Is your Company Export Ready?
It is vitally important that a company should only start to export once it has an established
a solid UK market base. Make your mistakes in the home market first since mistakes made
overseas could be catastrophic or even terminal.
Exporting will place addition pressure on manpower, production capacity, time and cash
and there needs to be sufficient of each of these resources within the business.
At least one person in the company will need
to have excellent planning and market research skills. Any proposed export activity must
also be a good fit within the company’s core business.
If necessary, the company should have the
ability to adapt its product or service to the market and an enthusiastic, organised
team committed to exports will need to be put in place.
Exporting should not be regarded as a quick
fix and is certainly not always a solution to profit or sales problems.
In fact, it is more likely to exacerbate any existing problems
It is also worth bearing in mind that compared to operating in the UK, the costs of exporting
merchandise will be higher and, with freight, distribution and agents costs the margins
can be considerably reduced.
There is also the potential for exposure to currency and credit risks. The initial stages
of starting an export programme can require considerable energy and commitment, and will
often result in management taking their eyes off the UK market.
How to Choose an Export Market
The most important aspect of choosing a suitable
export market is to select a country that you feel comfortable working in.
Influencing factors could include geography,
the ease of travel, the language, the size of the population and the standard of living.
It is also helpful if the market research information required for a specific country
can be relatively easily obtained since you will need this information to ascertain the
market potential for your products or services.
It is also useful if you can find markets where the USPs for your products
are the same as in the UK.
You will also need to establish whether there are any special standards or regulations in
the given country, whether you will need a license to operate or be required to change
your labelling and documentation.
It is also important that you establish whether
or not your product or service would need to be modified in order to meet the local
market conditions, and you will need to gather sufficient competitor data and pricing information
to allow you to develop a pricing model.
The easiest markets to access are often those where this information is readily available
from both primary and secondary sources of information.
Useful sources of information could include
Trade press & directories
Chambers of Commerce & Embassies
Trade missions and shows
International Trade Support – Business Wales
UK Trade and Investment (UKTI)
When searching for possible export markets
it is useful to speak to existing exporters who offer similar products or services to
your own or to try to establish what it is that your competitors are doing.
Undertaking Market Research
The ability to undertake detailed market research is the single most important skill required
for effective exporting.
Accurate market research can save the company from wasting tens of thousands of pounds
There are several elements to market research
which should each be considered in turn for each of the markets under consideration.
These elements are the purpose of the research,
economic considerations, the business environment, cultural differences, political considerations,
any special product requirements and pricing issues.
The Purpose of Market Research
Identify a suitable country
Establish the market size
Identify suitable customers and establish need
Ascertain any local competition
Identify potential agents/distributors/wholesalers
Determine product strategy and selling prices
Establish how you are going to inform customers
– think about which trade shows you should attend, and the major trade magazines.
Initially it is important to clearly identify the purpose of the market research which should
primarily be to identify suitable markets for the company’s products or services.
This should be followed by identifying a clear need,
establishing the size of the market for these products, identifying potential
customers and ascertaining any local competition.
This phase of market research should also include identifying potential agents, distributors
or wholesalers as well as suggesting possible product marketing strategies and an indication
of the potential selling prices in the market.
Finally this phase of the research should establish how to inform potential customers
about your products, identify which are the major trade magazines in the country and ascertain
which local trade shows should be attended.