Export Market Development and Its Importance to Market Growth

The global opportunities for exports are extremely varied and the sectors with high potential will differ between countries. The differences that exist across countries is reflected in factor endowments, location, and opportunity to scale. Global market development differs in some cases. Certain markets operate mainly through employment and learning effects at the firm and sector level.

In other markets, growth and development come as a result of expanded financing for the construction of infrastructures such as world class seaports, or imported capital equipment.  Other markets experience development through export promotions for focused improvements in public service and the business environment.

On the other hand, when it comes to businesses seeking to venture into the global scene for growth potential, it becomes the business responsibility to secure market share in the global market place by introducing their business or products in the foreign market and explore every possibility for growth.

Reasoning for Market Expansion

As businesses mature and increase market share steadily in a local market, it is but normal to encounter growth limits in the original target market.  Before the current market flattens out, developing new markets will not only give a business a considerable edge but also help the business survive through tough times and enhances market diversification.

An opportunity for business growth might come through creating new markets and new customers outside of your local market. Which explains why businesses seek potential opportunities overseas to explore and get their products and services to the rest of the world.

Export businesses on their part can spot opportunities in a foreign market and develop a strategy for developing the market and enjoy the market share they can acquire. Developing a new market requires time and money to facilitate a smooth market entry which explains why many businesses are reluctant to engage and take the risk in exporting.

What it takes to develop a new market

Developing a new market requires extensive market research to dissect the market potential and to analyze the benefit-cost ratios of the market before making any strategic management and business decisions for the market. A detailed market research will project the market values and the possibilities to tap the market values for effective market development.

For effective market development, businesses are obliged to understand what the market needs before they can make an offer. Providing answers to questions like; What is lacking in the market that your business can provide? What vacuum exist in the market that you can easily fill up? What value can your products or services add to the market to improve the customer experience? How differently can you stand out in the market?

The export manager is also required to ask certain questions before implementing an export market development strategy. Questions like; How profitable is the venture? Will the market require the introduction of modified or completely new products? Is the market well understood and did the market research provide all the required information?

However, numerous measures are required to provide a comprehensive export market development evaluation. Apart from the benefit-cost ratios of the market, the overall scalability of the market, geographical, political, and cultural factors combined with the benefit-cost ratio can provide a more comprehensive understanding of the full impact of an export market development.

Export market development requires planning and relationship development. Planning provides a comprehensive step-by-step process to follow in other to achieve the business and market objectives. Relationship development will require partnerships with key stakeholders in the market. With effective planning and a perfect relationship development strategy, creating and developing a new market can be easy to manage and even provides a solid foundation for success.

Creating a Market Development Strategy for Export

Creating a market development strategy is a way of planning to succeed. As it is always said, failing to plan is planning to fail. As we may know, a market development strategy is simply a growth strategy for businesses to take their products or services to a target market they have not done business in before. As this clearly states, there are no first-hand information about the market and the worst mistake a company can make is to venture into a new market blindly. With that being said, it is very important for businesses to undertake a comprehensive market research of the market they are planning to get into.

However, before creating a market development strategy, there are certain factors one must need to consider before taking the leap;

1 Is there any specific vacuum existing in the target market your product or service can fill? Will the target market truly benefit from your products or business offerings?

2 Here you will have to assess the current state of your business. Do you have a ready team in place to develop and measure the effectiveness of your market development strategy you are about to create? With an assessment, you will be able to identify your strength and weaknesses. You will be able to understand what is needed or necessary for developing the market.

3 Will taking this new venture worth your while or meet your company’s investment requirement? What are the cost-benefit ratios for the opportunity?

After having a clear understanding and answers to the above question, you can now easily define your target market and start a validation process through a comprehensive market research.

Defining Your Target Market

Given the current global economy, having a well-defined target market for your business is the most important thing to do. It shall always prove worthless to target everyone and in that light, SME’s can effectively develop new markets and compete with large companies by targeting a particular niche market.

The importance to define a target market is seen as it helps businesses to focus their marketing dollars and communicate their brand message to a market that is ready and likely to do business with them. This is known as target marketing and it is a much more efficient, affordable, and effective way to reach out to potential customers and generate business. A well-defined target audience will shed light on where and how to market your company.

Defining a target market when developing a new market can also be seen as pre-market research as it establishes the information to be gathered in a proper market research for further validation. In defining a target market it is important to first of all pay attention to the market customer base and why they need the service or product. What are their common characteristics and interests and where most of the business is coming from?

Besides, it is also important to look at the customer base of the competition and understand why the customers do business with the competition. This is not to go after the competitions’ clients but to seek a niche market your customer might be overlooking and create a “blue ocean” customer base and develop from there.

