International Trade eLearning Suite for SMEs-InTeLS


Researching overseas markets

4.1.1.     Introduction

                                 

It's essential to research overseas markets before you start to market, promote and sell your product or service within them.

To be successful, you need to find the right market - and the best way to approach it.
 
Every overseas market is different. To boost your chances of success you need a clear understanding of the market and how your product will fit within it. Entering a market without this can lead to costly mistakes. 
 
You need to think carefully about the customers who will buy your product, your competition and the market situation. You should also investigate practical issues such as route to market, logistics, regulation and local suppliers in your chosen market.

This guide will cover the main issues you need to investigate, introduce you to some specific types of research, and show you where to find help and support.

 

 

 

 

4.1.2.     What you need to know about overseas markets

                                 

 Thorough research into your potential customers, competitors and the trading environment in each overseas market will greatly increase your chances of success. Researching these key areas properly should help you identify which are your most promising target markets.

Customer behaviour

You need to assess the purchasing behaviour of customers within your target market.

Ask yourself:

  • What demand is there for my product?
  • Why will they buy my product?
  • What role will it fulfil for them? For example, is it an essential everyday item or a luxury purchase?
  • How will I sell and promote it to them?
  • What price can I profitably sell it for? 
  • How can I get them to buy from me instead of my competitors?

Answering these questions will tell you whether you can successfully sell into this market. For example, if you can't set a price that is competitive and provides sufficient margin for you, the market may not be suitable for your business.

Market issues

You need to understand local cultural influences in order to sell your products effectively. For example, your product may be viewed as a basic commodity at home, but not in your overseas market. Your sales and marketing approach will need to reflect this.

You will also need to consider language issues. Can you market your product effectively in the local language? Will you have access to professional translators and marketing agencies?

Legislation varies widely in overseas markets and will affect how you sell into them. You must make sure you adhere to local laws. You will also need to consider how you will find and select partners in overseas countries, and investigate the freight and communications options available.

UK FOOTNOTE

See our guide:Are you ready to export?

See the pages in this guide on how to analyse target countries and customers and analyse overseas sectors and competition.

To find individual business opportunities, see the page in this guide on finding business opportunities in overseas markets.

See the page in this guide on practical research for export operations

 

4.1.3.     Analyse target countries and customers

                                 

It's essential to research thoroughly your potential target countries and customers. This will help you decide which are the most suitable for your products.

Countries

You should consider factors such as the following:

  • Size of your potential market - this could be limited by cultural or economic factors.
  • Political situation - an unstable political climate can make exporting risky.
  • Economic climate - is it favourable and will it remain so? The economy affects how much customers are willing to pay. A recession will reduce your potential buyers' income.
  • Culture - this may affect your selling proposition. Investigate any barriers to your product's success. Will your product be valued the same as at home? Will your customers have the same reasons to buy it?

Customers

Just as in your home market, you need to identify your potential customers and their needs. The following factors are particularly important when exporting:

  • Who will buy from you? Each marketplace is different. You may find that your overseas customers are in the public sector while those in your home market are small businesses. 
  • What influences customers' purchasing decisions. This could include culture, age, gender and many other factors.
  • Why customers buy from you. You may find that your product is considered differently in your overseas market. A luxury item in one country may be a necessity in another.
  • How much customers have to spend on your products. This will influence your pricing and marketing decisions.

Researching countries and customers

 Trade visits can provide first-hand experience.

 

UK FOOTNOTE

See our guide on how to segment your customers.

See our guide: know your customers' needs.

See the page in this guide on how to analyse overseas sectors and competition.

See the page in this guide: visit your overseas market for research.

 

You can commission research via UK Trade & Investment's Overseas Market Introduction Service (OMIS). This service puts you directly in touch with staff in their overseas offices. Find out about OMIS on the UK Trade & Investment (UKTI) website.

Find background information on potential export markets on the UKTI website.

Search for commercially-available research on the Market Research Portal (MRP) website.

 

 

4.1.4.      Analyse overseas sectors and competition

                                 

When considering any new market you should research your sector and potential competition. This will help you decide whether to attempt to enter the market and can give you tips on how best to market your product.

It will also show whether you need to tailor your product, pricing and marketing to suit your target overseas market. Don't assume that you can sell overseas in exactly the same way as at home - trading conditions will change from country to country.

Demand

Find out whether your type of product is in demand in the market you are researching. If not, can you identify why?

Competition

Just as in your own country, you should research your competitors and how they operate.

You'll need to identify:

  • who your competitors are
  • why potential customers may buy from your competitors
  • how your competitors market and price their products
  • what customer service and after-sales care your competitors offer

Without this information, you risk entering the market at a disadvantage. For example, you could price your product too high or attempt to sell into a market that is already oversupplied.

