EXPORT MARKET RESEARCH

( Estimating Market Potential )

A
Presentation
By
Dr. P. K. Chugan
Institute of Management
Nirma University
Ahmedabad 1
 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

A MARKET RESEARCHER MUST TRY TO ANSWER

 WILL PEOPLE BUY OUR PRODUCT ?

 HOW SHOULD WE CHANGE THE PRODUCT TO MAKE PEOPLE IN THE
MARKET MORE LIKELY TO BUY IT ?
HOW MUCH WILL THEY BUY, AT A PARTICULAR TIMES IN THE
FUTURE ?
HOW MUCH MONEY CAN WE EXPECT TO EARN FROM THESE SALES ?

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
 WHAT WILL BE THE BEST WAYS TO MARKET THE PRODUCT, AND
WHAT MARKETING COST WILL BE INVOLVED ?
 WHAT INVESTMENT DECISIONS MAY BE REQUIRED IF THE
PRODUCT MUST BE MODIFIED IN ORDER TO MAKE IT SUITABLE
FOR THE MARKET ?

The accuracy with which the researcher

answers these questions depends to a
great extent on how closely he observes
the following two basic rules :
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

1- ALWAYS TRY TO FIND OUT THE REASONS

BEHIND THE BARE FACTS
AND
2- SEARCH FOR THE MOST SPECIFIC
INFORMATION, TO THE EXTENT POSSIBLE, IN
RELATION TO THE PRODUCT

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

FINDING REASONS

PRESENT ( Working in the present )

PAST ( What happened )
FUTURE ( Likely to happen )

 JUDGEMENT
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

FOCUSSING ON THE PRODUCT

THE SCOPE OF RESEARCH: (Factors
limiting market potential for an exporter)
 HIS OWN COUNTRY’S TRADE REGULATIONS
 MARKET SIZE ANDGROWTH
 THE COMPETITION
 ACCEPTED PRICES
 LIMITATIONS ON MARKET ACCESS
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FOCUSSING ON THE PRODUCT
 THE SCOPE OF RESEARCH: (Factors
limiting market potential for an
exporter )
HMTL Pvt .
H HIS OWN COUNTRY’S TRADE REGULATIONS
M MARKET SIZE AND GROWTH
T THE COMPETITION
L LIMITATIONS ON MARKET ACCESS
P PRICES ( ACCEPTED) 7
 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

EXPORT COUNTRY’S TRADE REGULATIONS

( These may block or hinder exports )
 OBTAINING EXPORT LICENCE AND OTHER POLICY RELATED
ISSUES
 FOREIGN EXCHANGE REGULATIONS
 CREDIT POLICY – as announced by RBI
 PREPARATION OF NUMEROUS DOCUMENTS
 THIS LEADS TO ASCERTAIN THE COST FACTOR
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

COST FACTOR TO ANSWER SUCH BASIC

QUESTIONS AS
 WILL IT BE WORTH OUR EFFORTS TO EXPORT THIS
PRODUCT ?
 HOW MUCH WILL WE HAVE TO CHARGE TO COVER OUR
COST ?
 HOW MUCH OF THE PRODUCT WILL BE AVAILABLE ?
 TO WHICH COUNTRIES (Selection) CAN WE EXPORT
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COST FACTOR TO ANSWER SUCH BASIC QUESTIONS
AS
CASE

C HOW MUCH WILL WE HAVE TO CHARGE TO COVER

OUR COST ?
A HOW MUCH OF THE PRODUCT WILL BE AVAILABLE ?
S COUNTRY (ES) SELECTION TO WHICH
COUNTRIES CAN WE EXPORT
E WILL IT BE WORTH OUR EFFORTS TO EXPORT THIS
PRODUCT ?
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

MARKET ACCESS
( Trade barriers of possible markets )
Tariffs and quotas
TARIFFS
-Can affect competitiveness of his product against
1-products made within the market.
2-products those of suppliers from third countries
who may be subject to different tariff rates.
- Must be taken into account in calculating selling prices
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

• Ad valorem tariffs : LEVIED AS % OF CIF

PRICE OF GOODS IMPORTED.
• SPECIFIC TARIFFS : ARE FLAT RATES PER
PHYSICIAL UNIT IMPORTED
• MIXED OR COMBINED TARIFFS : COMPOSED
OF BOTH A SPECIFIC AND AD VALOREM
ELEMENT
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

• MFN GT GSP SPT( C.U.)

QUOTAS:
• OFTEN MORE SELECTIVE THAN TARIFFS
• TEND TO BE ADJUSTED MORE FREQUENTLY
• AT ANY TIME, CAN EFFECTIVELY LIMIT THE SHARE OF
MARKET TO ALL OUTSIDE SUPPLIERS OR A
PARTICULAR COUNTRY (S).
• IN MANY CASES MAY CLOSE MARKET ALTOGETHER

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
INTERNAL TAXES
Taxes on transactions, such as value added
tax (VAT) imposed by countries in
European Union, South Africa and many
other countries

CURRENCY RESTRICTIONS

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
HEALTH AND SAFETY REGULATIONS