Furthermore, in defining the target market, businesses are required to analyze the value they bring by making a list of the benefits of their products or services. In developing a “benefit list” it becomes easy to also make a list of the people who have a need for the value you bring. That’s the people your marketing will be targeting.

Once a target list has been generated, you will have to choose specific demographics like a specific age, gender, income level, location, educational background, occupation, marital and family status, and even ethnicity. Spotting a specific demographic which has not been targeted by the competition is an advantage.

In addition, businesses may be required to consider the psychographics of the target audience. These are their personal characteristics like personality, values, attitudes, behavior, interests, and hobbies.

When defining your target market, it is important not to break down your target too far until the bottom. It is also possible to have multiple niche markets with different marketing messages.

Once you have your target market, you can now use a market research to investigate further. A market research can answer questions like; are there enough people who fit my criteria? Will the target market really benefit from my offerings? What drives their buying decision? And can they afford your products or services, what best ways to reach the target market and are they easily accessible?

Performing a Market Research.

A market research is your tool for obtaining market intelligence.  Market research is a process of acquiring and evaluating valuable information from the market with the sole purpose of identifying opportunities to achieve the objectives of the market.

A comprehensive research will shed light on who your target market is and the best way to target them. Information gathered from a market research can help greatly in decision making and to develop the best means to offer the proposed products or services with the sole need to satisfy the needs and desires of the customer.

A detailed market research will give you insight into the population dynamics, the market economy, and investment conditions. The market research will also indicate if there is a current demand for your products or services, price trends, and growth potentials in the market. The purchasing power of the consumer can also be known, the competition, and the overall characteristics of the market.

The Importance of a Market Research for Market Development

The information derived from a market research can be used to evaluate and validate if a product or service is actually needed in a market. The information can be used to understand the market potential and points out opportunities which the company can rely on and improve on.

With the information gathered from a market research, businesses can come up with a concise plan of market penetration and an effective budget allocation.

The information received from a market research can identify pitfalls that can be avoided and eventually saving the business time, money, and other valuable resources from venturing into a bad investment. Effective market research can help companies find gaps in the market, thereby encouraging success, development, maximizing profits, and enhancing competition.

A market research will keep companies well equipped and prepared with first-hand market intelligence which can easily optimize the chances of performing excellently in the new market. All risks and damages a business can face in a new market can be mitigated or even eliminated.

Effective market research can not only share insights on product or service needs but also tell you who is competing in the market. After you understand your competition better, you can easily diagnose their strengths and weaknesses. Market research will tell you whether you have a chance to compete, or how management can take advantage of the weaknesses of the competition and gain some market share.

A comprehensive and well-focused market research will provide a business with knowledge about their clients and what their future requirements are which is always considered the most valuable “commodity” of a business. Proper market research will open the vault of what the customer knows, what they think, value, and their belief system. Businesses can also understand how the customers are able to use the product or service, what they use the product for and what experience are they expecting. All these pieces of information tell the company valuable information about the customer’s behavior, what motivates a purchase, and what drives them. And lastly, what can cause any issue that might hamper the product or service in the market.

Planning with Information you have

If you had a research goal and objective, then you must have certainly obtained all the information you need to decide on a plan of action for the market. With all the information gathered from a market research, you may be able to decide where you want to focus your attention. You must have identified your competitive advantage in the market or you may be able to identify your product or service greatly needs modifications and development. All the above falls back to planning.

The first step to a successful business is always planning, and this is also true if you want to expand your business on the international stage through exports. It is important to realize that planning is not only a one-time thing but also a continuous process. The plan lays the foundation for the business and provides a model that can run with your business. The model has a high company purpose and mission.

Studies tell us that 67% of businesses export their products or services without a business plan which can be the worst idea when developing a new market. As it is said “failing to plan is planning to fail.” Developing a new market will definitely come with serious challenges that must be addressed before stepping into the market. The best battles are won before the battle itself.

The benefits of an export plan are endless, but the information collected throughout the process is invaluable to your business. When making a plan, you will gain insights, whether your business is ready for the desired market, you can conduct industry analysis, select products with your desired market potential, determine market needs, develop marketing strategies and be able to build your own company’s market goals and objectives. More importantly, a comprehensive planning process is that you will have enough information that will guide you to make wise decisions when you are ready to export to the new market.

The Importance and benefits of preparing an export business development plan.

By preparing a plan for your market development, you are certainly one step ahead and into success. It is very important to know that proper planning is what will place your business on the path to success. As it said, “the greatest victories are already won before the actual engagement.” Below are some benefits of preparing a plan for your market development.

