues around bonded warehouses may need to be addressed.
Legal/Regulatory Factors
- Are there import controls in the market
What is the position on import tariffs? How high are they and can you build them into your pricing structure? - What legal systems apply? In the UK we use a common law system and this is common in many other Commonwealth countries but also in USA. A code law system is more commonly used by European countries.
- Is there a separately defined commercial law or code?
- How do IPR laws get interpreted in the market?
Political Matters
- How politically stable is the market?
- Is there any likelihood of state intervention and what could you do to minimise the possible adverse effects?
- How is economic growth in market?
- What is the environment like on trade restrictions?
Cultural and Language Issues
- Is English widely spoken or understood?
- Do you have language skills that you can utilise?
- Are there any shared cultural backgrounds?
- Have you fully understood the demand factors in market?
When you’ve looked at all these factors for each of your long list of markets you should score and weight them to arrive at the short target list that will start to form your export plan. By being more systematic, you should be in a better position to make the most of the abundance of opportunities out there. I’m sorry to be offering you the prospect of a little homework over your holiday but getting properly prepared will lead to a much greater chance of success.
Enjoy your Christmas and I wish you all a Fantastic, Prosperous New Year. I will look in more detail about other factors of success in 2012 but now I need to find a good recipe to cook my turkey crown! My own homework will start on Boxing Day.
6 comments
Comment by S.Rupasinghe posted on
25th December 2011,
Dear Mr. Clive,
I am interested in . I am involved in Maritime Training and Education as a senior lecturer for a long time, subsequent to my previous carrier as an officer in international merchant ships. My last sea going experience was with a ship management company known as "Buries Marks Ship Management", located in Finsbury Square London.
I am in the process of compiling my final MBA research project related to " Ocean Shipping Freight Transportation Management". I understand that there are possibilities to commence an UK based export trade and trade management business. I will be very much obliged to you, if you would kindly let me know any directions to start a similar company in UK. I hope to visit UK during next May/June.
Thanking You.
Yours Faithfully.
S.Rupasinghe.
Comment by Clive Drinkwater posted on
Hi there,
Thanks for your comments. It sounds like an interesting option to set up in business. If you let me know when you are in the UK, perhaps we could have a chat about things.
Kind regards,
Clive
Comment by Rocio posted on
Hola Clive Drinkwater, he estado pensando mucho en las preguntas que has echo, y creo que para triunfar el año que viene vamos a tener que ser diferentes a la competencia, ir siempre un paso por delante para poder tener clientes nuevos y a nuestros clientes de siempre mimarlos mucho.
Espero que te salga bien el pavo, y feliz año nuevo.
Un saludo, Rocío Izquierdo.
Comment by Clive Drinkwater posted on
Dera Rocio,
Please excuse my replying in English. I agree completely that, in a very competitive world, you need to get your value proposition to be just right, tailored to your customers, differentiated where it needs to be and one that puts the customer at the heart of what you do.
Incidentally, my turkey crown was brilliant - an organic free range turkey from Adlington Ltd, near Coventry. The trick is to cook it upside down to begin with!
Kind regards,
Clive
Comment by Dennis Ogbu posted on
Clive,
I just started a logistic business after 10 years in the oil/gas working offshore north sea and around the world I started with three staff now have 23 staffs working for me. I'm interested in going into export and import but need somebody to guide me through I have some little money to invest if i have the right advice any help? or support. I'm a UK citizen based in Scotland.
Comment by Clive Drinkwater posted on
Dear Dennis,
I'm very pleased you're interested in starting exporting. In Scotland you will get help from Scottish Development International and it is through them that you will get access to all of the UK's Embassy and High Commission staff. I attach a link to their website below:
http://www.sdi.co.uk/
I wish you luck with your efforts.
Regards,
Clive