Researching the export markets requires global-scale marketing activities. It would help if you researched all possibilities, different countries, and different types of customers. The common points of most exporting countries and exporting companies are their focus on the right markets. Detailed market research and effective marketing activities will bring success in exports.
At this
point, Governments may assist & help their exporter companies by creating
suitable commercial conditions as below:
- To increase the number of advantageous countries exported with bilateral trade agreements.
- To make the legal and technical regulations necessary for the exporter processes to progress rapidly.
- Such as providing support and financing to exporter companies.
On the other
hand, exporter companies should conduct detailed market research from product
selection to market selection and base their export strategies on identifying
the most accurate product and market.
Conducting International Market Research
Conducting
international market research, doing this research properly, and obtaining
reliable results is the most crucial step in successful export planning. Are
the potential export markets, the possible countries you have identified,
really suitable for your products or services? When determining these markets,
your only criterion is customer potential? My profit margin? Have you decided
on other conditions required to export in these markets? Have you considered
factors such as tariffs, customs procedures, political and economic stability,
and security in those countries?
Many
exporters need help with lower profits in more challenging markets to create
the right price strategy. Some exporters need help identifying the markets they can sell because they need to implement the correct market entry strategy, calculate packaging, shipping, and customs costs, or correctly manage the paperwork processes.
When
researching a market, your priority should be determining whether your product
is competitive, potential customers, and the best selling prices. But
immediately afterward, you should identify the extra processes likely to affect
your export costs and the advantages and disadvantages in the target country's
social, political, economic, technological, and environmental processes. In
short, you should make a PESTLE analysis for each country you identify as an
export markets.
Determination of Export Markets
When the top 10 exporting countries are analyzed, we see that China, USA, and Germany lead the way. China is pursuing a state-organized export policy based on public-private cooperation. On the other hand, the US and EU countries have exporting companies struggling in the free market economy.
The exporting companies must determine by which country the product it sells is imported most. Entering a new market where a product has not been sold before is costly and risky, although there are opportunities. Export markets require customers who know what you'll sell and are in the habit of using it.
Identify the top 10 countries where your products are imported. The most
important challenge facing exporters is identifying the right market. Reliable
trade statistics on target markets are very few. ITC Trademap is a site under
UNCTAD where export and import statistics of all countries and product groups
are published. By choosing the product you sell, you can determine the top 20
importing countries in this way.
After determining the countries, you need to determine the priority
markets. At this point, you may have different criteria. Your priorities may be
different.
Group Target Countries According to Your Export and Marketing Strategy:
1) Identify the countries where you can sell with the highest profit
margin.
2) Identify the countries with the lowest competition.
3) Determine target countries according to their geographic proximity.
4) Determine the most advantageous countries in terms of communication
advantages. For example, English speaking rate, e-mail usage rate
5) List countries according to customs taxes and advantages in customs
procedures.
6) List the countries in terms of the reliability of the business and political and economic stability.
Entry to the Foreign Markets
If you are planning to entry to new foreign markets. It is recommended to do research on the following fields:
Sector-Based Export Markets Research
When evaluating an external market, research your product and the sector your product is included in. The sectoral analysis allows you to see the big picture and avoid surprises. Sometimes, while there is less competition in your product group, there may be competition due to equivalent products or products that offer similar benefits. Therefore, be sure to search for equivalent, substitute, and domestic and foreign competitors selling these products in your target market.
Constantly Update Market Research
The world is changing; products, companies, technology, and competition are changing rapidly. The results of your research on a product, an industry, or a market can be utterly misleading after a year because many things will change in the intervening period. That market may no longer be a suitable market for you. You may find new opportunities in a country that was low on your previous year's list.
Tariffs, Restrictions, and Trade Agreements in the Target Market
Customs taxes imposed between countries are not standard. A country may apply import duties for the same product at different rates between the two countries. In addition, customs duties can be exempted through protocols such as bilateral trade agreements and a customs union between countries. All these conditions affect the unit cost of your product, including all costs that you should consider when determining the market country. In addition, these conditions constantly change; you should follow the economic and political developments experienced in your current and target markets.
Licensing, Standards, and Certification in the Target Market
Check the additional costs and procedures that may occur at the customs stage in your target export markets. You also have to investigate the domestic sales stage. License requests may appear as a restriction that prevents you from selling, except for the cost. Standards that you will request may prevent your products from losing their competitive advantage. Test reports or analysis certificates requested for your product may cause your goods to be stuck or rejected at customs if you have yet to discuss these conditions with the importer at the beginning. In short, if you export to a country, you should determine all the documents and assets requested in your product group.
Setting Taxes, Customs Duties, Fees, Quotas, and Other Non-tariff Barriers
If you are selling to a country, including customs charges and taxes, you should determine all these processes at the time of your submission to your customer. Importers in some countries, such as the US, frequently operate with DDP delivery. DDP stands for Delivery, Duty Paid. Suppose you gave a DDP price to a customer. You have agreed on all costs, including shipping, customs charges, local taxes, and insurance. in short, it is a door delivery agreement.
In this case, you are responsible for the costs and the consequences of any problems that may occur during the import process in the destination country at the customs stage. For example, suppose a quota is applied for your product if the quotas for your country are exceeded in case of additional taxes or rejection of the material. In that case, the return of the products to your country and all financial and legal liabilities arising from this process will belong to you.
Finding & Managing Export Finance
The key to successful and growing exports is to manage financial processes correctly. You should evaluate the financing processes under two main headings. First, it is to be protected from financing and risks that may occur due to deferred payments. Suppose you are not working as an advance payment. In other words, if your customer pays you in terms of 30,60,90 days, you should be able to finance the period from the moment you purchase the raw material to produce the goods until the day the payment reaches your bank account.
Imagine you have dozens of bills this way. If you need more finances, you may experience severe problems if payments are delayed. Payment methods such as letters of credit ensure payment, even with additional costs. Allow you to get credit and financing from the bank issuing the credit letter.
Banks, financial institutions, and organizations such as Eximbank provide credit support to exporting companies through different methods. Rediscount credits provided by Eximbank also include export insurance. Here are some of the financing methods provided for exporters:
- Export Contracted Financing
- Forward Export Financing
- Advance Export Finance
- Final Export Financing
- Rediscount Credit
- Post-Shipment Rediscount Credits
- Pre-Shipment Export Credit
Conclusion
As a result, determining target export markets are an important decision. Your decisions may cause you to grow as an exporting company or leave the commercial scene. As we mentioned in the article's content, many criteria exist for determining the right markets. Some markets are less profitable due to competition. Exporting to some countries is risky due to customs laws and trade restrictions. In some markets, prices and customer demands are attractive, but payment methods are risky. In short, you should evaluate each market from many aspects, such as logistics, financing, competition, and trade laws. You should set up your export strategy to continuously determine the right markets and control the processes.
Written by: A. Alan - 02.2023
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