Exports are increasingly becoming more important to the success of both our economy and individual companies. Selection of market for export business is an important task for the company who wants to enter in export business. Markets chosen by the company should be those in which export activity is more precious. Export market selection decision is depend on different factors like political, social, economic and technological etc. Different factors are important for different companies. First step of export market selection process is identification of most important factor. After that potential market can be recognized.
Following factors to be considered during market selection:
For market selection of export business companies require to assemble a wide range of primary and secondary research. Because of the expense of primary market research, most firms rely on secondary data sources but internet is the best source to collect data without any cost.
Companies can obtain data related to primary research from International organizations like United Nations (UN) and World Trade Organizations (WTO) without any cost.
Gathering and evaluating secondary market research can be complex and tedious. However, international organizations, government websites and several publications are available that can help simplify the process.
The first step in foreign market selection process is to compile a list of potential countries. Numbers of different methods to compile the list are availed. The main methods used by exporters tend to be the following:
Enter in easy markets – In starting it’s better to exporter that learns in an easy market and after that can be gone with difficult markets.
Closeness of the market – Markets which are closer to home and are easier to service in terms of logistics, follow up, payments, and so on are better choice.
Similarities in language – Countries with same language are more convenient than one where the language is different. Documentation, product labeling, marketing, and so on, become simpler when the importer and exporter share the same language. Communication becomes simple with same language.
Similarities in business culture – Similarities in business culture between the importer and exporter make the process of exporting much easier.
Logistics – Every exporter is wants to ship his products to the foreign market in order to receive payment. So it’s better for an exporter to target markets with established logistical links from the home country.
Past or current knowledge – It is easier for an exporter to enter a market in which it has past or current knowledge. Even if the knowledge is external it is better than not having any in the first place. Moreover, if the knowledge is personal experience of the country, it adds considerable weight to the selection of the market.
Overall risk –Every exporter want to maximize his profit so it’s necessary to take into consideration the level of risk entailed in a particular market. He has to evaluate the possible revenue against the potential risks.
Limitation of resources – All exporters has limited resources and this may limit the selection of a particular market in that certain countries.
Every exporter must examine all the necessary data for achievement of success in export business. You must remember that foreign products compete with domestically produced goods so you have to take competitor analysis. By this you are able to beat foreign products at some level.