Where to begin researching your new international market
Before expanding globally, it’s important to conduct research on the market you want to break into. Here’s some advice on what to consider researching and how to do it.
For many business owners, their product is their baby. And just like any good parent, they’ll need to do thorough research before sending it off on its first overseas adventure. It needs to be able to fit, culturally, to be appropriately protected (be it packaging considerations or understanding international storage and transport) and it needs to pass all the legal requirements to travel to that country. There’s a lot you need to know, so here’s some of the most important things to consider to get you started,
Making it easy by choosing the right place
Step one? Decide which country you’ll first export to. Sometimes that is easier if you have any connections on the ground – someone you trust for cultural or economic insights, and who’ll point you in the right direction of local experts.
The 2016 AIBS survey found that 18 percent of Australian companies started their export journey in the US. Three of the top 4 countries are English speaking, with China (12 percent) the exception. Geographic or linguistic closeness are equally important factors for first market: the top 10 countries were either English speaking, located in the Asian region or both.
Research from afar
It’s the 21st century, which means you can Google virtually anything – but be strategic in where you get your information from. The Austrade website is a great place to start. You’ll find some relevant information on the current business situation, business culture, setting up in each country, types of companies that you may set up in a specific country (such as corporation, limited liability partnership) for over 50 countries. It’s a solid foundation for further research.
A good way to get a feel for a market is by having direct contact with experts, customers or other industry advisors from your chosen country. Cultural nuances can have a big impact on how a business operates, so set up some phone or video interviews. Through those conversations, a lot more could be revealed and there’s more chance of being exposed to information you may not have even considered.
For 71 percent of respondents to the AIBS 2016 survey, undertaking research and development activities overseas was ranked as very or moderately important.
What am I researching?
Now you know how to find that research, make sure you’re clear on what you’re actually looking for. Work out how big your market is, and what characteristics and demographics it has. Then consider breaking those up into segments such as by disposable income, geographic location, age, and cultural beliefs that may influence purchasing decisions.
What do they want?
Knowing what your target market’s needs and wants might make marketing your product much more intuitive – and selling it, much more successful. Look into competitors in the area and research the current demand, the potential for future demand, how busy the market is and how your product differentiates from what is already available.
When do they need it?
Work out the logistics of getting your product to your market in a timely, legal and (if necessary) seasonal manner. Be sure to consider things such as transportation to market (cost, storage, life cycle), import restrictions and product suitability, both for your market and logistically (does it make sense to export).
What are the best sales channels?
Finally, you may need to understand the different types of market entry options available to determine the best possible fit for your product or service. For example, having a representative, sales agent or local distributor in the export market may allow you to get a feel for how much interest and demand there is. Alternatively, you could sell your goods and services directly into the export market, or open a local office (particularly for service-based companies).
One of the important things to consider in your market research as well is access to a safe business environment. This was one of the most popular deciding factors for AIBS survey respondents. You need to help protect your business, and this means protecting yourself from legal risks, protecting your product being compromised in transit, and making sure you actually get paid.
Some of the things you should consider are:
- Product supply chain protection (security of your product in transit, locks and tamper-proof seals, advance notification of the contents to the destination country)
- Legal requirements to export to the country
- Non-tariff barriers (look out for quotas, embargoes or sanctions that could limit your ability to trade)
- Pricing (based on your target market research, you need to understand the appropriate price point for your customer)
- Payment options (consider accessible technology and what is trending in that country)
- Business practices (how local businesses operate so you can meet or exceed those expectations)
It’s a lot to research, but the more effort you put in from the outset, the less you might expose yourself to risk – and the more successful your global expansion could be.
Now that you know your market, you’re ready to write your international business plan.