Choosing Your Market
The most important aspect of your research will be to determine your first export market. You may already have a rough idea of where your product or service would sell well, in fact, you may already have received interest from buyers in this country. Your priority in this section therefore will be to ascertain not only whether your product or service is matched to the right market, but if it is a viable option once all factors are taken into consideration.
New exporters are often attracted to large retail markets such as America, but fail to realise that this market is also highly competitive and price sensitive with a relatively complex distribution network. Your transportation and distribution costs will also be higher due to the distance from Australia. Therefore, as a first time exporter, the risks of entering this market may not seem as attractive once you have completed your research. It may in fact be a market you can tackle later once you have developed a track-record in another, easier market.
Similarly in the export of services, before you go it alone you may consider starting by gaining off-shore experience working with organisations such as the Australian Agency for International Development (AusAID) or by pursuing projects funded by organisations such as the World Bank or the Asian Development Bank.
Matching your product or service with the right market brings together a number of discrete factors. You will need to understand:
- market size and growth;
- number and market share of competitors;
- barriers to trade, including legal, regulatory and political;
- how the product should be adapted for each export market;
- who are the best agents to appoint;
- what prices are paid at each level within the distribution channel;
- which distribution channel offers the quickest success; and
- what customer service standards should be employed.
If you are to be a proactive exporter rather than purely reactive, you must consider carefully the choices you make about your partnerships; customer service strategy; product strategy; promotional strategy; distribution strategy; and pricing strategy.
The primary source to obtain answers to these questions is the internet. The key sites that you may find helpful include:
- Austrade country profiles focus on the commercial environment and key issues that may impact on your research. They are also able to provide specific in-market research tailored to your business’s individual needs on a fee for service basis.
- The Department of Foreign Affairs and Trade (DFAT) country reports discuss the economic and political environment as well as general trade issues and are therefore a useful tool in determining the stability of the country you are researching.
- The Department of Industry and Resources (DOIR) provides a wealth of information to help Western Australia develop business and trade ties around the world. In the Country Information section, you will find background information on a number of countries, together with sections on how to do business in those countries, trade events, market reports and contact information both in Western Australia and overseas and links to other relevant websites.
The Australian Bureau of Statistics (ABS)
Another avenue is to investigate the volume of what is currently exported from Australia in your product category, and into which markets these goods enter. This will show where there is most likely to be demand for your product.Foreign countries’ import data - It is also recommended to examine the import statistics of the countries you are interested in as this will indicate other similar products being imported and where they are being sourced, thus giving you an idea of your competitors.
In selecting your potential export market, keep in mind the following:
- Do I need to adapt my product or service for this market?
- Does this market possess too many non-tariff barriers such as import restrictions or licensing requirements?
- Is this a relatively new market with less competition and the potential for growth?
- Is this country recording sustainable import growth in my product or service category?
The TradeStart program
delivered by the SBDC also provides assistance in determining the best markets
to focus your attention on.
