HOW TO SELECT MY EXPORT

MARKET ?
Too often, SME Small and Medium
Enterprises undervalue the importance
of international market research during
the selection process of their target
markets.
This fact can be explained by several
reasons:
 Sometimes the export occurs by chance (for example,
after participating in a mission or fair trade ), even in
response to unsolicited orders .
 Some SME are not aware of the differences between
the domestic market and foreign markets (culture,
infrastructure, regulations, business practices,
distribution system, ...);
 Some SME, lacking financial resources and time ,
consider the implementation of such studies too costly
compared to the potential benefits ;
 Some SMEs are not familiar with international data
sources and analysis tools;
 Already some experienced SMEs
consider their experience in the
country preferable to a market study;
 Some business leaders select an export
market simply based on their personal
feelings and affinities (because they
have studied or they go there regularly
on vacation or they know the
language ) ;
However, one of the main failure causes
abroad is related to preparation and a
lack of specific knowledge that these
foreign markets are. Market studies
export must avoid superficial approach
in order to identify opportunities
abroad, to evaluate and compare their
attractiveness.
Thus, the company can identify the most
promising markets (in terms of sales,
potential and accessibility ) to warrant
its exploration efforts. This avoids
wasting resources in uninteresting
The selection of an export market
traditionally goes through the following
three steps:
 Pre selection Studies
 Global studies
 Up date studies
During these three phases approach, the
company must gather information on a
number of factors that may affect its
operations and performance of the
markets. However, the exporter must
not neglect his own intuition and
personal interest in each market as well
as the networks of relationships that
have developed in each market.
Before deciding to go abroad to collect
quantitative and qualitative information,
make sure you have used all the available
secondary sources!

The selection process of a market is not

static.
Don’t neglect or ignore currently
uninteresting countries because they
could be very important in the future and
offer real opportunities.
Market research should be conducted on a
regular basis.
STUDIES OF SCREENING (PRE SELECTION)

 Unlike large companies, SMEs do not have

sufficient financial resources to carry out a
market study on all countries in order to select
their target markets.
 It follows that generally, during a pre-study,
also called an exploratory study, SMEs identify
and select a priori more attractive and more
accessible markets (e.g. proximity, level of
development, compatibility of payment
methods, language ,... ) .
 At this level, the company can eliminate
certain uninteresting markets for which it does
not have the resources and skills, or for other
reasons such as the political crisis.
This pre-selection study must be rapid,
inexpensive and based on the
analysis of general and summary
information, also easily accessible in
a documentary search.
PRE- SELECTION OF MARKETS
GEOGRAPHIC INDICATORS

 the geographical location((highlights its strategic

positioning in relation to other markets and logistics considerations)
 the geographic distance(Refers to the physical distance
between your home country and the target market, usually measured in
kilometers or miles
 Political system, political crisis
 Agreement(Regional Trade Agreements(EU) ,bilaterla trade
agreement , multilateral trade agreement
 geology and natural resources
 Area( market size and diversity)
 Opportunities
ECONOMIC, FINANCIAL AND MONETARY DATA

 the trade data ( the trade balance , the

balance of payments, ... )
 the existence of trade agreements ,
technical cooperation or financial
protocols with other countries
 the local tissue bank (efficiency of the
banking system, ...) and credit conditions.
 key sectors and relative importance of
agriculture, industry and services.
 the level of production by sector
 consumer spending
 social status (availability, cost and skill
level of the workforce, flexible
employment, unemployment rate)
DEMOGRAPHIC INDICATORS

 the total population

 the density and the level of concentration of the
population
 the growth rate of the population
 the degree of urbanization and the distribution urban
and rural groups
 the distribution of population by gender
 the age distribution
 the purchasing power and distribution by income class
 The socio-professional classes
 The ethnic groups
 the level of health
 literacy level and levels of education
 the technical level
 Infrastructure and power supply
equipment
 The availability of physical
distribution channels (distributors )
 Level of development and the cost of
transportation
 The cost of storage infrastructure,
the cost of communication, the cost
of other commercial facilities such as
banking and credit
 political regime ( democratic or not) and the stability
of the regime
 economic policy ( trade agreements, technical
cooperation agreements , free trade agreements
with other nations , political business assistance , ... )
 trade barriers (tariffs , import quotas and licenses ,
quotas, ... )
 non-tariff barriers (sanctions, boycotts and
embargoes , technical standards , safety and
hygiene , environmental standards taxation
policy ... )
 Tax policy (Added Value Taxes (AVT),
taxes, terms of repatriation of
funds, ... )
 The foreign investment regime
 The political and administrative
organization (degree of bureaucracy ) ,
the attitude to corruption
STUDIES OF GLOBAL MARKET

