Where to Export

Identification of Export Markets

A
Presentation
By
Dr. P. K. Chugan
Institute of Management
Nirma University
Ahmedabad 1
 Where to Export
Identification of Export Markets
Introduction
Though the whole universe can be potential
markets for one’s product, it may not be possible
and worthwhile to export to the world as a
whole. Each country has its own peculiarities
necessitating individual and specialised
approach.
In the selection of potential market, the primary
task is to identify the areas where products
similar to those of the prospective exporter are
currently sold either by India or other countries.
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 Where to Export
Identification of Export Markets
Need for Market Selection
• It is very difficult for a company to operate in all
the markets over the globe
• There are markets which are not profitable or
are not worth to trouble
• There are various types of trade barriers in
different markets which make entry difficult or
impossible
• There may be markets which are very risky due
to political or other reasons
• Company’s resources may not permit the
operation in large number of countries.
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 Where to Export
Identification of Export Markets
• Of course, there are companies which operate in
majority of the countries of the world, however,
they have expanded gradually over a long period.
Hence, any company willing to enter in many
markets should do it systematically, because any
fast expansion without resources, without strength
and strategies could prove to be suicidal.

For example as cited by Kotler, The Bulova Watch

Co. expanded into over one hundred countries,
however, made profits in only two countries and
lost around $40 million.
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 Where to Export
Identification of Export Markets
Sources of Information
Monthly Statistics of Foreign Trade of India -
published on commodity/country as well country /
commodity pattern
(http://www.commerce.nic.in/eidb/default.asp)
International Trade Statistics
• Personal Computer Trade Analysis System (PC-TAS) of
the international trade centre UNCTAD/WTO
(http://www.intracen.org/mas/pctas.htm)
• Yearbook of International Trade Statistics published by
United Nations, New York
Trade Accounts published - by leading exporting
countries like USA, United Kingdom and Japan or the
major world producer/exporters of products 5
 Where to Export
Identification of Export Markets
MARKET SELECTION PROCESS

Determine the International Marketing Objective

Determine the Parameters for Market Selection

Preliminary Screening

Short Listing of Markets

Detailed Investigation / Market Research

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Evaluation and Selection
 Where to Export
Identification of Export Markets
Objectives
• Export Surplus/Large quantities
• Achieve sales and product stability – market and
product diversification
• Pay for Imports
• Achieve growth and development (Seasonal
products – opposite seasons)
• Lower the cost of business
• Improve company image
• Political reasons
• Economic Incentives
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 Where to Export
Identification of Export Markets
Parameters
• Political stability
• Economic stability
• Currency strength and stability
• Government Policy
• Ability to serve as marketing hub
• Tax incentives
• Ethnic factors
• Bureaucracy and procedure
• Competition, demand, labour cost, labour
productivity, infrastructure, etc. 8
 Where to Export
Identification of Export Markets
How to Pick a Market
(Preliminary Screening)
Following factors should be considered while
picking a country:
• Political embargo on exports should be straight away
excluded
• Non-availability of export assistance should be dropped
• Special requirements
• Product specification
• Location
• Market Accessibility
• Business Community
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 Where to Export
Identification of Export Markets
General Steps to pick a market (Preliminary)
• Appraisal of Markets
• Market Report
• Demand and Supply
• Prices
• Distribution Methods / Trading Practices
• Report of market surveys and trade delegations
• International market information through
internet
• Contact with exporters
• Commercial Banks
• Foreign trade representatives
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 Where to Export
Identification of Export Markets
Determinants of Market Selection
Firm related Factors

Market Selection Decision

Market Related Factors

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 Where to Export
Identification of Export Markets

Firm Related Factors

• Objectives
• Resources
– Financial
– Human
– technological and managerial
• Product mix
• Internationational orientation (EPRG) 12
 Where to Export
Identification of Export Markets

Market Related Factors

General Factors Specific Factors

• Economic Factors
• Economic Policy
• Business Regulations
• Currency Stability
• Political Factors 13
 Where to Export
Identification of Export Markets

Market Related Factors

General Factors Specific Factors

• Ethnic Factors
• Infrastructure, Bureaucracy and
Procedure
• Marketing Hub
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 Where to Export
Identification of Export Markets
General Factors SAHIB GE

S - Stability: Political, Economic, Currency

A - Accessibility (barriers)
H - Hub: Ability to serve as hub
I - Infrastructural facilities, Incentives (Tax)
B- Bureaucracy
G - Government Policy and Regulations
E - Ethnic Factors 15
 Where to Export
Identification of Export Markets
Market Related Factor
Firm/ Industry Specific Factors

• Trends in domestic production and

consumption and estimates for the future
of the products (s) concerned, i.e.
demand estimates.
• Trends in imports and exports and
estimates for the future 16
 Where to Export
Identification of Export Markets
• Nature of competition
• Government policy and regulation
pertaining to the particular industry or
sector
• Infrastructure relevant to the industry
• Supply conditions of the raw materials
and other inputs such as cost of labour
• Trade practices and customs

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 Where to Export
Identification of Export Markets

• Market characteristics including the

number and nature of market segments,
prices trends, etc.
• Export Incentives
• Cultural factors and consumer
characteristics

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 Where to Export
Identification of Export Markets
Market Related Factor
Firm/ Industry Specific Factors DIG LIC

D - Demand ( Consumption, Production, Import

and Export) and factors affecting demand
I - Infrastructure,
G - Government Policies
L - Labour cost, Labour productivity
I - Incentives
C – Competition, Characteristics (segments,
prices, etc.)
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 Where to Export
Identification of Export Markets
Evaluation Matrix and Market Selection
Based on the data collected thorough market
research an evaluation matrix is often used for
ranking and selecting the market with reference to
their attractiveness for the company.

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 Where to Export
Identification of Export Markets

This matrix includes the relevant general

and specific factors which are rated on
ten point scales to give the raw score
(RS) with respect to each factor. These
raw scores are then multiplied with their
respective weightages to obtain the
weighted scores (WS). Markets are then
ranked and selected by comparing the
total weighted scores. 21
 Where to Export
Identification of Export Markets

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