HEAP

Human Environment Animal Plant

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
HEALTH AND SAFETY REGULATIONS
(Plant, animal, human and environment)
• Raw material
• Conditions underwhich product is processed
• Packaging and labelling
• Types of preservatives, their chemical contents,
colouring matter used to decorate tableware,
toys, eatables, etc.
• Regulations based on environmental
considerations

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

POLITICAL FACTORS

• INTERNAL POLITICAL FACTORS

• THE POLITICS OF INTERNATIONAL RELATIONS:

TO PLAY A ROLE IN CREATING OR ELIMINATING
TRADE BARRIERS
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

MARKET SIZE, PATTERNS AND GROWTH

IMPORTS
• How much of the product is presently being
imported
• From where imports have been coming
• How market shares of various foreign suppliers
have been shifting and are likely to develop
• The prices of exports from various countries
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

CONSUMPTION
• THE SIZE AND TRENDS OF PRODUCTION WITHIN THE
MARKET
• EXPORTS FROM THAT MARKET
• THE FACTORS THAT WILL AFFECT THE SHARE OF
IMPORTS IN CONSUMPTION AND IN PARTICULAR THE
FOLLOWING CHARACTERISTICS, AMONGST THE
OTHERS, MUST BE INVESTIGATED

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
-How much of the product is consumed
annually ?
- Who consumes it ?
- Where it is consumed ?
- How often is product bought by an
individual: Weekly, Monthly or
Seasonal ?
- How is product used ?
- What are the prospects for becoming
substitutes? 20
 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
- Derived demand
------------------------------------------------------------
-
MARKET SEGMENTATION -- is a process
To identify market segments for:
•To draw up an end user’s profile
For
•Adapting suitable marketing tactics to maximize
sales in the segment or the
segments selected as target 21
 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

FACTORS AFFECTING DEMAND

1- ECONOMIC FACTORS
• Purchasing power
• General economic outlook
• Employment levels, the level and
distribution of income and so on
2- CLIMATE AND GEOGRAPHY (Natural Factors)
3- SOCIAL AND CULTURAL FACTOR
4- TECHNOLOGY FACTORS 22
 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

FACTORS AFFECTING DEMAND

1- SOCIAL AND CULTURAL FACTOR (S)
2- TECHNOLOGY FACTORS (T)
3-ECONOMIC FACTORS (E)
4-POLITICAL FACTORS (P)
5- INTERNATIONAL FACTORS/RELATIONS (I)
6- NATURAL FACTORS (CLIMATE AND
GEOGRAPHY) (N)
STEPIN Business Environment 23
 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

THE COMPETITION
• Strength of competition
• Continuity to watch competition
• Direct or indirect competition
MARKET RESEARCHER MUST FIND OUT
 Structure and strength of its competitors
 The reasons for the success of important
competitors
 Chances of competing against them
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

THE COMPETITION
• From the suppliers based in the market
• From the suppliers exporting from other
countries
• From suppliers exporting from
researcher’s own country

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

STRUCTURE OF THE COMPETITION

• Does direct competition exist, if yes -
who are important suppliers -
domestic or foreign ?
• What indirect competition exists ?
• What share of the market does each
important supplier have, and how
have these market shares been
changing ?
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

• What particular cost advantage or

disadvantage do important suppliers
have ( raw material supply, labour
costs, etc.)
• What are the prospects of important
suppliers in increasing their
production ? What is their
present capacity and what are
their plans for expansion ?
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
• Is the market dominated by one or small
group of suppliers, or is shared by
many ?
• If foreign suppliers have significant
share of market, do they enjoy
relative tariff, transport-cost or
similar advantage ?
• Do domestic suppliers have political
influence that can be used to raise
trade barriers
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

• Do the main competitors have a strong

enough grip on distribution channels
to make entry difficult ?
• Are there any “holes” in the market - any
market segments which are not
efficiently served by the existing
suppliers or any gaps in their product
lines ?
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

REASONS FOR SUCCESS

• For stronger/large suppliers
• For smaller sized firms
IN LINE WITH THE FOLLOWING :
 High product quality
 Competitive pricing
 Cost advantage

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

 Advantageous plant location

 Unique product features and patent
protection
 Size and strength of the company
 Domination of distribution channels
 Sales and distribution methods
 Advertising and promotion
 Tariff and other trade related protection
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

 TO BE NOTED - If important suppliers have

been losing grounds in the market, the
reasons for that are also worth
investigating
------------------------------------------------------------
-
PRICES
 At what prices good must be sold ?
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
 Prices at which prospective
competitors offer products to end users
 Difference between the price paid by
end users and price received by the
producer
 Mark-ups at each stage of distribution
 Calculation and adjustments of various
taxes, duties, transport costs, etc.
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
RESEARCH CHECK LISTS
• Marketing practices - Check list
1- Transport
2-Sales and distribution channels
3-Pricing strategy factors
4-Services expected by buyers
5-Advertising and sales promotion
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
• Product requirements - check list

1- The product
2- Packing for shipment
3- Industrial product pack
4- Consumer pack

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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )
• ESTIMATING MARKET POTENTIAL - CHECK
LIST
1- Your own country’s trade regulations
2- Market access
3- Market size, pattern and growth
4- Competition
5- Price structure, etc.
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 EXPORT MARKET RESEARCH
( ESTIMATING MARKET POTENTIAL )

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