The primary step in crafting a comprehensive export
strategy and achieving sustainable profitability in export is determining the
target markets. In today’s globalized trade environment, where competition is intense,
and technology has made access to information easier, identifying the right
market and obtaining valid company information have become critical for firms
to realize their potential and gain a competitive advantage on a global scale.
Internal and External Factors in Target Market Determination
Target market determination broadly relies on two
factors: internal factors and external factors. These factors are crucial in
shaping the market selection process and ensuring a systematic approach
to exporting.
Internal Factors
Internal
factors include the competitiveness of the firm, its export strategies, and the
growth model of the country where the firm operates. To begin, it’s essential
to establish the medium- and long-term export strategy for the company. This
step is closely related to the company’s resources, the features of its
products, and the economic goals and competitiveness of the country it is based
in.
External Factors
External
factors encompass the status of global competitors whose exports are growing
and the nature of markets where imports are on the rise. These factors help
firms select international markets strategically by focusing on areas
where opportunities align with their offerings.
Steps to Identify Target Export Markets
Identifying target markets for export requires a
systematic approach. The following steps outline a clear market selection
process:
· Develop
the company’s export strategy based on its resources, products, and home
country’s economic goals.
· Research
the trade status of the product both globally and locally.
· Acquire
the product’s HS Code (Customs Tariff Statistics Position) to access
comprehensive trade statistics. The HS Code is a globally recognized standard
for describing types of commodities.
· Conduct
a detailed analysis of potential markets using both internal and external
factors. This includes narrowing down the selection of export markets to
those with high potential for profitability and growth.
Macroeconomic Factors for Market Selection
After developing
an export strategy and narrowing down potential markets, monitoring external
macroeconomic factors becomes vital. These factors influence the selection
of market for export and include:
·
The
demographic structure of the country- Critical for market projections
·
Geographical
proximity- Directly related to transportation costs
·
Social and
economic circumstances- Coincides with income distribution, growth rates,
population distribution
·
The
consumers, culture, and lifestyle of the society- How well the product will be
embraced
·
Industrial
and technological advancement- How strong telecom infrastructure is
·
Political
and legal system of the country- Represents whether the political system is
stable or not, legal system trustworthy enough in the case of dispute
resolution
·
The
distribution channels- If there are wide networks of transportation, packaging
and unloading capacity
· The competitors in that
particular market- How concentrated the market is in terms of competition
Tools and Databases for Target Market Research
Public institutions and global
organizations provide valuable tools and databases to assist in market
selection. Examples include:
· Ministry of Commerce databases
for trade statistics.
· International organizations
like the OECD, IMF, and World Bank for macroeconomic data.
· ITC’s Trade Map for HS
Code-based statistics and market research.
· TradeAtlas: Simplifies the
market selection process by offering comprehensive details of global import and
export shipments. With TradeAtlas, companies can analyze trade flows, identify
potential customers, and make data-driven decisions for the selection of export
markets. Its extensive database ensures businesses have the insights needed to
succeed in the global market.
Find Global Shipment Details with TradeAtlas
TradeAtlas offers a unique
advantage by presenting detailed global trade data in an accessible format.
Companies can easily track trade flows, evaluate market dynamics, and identify
untapped opportunities. You can explore TradeAtlas by clicking here.
For detailed information on the subject export business plan & roadmap,
you can review the content “Export
Business Plan and Exporter's Roadmap”.