 

Pricing

What's the economic climate in your chosen country, and what influences the prices its customers are willing to pay?

Market entry issues

You may have to change the ways you sell and distribute your products. This could depend on the infrastructure in your target country.

Trade visits and trade shows can give you an indication of how a sector currently operates.

UK FOOTNOTE

See our guide on how to understand your competitors.

 See the page in this guide on practical research for export operations.

See the page in this guide: visit your overseas market for research.

 

4.1.5.      Carrying out and commissioning research on overseas markets

                                 

There are many sources of market research available from government agencies and commercial organisations.

Conducting your own market research

For many small businesses the best approach is to visit the market and spend some time interviewing a range of people.

You can also research using media sources, such as newspapers, trade journals and the Internet, and get information by networking with experienced exporters. Your trade associations may be able to help you with contacts.

Commissioning market research

You can commission a market research agency to investigate your overseas market on your behalf.
 
Decide whether you want to use a UK-based agency or a local one. A local agency may understand your potential customers better, and will be able to access the necessary information more easily. You should select your agency carefully, and check their proposal shows that they have understood your needs.
 
State what you expect to find out from your research in a clear brief. This should specify your aims in commissioning the research, and the timescales and presentation you want. Describe your business and product, state the information required and the geographical scope.

Published market reports

You can also buy reports on some overseas markets.

 

UK FOOTNOTE

See the page in this guide: visit your overseas markets for research.

UK Trade & Investment (UKTI) produces sector in country reports for many markets. View profiles for most countries on the UKTI website.

 

 

4.1.6.      Practical research for export operations

                                 

As well as investigating business opportunities, you will need to assess how to carry out your export operation.

Researching partners

The distribution channels available for selling will vary between countries.

You may need to find local agents or distributors and choose between them. If you plan to open a local office, you'll need to assess whether skilled staff are available. What options are there if you want to offer after-sales customer service? If you are importing you may need to identify countries to trade with, as well as individual suppliers within those countries. Research is key.

Financial issues to investigate

How will you be paid by your overseas customers? Will the exchange rate be prone to fluctuation?

Infrastructure considerations

Investigate the communications infrastructure. Does your target market have widespread access to telephones, faxes or the Internet?

You may need to assess the quality of air, sea, road or rail transport available - especially if you have particular requirements, eg for speed, packaging or temperature.

You may need to find UK freight forwarders experienced in your chosen market and product.

Legal issues

You may need to adjust your product or operational set-up to comply with local laws.

You should investigate:

  • local export legislation and technical regulations
  • certification and testing requirements
  • local standards affecting your existing and future products
  • product liability
  • quantities and units
  • patents and trademarks
  • staff qualifications

 

UK FOOTNOTE

See our guide on Entering overseas markets.

See our guide on Manage overseas suppliers.

See our guide on Getting paid when selling overseas.

See our guide on International transport and distribution.

 

 

4.1.7.     Finding business opportunities in overseas markets

                                 

Once you have identified your target customers, you will need to market your products or service to them. How you go about this will depend on your chosen route to market. You can:

  • sell direct from the UK
  • use an agent or distributor
  • set up a presence in your target country

Sources of information

  • Check with your trade association - many can provide you with details of overseas customers who have expressed an interest in your sector.
  • If possible, visit your target market and meet potential customers face-to-face. 

UK FOOTNOTE

See our guide on Entering overseas markets.

4.1.8.      Visit your overseas markets for research

                                 

Visiting your target market can provide invaluable information.

Trade fairs

Trade fairs offer an opportunity to see potential customers and competitors face-to-face in a trading environment. Even if you don’t choose to exhibit at this early stage, a visit can provide insight into how your target market works, what your potential customers are looking for, and whether your competitors provide it.

 

Trade visits

Trade visits are organised trips to target markets, often provided by trade associations and business-support organisations.

You may find them particularly helpful if you are new to exporting. Appointments and visits to potential suppliers, customers and business-support organisations will be arranged for you. You will also be travelling with other business people so you may find support and networking opportunities.

Check with your trade association to see if they are running any market visits.

 

UK FOOTNOTE

Find your trade association on the Trade Association Forum (TAF) website.

Find a listing of international trade fairs on the biztradeshows.com website or find trade shows for your industry and export destination on the Tradeshow Week website.

Find out about trade visits and the TAP on the UKTI website.

Find out about the Scottish Exhibition and Mission Programme on the Scottish Enterprise website.

Find out about Invest Northern Ireland Trade Events Programme on the Invest Northern Ireland website.

 

Help and support

UK Trade & Investment (UKTI) offers two key services to help UK businesses.

  • Their trade visits are subsidised trips to your target market that also include prearranged appointments with key contacts.

The Tradeshow Access Programme (TAP) provides support for UK businesses that wish to exhibit at trade shows in their overseas markets.