In a second phase, SMEs conduct a study on

the overall market. This will allow the
company to develop a comprehensive and
knowledge of the market addressed by
analyzing its structure (eg demand model,
competitive structure , ...) , its operation,
its constraints (eg legal environment ) , its
key players, its size ( volume potential
demand ) ... In doing so, the company can
confirm the degree of attractiveness of
the markets in the short and medium
term. In other words, the study of global
market can lead to the final selection of
the target market.
DEPTH STUDY OF FOREIGN MARKETS
LEGAL ENVIRONMENT

 legislation making consumption (mandatory information ,

labeling, packaging , after-sales service , how the
producer is responsible for the civilian population, ... )
 social legislation
 the legislation on commercial contracts
 environmental legislation
 legislation for the protection of intellectual property
(patents and trademarks)
 Product regulations and technical standards, health and
safety
 legislation on advertising and promotion
 the price regulation
COMPETITIVE STRUCTURE
 concentration or not of the competitive structure
 local and foreign competitors in the market
 size , market share, sales and growth rate, production
equipment , foreign markets for local competitors
 strengths, weaknesses and problems they face
 product policy (width and depth ranges , technical
and commercial characteristics of products, level of
technology and quality, brand , packaging , after
sales service, ... ) competitors
 pricing (price , margins, payment terms, and
conditions, ... ) competitors
 distribution policy (number and location
of outlets (selling places) ,
distributors, ... ) competitors
 positioning , target segments , brand
competitors
 Communication (messages, and target
areas of advertising , promotion, trade
shows, ... ) competitors relationships
with local government
SOCIAL AND CULTURAL FACTORS

 languages
 religions
 popular culture ( popular sports , national entertainment ,
iconic figures ... )
 habits and customs ( forms of greeting, how to address
people , major holidays , ... )
 values ​, attitudes, preferences , beliefs
 behaviors and lifestyles
 history and key events in the country
 ethnic groups, socio-cultural classes ( structure and
mobility) , social conflicts,
 level of education (literacy , higher education
training , ... )

DEMAND CHARACTERISTICS

 Current market size

 market potential
 identification specified, buyers , consumers
 demographic characteristics ( gender distribution - women, rural-
urban distribution , age groups , ... ) consumer
 income level , budget, credit target consumers
 where do they buy? What are their favorite types of points of
sale ?
 when they buy (climate , phenomena mode) ?
 how do they buy ( or what reasons impulse purchases , brand
influence and the origin of products , use of credit , turnover ) ?
 purchase decision criteria ( product characteristics, cost , ... )
 requirements regarding the quality and characteristics of the
product ( color, material , ... ) , after-sales , credit opportunities ,
price, delivery service, etc. .
 lifestyle, attitudes, needs, other cultural factors that may
influence the buying behavior (religion, political opinion,
attitudes towards foreign products , ... )
The study can lead the company to
define precisely the different
elements of the marketing plan .So ,
one hand with the market
characteristics and secondly , with
the resources and the internal limits
of the company :
PRODUCT

Market research on the product can be

designed to measure its acceptability
by consumers through testing
concept , name, packaging, brand. It
can also be designed to assess the
level of adequacy to market to look
for possible improvements and
necessary modifications, based on
the opinion of potential consumers ;
THE PRICE.
research should help the company to
set a price strategy for the market on
the basis. The survey of prices of
competitors and estimating the
psychological price accepted by
consumers;
DISTRIBUTION

A study in this area should allow to

choose the mode of penetration and
channel which is most appropriate.
It can include the study of the local
distribution structure , the key deciders
, analysis of the performance of each
distribution channel , research and
selection of industrial and commercial
partners ... ;
COMMUNICATION.

The study 's objective may be to seek

areas for advertising , test a priori the
effectiveness of a message ( pre-test or
copy- testing) and to assess the
memory (post -test) , ...
SOURCES OF INFORMATION
 Exercise
 What are the different sources of
information?
 Explain the importance of doing
business in a foreign markets?
 What are the constraints?