Researching Global Markets
Editor's note: This article is excerpted fromTake Your Business Global from Entrepreneur Press.
If you're thinking of going global, you probably have already selected a number of countries as potential targets for your international marketing activity and you should examine each of them further in order to prioritize your efforts. The first step is to do a relative assessment of the market potential in each country so you can compare them. You want to estimate the number or amount of your product that could be sold in each country and then do a quantitative comparison of the countries.
What Is Market Potential?
For the purposes of Take Your Business Global, market potential is defined as the number of potential sales of your product in a particular country, if there was no competition and if everyone who wanted to buy the product did so. This is an idealistic situation, but it is a necessary first step in assessing the market and comparing countries.
Remember that you are doing a relative assessment of countries, so the numbers you arrive at for each country do not have to be precise, as long as the same criteria are used for each country. When establishing your market potential for each country, base it not only on the current situation but also on the future market potential, even though you may have to put some conditions on it. For example, there may be a very big market potential for your product in Cuba even though American companies are not allowed to trade with them at this time. This situation could change, so be prepared. Only a few years ago Vietnam was on the same blacklist, yet American companies are flocking there to test the business waters now.
Exploring Government Sources
Obtaining information on the market potential of a list of countries sounds like a daunting task, but it is easier than you may think. Much of the information you require can be obtained through the U.S. Department of Commerce, International Trade Administration. It is devoted to assisting U.S. companies in international trade. They have a network of approximately 2,500 trade experts in about 70 countries around the world and about 70 cities in the United States. The government commercial officers stationed around the world are there to provide you with market information on the countries they are responsible for and to help you market and export your products. The trade specialists in U.S. cities are there to provide you with the Department of Commerce international trade services. To access this information, call your nearest Department of Commerce District Office which you can find here.
Department of Commerce trade specialists can provide a wide range of information drawn from government sources, which include trade-related documents, product specific market research reports, and trade statistics as well as information on trade regulations, customs requirements, product standards, and tariffs. You can request information brochures that describe the services and reports available from their district offices. Here is a brief outline of some of these services, as advertised on the International Trade Administration's website.
- Sector expertise industry specialists provide SMEs (small to medium-sized enterprises) detailed information and analysis on foreign market conditions and opportunities, advocacy assistance, general exporting advice, export financing advice, industry analysis, tariffs, regulations, business and cultural practices, etc. This expertise is found nowhere else, inside or outside of the federal government.
- SMEs can contact the Trade Information Center (TIC), through the 1-800-USA-TRAD(E) toll-free hotline, as the first stop for all global export counseling and assistance from the Trade Promotion Coordinating Committee (19 federal agencies) and the Department of Commerce. The TIC is a comprehensive resource for export information and assistance by phone, fax-on-demand, or Internet. In addition to basic export counseling and information on regulatory requirements, trade events, government programs, and sources of financing and market research, the TIC now offers country and regional information and counseling.
- Working hand in hand with the private sector, trade development industry experts help recruit and organize trade missions and other events for the Secretary and the Under Secretary of Commerce.
- The Office of Export Trading Company Affairs (OETCA) promotes the formation and use of export trade intermediaries and the development of long-term joint export ventures by U.S. firms, including joint ventures by U.S. firms that are competitors in the domestic market. The OETCA administers two programs available to all U.S. exporters or potential exporters. The Export Trade Certificate of Review program provides antitrust protection to U.S. firms for collaborative export activities. The U.S. Exporters' Yellow Pages publication is designed to help U.S. trade intermediaries match with U.S. producers of exportable goods and services.
Other Sources of Country Market Information
In addition to the government marketing information listed above, there are many more sources of information, depending on your product. This list will get you started.
- Public library. This is an often overlooked resource, available free of charge. You can do the search yourself or get your staff to assist you. Librarians are usually willing to help you find information of this nature because it allows them to use their professional training.
- Trade associations. There are many local and national trade associations involved in exports, such as freight forwarders, customs brokers, and those associated with specific product manufacturing. Many of the associations provide export information for their members.
- Banks. Many banks have large international trading departments that have a wealth of information on international markets.
- Foreign embassies and consulates. These foreign representatives are more than happy to provide information about their country, but be aware that they are more interested in selling to you.
The accuracy of the market potential you project for each country will depend on the product and the information available. What you can project may not be accurate enough to stake the future of your company on, yet it is a lot more information than you had when you started. By doing the research, you will have a much better insight into your potential international market.
Assuming you used the same criteria for each country, your results should be accurate enough to do a relative assessment of the potential in each country and then to prioritize the countries in order of their market potential. You will probably find that some stand out as obvious markets to target and others as not worth your effort. You may want to discard the latter at this point and concentrate only on the others.
With more than two decades of global marketing experience, Gerhard W. Kautz is president of GWEM Systems Limited, an international marketing consulting company founded in 1981.