Four Steps To Making the Most of Export Opportunities

Even as the world becomes a “global village,” small to medium-sized companies continue to miss export opportunities. Most business owners believe exporting is either too expensive or inappropriate for them. But with a clear strategy and an understanding of how to seek out marketing opportunities, it is more than possible to become a successful exporter. Consider the following four steps on how to achieve exporting success.

1. Evaluate market potential

Evaluate the global market potential by using Export statistics (http://trade.gov/data.asp ). Through this resource, business owners can cost-effectively seek out potential markets in particular countries where one might import specific products or services. Other helpful sources on foreign markets include state agencies, trade associations, universities, and chambers of commerce.

After identifying the major importing countries, management should track the top five based on market attractiveness (ease of doing business) by using such criteria as import history, politics, GNP, population, market access, and distribution. The World Bank (http://doingbusiness.org/rankings) is an excellent source for obtaining preliminary data on world rankings.

Before commencing a market attractiveness analysis, a company needs to determine what business and managerial variables provide the company with success in its current market. Table One illustrates a possible scenario:

This by no means is an exclusive list of variables. Each company has specific internal and external variables it must deal with.

Based on the above, one can evaluate which country provides the best opportunity for the firm due to market attractiveness and market potential. A similar analysis revealed to of our clients that China, although the highest importer of the company’s particular product, was the least accessible market after analyzing market attractiveness and market entry. Therefore, this entry would have been very costly and taken substantial company resources and management time.

2. Evaluate market entry constraints

It is important to evaluate the following variables to determine the overall competitiveness of a product: licensing requirements (ITAR), duties and tariffs, product labeling, packaging, promotion, storage, maintenance, and training. All these items have an impact on how a product is accepted in the country it is entering. A good place to begin the market entry analysis is through a free tool from the Department of Commerce and the World Trade Organization (http://www.wto.org/english/tratop_e/tratop_e.htm)

3. Evaluate market competitiveness

To reach potential buyers one must determine what competing products are being sold in the targeted country. Information about competitors (whether importers or local manufacturers) or complementary products must be analyzed. Information on pricing structures, channels of distribution being used, packaging, promotion, and product differences is vital.

Any additional information on a competitor’s management structure will help determine the competitor’s strengths and weaknesses, and help evaluate the level of market entry opportunity available.

4. Seek a distributor or agent

The final step requires a decision as to who will best represent the product or service being exported. First, a potential exporter must determine if he or she is better served by having an actual distributor or by having an agent seeking out potential distributors and clients for the product. An agent will add some costs to overall local marketing efforts, but in some countries it is better to have multiple distribution points rather than a single distributor.

A detailed financial and market capability analysis should be conducted. This due diligence is important to understand the resources available and recognize what support is needed to insure success. The U.S. Department of Commerce offers Gold Key, a low cost tool for finding local agents or distributors. As there are many services available, selecting the right option is crucial in developing an export plan. On LinkedIn business owners can follow specific industry and country groups.

Firms should set specific targets for sales, distribution growth, and other relevant data related to their specific or industry needs. These factors should be tracked in quarterly and annual reports. The reports will determine if specific objectives are being reached. This information can be used later to cancel distribution or agency agreements if local partners are not meeting obligations previously set forth.

Before a final decision is made as to which country to export to and whom to select as a local partner, it is wise to travel to these markets or hire an advisor to do so. It will save both money and time in the long run.

By following the four steps above, a potential exporter is on the right course to begin viably participating in the “global village.”

About The Author Paul Daemen

Paul Daemen has more than 30 years of multi-industry experience and hands-on knowledge in 54 countries. He has been involved in global marketing, strategic planning, operations, business development, and implementation. Paul also is an adjunct Professor at three universities.