by Selma Canas | November 21, 2023
Conducting thorough global research is essential for management to make informed decisions about which new markets to explore. A comprehensive market study, grounded in both quantitative and qualitative data, provides managers with the confidence needed to choose the right markets to enter. This approach minimizes the risk of wasting time and resources on ventures in unsuitable markets.
To initiate the research process effectively, gathering pertinent information from the company is crucial. Understanding the product and identifying the end users enables researchers to assess potential demand and market size accurately. Utilizing trade flow data helps pinpoint countries with high import volumes of the product while analyzing sales revenue provides insights into product demand in each country. These indicators help differentiate between small and large markets. Additionally, calculating the compound annual growth rate (CAGR) over the past five years offers valuable insights into whether a market is expanding or contracting, aiding in strategic decision-making.
Using Reliable Sources
When predicting potential markets, it is crucial to rely on relevant data specific to a company’s industry and product. Obtaining information from reliable sources is paramount. Trustworthy sources include national governments, non-governmental organizations, transnational publications, trade associations, market research firms, and annual reports of public industry leaders. Several reputable sources include:
- United Nations Contrade database
- Oxford Economics
- World Bank
- Mergent Online
- D&B Hoovers
- World Health Organization
Conducting Market Analysis
To conduct effective market analysis, it is essential to narrow down the data to no more than 15 relevant data sets and organize them in a spreadsheet, aligning each data set by country in separate columns for easy comparison. Each data set should represent a specific criterion deemed important to the company exporting the product. Potential data sets for consideration might include:
- Market Size (in USD)
- Compound Annual Growth Rate (CAGR)
- Number of Competitors
- Import Duties and Taxes
- Existence of Free Trade Agreement (FTA)
- Consumer Purchasing Power
- Regulatory Environment
- Infrastructure and Distribution Network
- Consumer Behavior and Trends
- Technological Adoption
- Currency Stability
After organizing the data, each column should be sorted, allowing for a clear comparison of countries based on individual criteria. Analyzing the top countries against the remaining data sets is crucial. For instance, a country might exhibit a large market size but a negative CAGR, indicating a declining market. In contrast, a country with a smaller market size and a positive CAGR may be worth considering due to its growth potential.
Number of Competitors
Additionally, considering the number of competitors is important. A high number suggests demand for the product but also indicates intense competition. Import duties and taxes are critical factors, and countries with lower or zero duties are favorable. Countries with free trade agreements with the US often have reduced duties and fewer restrictions, making them attractive options for market entry.
By evaluating these factors comprehensively and aligning them in a structured manner, businesses can make well-informed decisions about which markets to explore, ensuring strategic and successful market entry.