With all the potential in today’s global marketplace it can be a daunting task to find the right market to expand your business internationally. We know (statistics show) that companies who export make more money than those who only sell to their domestic market. But how do you narrow down potential markets from the entire world, to a particular geographic area, country and region?

Reviewing available data for different international markets allows organizations to assess which markets realistically fit with their overall strategic direction. This allows for selection of potential target markets where product and service alignment is evident and market entry is feasible. As detailed market research can be expensive, many experts suggest the process begin with a preliminary screening to assess basic alternatives and narrow the focus before proceeding to more comprehensive data collection.

Looking to determine if your new trade opportunities are viable? Check out the FITTskills Feasibility of International Trade online course!

While screening potential markets is often thought of when exporting products and services, it is also important for importers who are considering new suppliers of products and services.

Reflecting on the organization’s motivations, the identified research objectives and the research brief, researchers may need to narrow the list of potential target markets to ensure that available resources are spent wisely on further research and that useful market and competitive intelligence is obtained. This screening process should generally result in identifying a few target markets with high success potential for further investigation.

One market or many?

It can be useful to view large countries with big populations not as one market, but as a mosaic of regional markets. China, for example, has more than 50 distinguishable markets, five of which are major entities in themselves, and the United States has at least a dozen identifiable markets.

Focusing on a regional market in countries such as these can be much more effective than trying to cover the whole country—which, in the case of nations such as China, is almost impossible anyway. There is significant emerging evidence that large cities are becoming increasingly independent markets that are different from country markets and that they should be considered separately.

Conversely, some countries within a region are so similar that you can apply a common approach to all of them. The EU and Andean markets, for example, fall into this category.

Start narrowing your focus

Researchers should begin by identifying five to ten large and fast-growing markets for their products or services (for exporting) or as potential suppliers (for importing). They should also identify some smaller emerging markets for screening that may not have as many competitors as an established market. From this initial list, there are some questions to ask when trying to narrow the research focus. While the scope of these questions is largely on the exporting of products and services, many of the questions are also applicable to finding new domestic target markets for imported goods and services.

Market Size and Growth

Examine target market data from the last three to five years and consider the following questions:

1. Has market growth been consistent year over year?

2. How much is spent annually on products or services like the ones offered by the organization?

3. How many potential buyers are there likely to be?

4. Are there a lot of products or services already in the market that will be competition?

5. Can the organization match or beat the prices competitors are charging?

6. Are there cultural factors that may affect the marketability of the product or service?

7. Is the market industrializing rapidly? If so, can products or services be developed to take advantage of this?

8. Has there been market growth even during periods of economic recession?

Market Accessibility

9. Would the organization’s products or services be subjected to high tariff and/or non-tariff barriers?

10. Are there already many suppliers of the type of product or service, making it more difficult to access the market share needed?

11. Is the product or service the organization wants to import/export banned, restricted or controlled in the target market?

12. Are there safety or testing requirements for the product or service?

13. Are there any non-preferential or preferential rules of origin that the product or service must comply with?

14. Will shipping the product or providing the service to the market be expensive and/or logistically complicated?

Business and Political Environment

15. Is the economy stable and growing?

16. Are governments at the national and regional levels friendly to foreign organizations and investors?

17. Are there any issues with currency exchange, transfer or convertibility?

18. Is the political system stable?

19. If assets are placed in the country or invested there, are there risks of political upheavals that could threaten the assets and investments?

20. How strong are the local legal and governmental institutions?

21. Is there widespread corruption?

22. What is the cultural distance between the domestic or current operations and the potential new target market?

23. What is the language of business in the target market?

24. Will it require resources for interpretation and translation for business dealings and product or service modification?

Addressing these questions puts the organization in a better position to identify the markets offering the best chance for success. A single market is often the optimum number, although two or more can be chosen if they are highly promising.

The next step is to plan your research using primary and secondary sources.

Are there any questions you ask that missed our list?

The post 24 Questions to help you find the right international markets for expansion appeared first on Trade Ready.

Sampling is one of the primary ways to gather the important data you will need in order to be successful in a new market. The FITTskills Feasibility of International Trade course delves into the best methods for researchers to create a representative sample.

For researchers to make conclusions about the population from the sample, it must be representative.

This means the sample group should include the same major characteristics of the larger group, as well as be chosen in a way that will reduce the likelihood of selecting members who are not representative of the population as a whole.

To accurately create a representative sample, researchers must ask themselves a simple question.

What Sampling Methods Will Be Used?

After defining the sample characteristics, the researcher must choose members of the sample to participate in the study. To do this, researchers use either of the following:

A probability based method

This is a random selection method, in which respondents in the sample pool each have a pre-established chance of being selected for the survey.

A non-probability based method

 This is a selection method in which respondents are chosen because of convenience, judgment, or through quota methods.

The probability sample provides data that can be statistically tested to identify the degree of its similarity to the larger population. Even so, there may be errors that have nothing to do with the sampling method. This possibility should be considered when evaluating the cost/value trade-off of using a probability versus a non-probability based sample.

Probability based methods of sample selection can take a great deal of time and expense that can be magnified when applied internationally.

To benefit from the precision of these methods, a researcher must be sure the sampling tool is complete and current, as well as be sure that the individuals who are randomly chosen are accessible. The expense of this approach is justified by the benefits gained.

The non-probability based sample is often selected because of cost, time, and value considerations, or because the entire population might not be available to the researcher. The ability to identify and access an unbiased random sample might be hampered by cultural factors or logistical problems. In such cases, the precision of the probability based sample is lost, making the high cost difficult to justify.

If the survey is being used to gather more general ideas or trends, a non-probability based sample can be adequate, if it is carefully chosen. The researcher should understand there is no method to statistically test whether it is representative of the entire population.

There are four generally accepted methods of selecting a non-probability based sample:

 1. Convenience

This is the least reliable, the least expensive, and the easiest method. The researcher chooses whoever is close and easy to access. For international trade research, this method might be difficult to implement if the company has no previous contact in the market, because selecting people who happen to be passing by might not be acceptable. An example of the convenience method is taste-testing in a supermarket.

2. Judgment

This is a more reliable method than convenience because respondents are chosen based on some pre-defined characteristic. An example is the use of key clients to test changes to a product.

3. Quota

This involves a greater effort to define the sample, but offers higher reliability and a greater degree of similarity with the characteristics of the population. at large. The researcher specifies the characteristics of value to the research question and selects a group that has the same proportion of these characteristics as the larger population.

4. Sample size

As with the method of choosing the sample, the researcher can use either a qualitative or a statistical approach to selecting the sample. The choice depends on the degree of accuracy and the amount of acceptable risk.

There are several methods of gathering primary data. Focus groups are a very effective way of obtaining qualitative data, while surveys and questionnaires can deliver qualitative or quantitative data, depending on how the survey is designed. Developing questions for surveys, interviews, and focus groups requires skill and experience. Poorly worded or structured questions will produce inaccurate results.

The method chosen for a research project will depend on the type of data that is required and the research objectives that must be met.

An essential consideration for primary research is selecting a sample to survey. It is too impractical for companies to survey an entire population to gather research, but it is important to select a sample best matching the population at large in order to gain the most realistic results.

Are there more factors to consider when making sample group that we haven’t listed? Share them with us in the comments down below.

The post The 4 sample plans you need when researching new markets appeared first on Trade Ready.