Planning will help guide or map out the future direction of your business in the new market. Using the information gathered from your market research, you can project the possibilities of your business in the market you are about to develop.

With a proper export plan, you get to master all the information needed to set the pace and prepare for execution. With a plan, you find yourself well equipped and with a road map towards achieving your market objectives. You become enlightened with the right steps to take and correct “buttons” to press.

A well-developed plan gives you the opportunity to work on the facts derived first hand from the market. You don’t work on mere assumptions or try and error. Working with facts gives an added confidence and a boost in morale. It makes you feel success is by your reach and makes it much easier to develop the market needs.

Preparing a market development plan exposes you to your business strength and weaknesses for the desired market. For your strengths, you take advantage of them and for your weaknesses, you may find ways and means to address them before stepping into the market. A plan can not only identify your strength and weaknesses, but it also exposes the competitions’ weaknesses which can be an opportunity for you, and also how their strengths can be a threat for you in the market.

A market development plan will help to keep you focus and on the immediate tasks to tackle. By keeping focus, a well-developed market development plan comes with goals and also the best strategies to achieve them. With the right strategy, your market objectives can easily be achieved.

Planning can encourage communication across your export team and through dialogue and communication; bright ideas and possibilities can be brought up and developed. New ideas can go a long way for your business to develop and conquer a new market.

Only through planning can you have a glimpse of the required investment for developing a new market. Preparing a market development plan is very important because it gives you an opportunity to determine what financing is needed and how to allocate resources to meet the market requirements.

Preparing an export plan will help you answer certain key questions that may help avoid pitfalls along the way as you plan to develop your market of interest. You may be able to have a clear answer on the value your product or service brings to the market, What modifications you may need to adapt in the market you are developing, what documentations licenses, certifications, and standards the market requires, Would you need to re-pack or re-label your products? How much will it cost you to get your products or services in the market and what will be your pricing strategy?

Clear answers to all these questions will provide you a strategy to develop the market with and which you can always improve upon when falling short of your expectations.

Plan of Action

After collecting all the facts and information you may need to develop the market, you should be able to decide on a plan of action and to start taking action immediately. Your plan of action may guide you on how aggressive you may want to enter the market based on the opportunities and your competitive advantage in the market. You may want to decide where your focus and attention will be directed to as well as your available resources.

Action plans can be a list of steps to be taking and their objectives, the tasks involve written down in a clear and actionable manner and the resources needed for each step. After an action plan has been arrived at, it must be re-evaluated for its effectiveness and achievability.

The objective for a market development can be to attract non-users of your products or services or simply attracting your competitors’ customers if there is a void you can fill which they might be overlooking. The plan of action can be a variety of actions or methods which may include offering free trials, advertising, and cold outreach or adjusting prices below the competitor’s price, offer incentives, deals, and discounts, or even promising to deliver a superior user experience when targeting your competitors’ clients.

Your plan of action will give birth to two outcomes which will bring the market development objectives to light. This may include the market penetration strategy and product or service development.

Market Penetration

The market penetration may be looked at as strategies that are proposed to achieve the market goals and objectives.  Market penetration is a question of how effectively can you implement your plans of action? At the primary stages of developing a new market, the penetration strategies need to establish the current situation of the business and which directions the business needs to take to achieve market growth or gain market share.

The keys to a successful market penetration strategy need to be timely, swift (speed), and flexible. These factors will greatly depend on the overall welfare of the market, the available competition, and current events in the market. When we talk of timing, we can look at it from two angles. Firstly, is it the right time for growth? Secondly, how timely are you to spot opportunities the market bring?

For speed, you need to be swift in solving the problem you spot in the market or somebody else will, and for flexibility, how easily can your strategy be changed to meet the market requirements. Things may not go your way at all moments when you are dealing with exporting or generally in business but how flexible are you or your business to bounce back. All these put together in an effective manner can guarantee success in your market development endeavors.

Other variables of market penetration that can greatly influence the development of a new market can be economies of scale, maintaining cost, technology, supply chain, and advanced inventory management practices.

The main focus of market penetration is to successfully sell a product or service in a specific market. It is measured by the total sales volume of a product or service compared to the overall target market for the product or service. In other words, a successful market penetration strategy will reflect on the market share or value acquired in the market.

Market penetration is possible if the dividend growth rate is more than the ratio of the percentage population of wealth distribution ratio. In developing a new market, market penetration can be achieved through growing the market share of current goods and services, obtaining and maintaining the dominance of existing markets, reforming the market through monopolizing the market, and kicking out the competition.

To be more effective with your market penetration strategies, you will also have to anticipate the counteractions of the market in response to your market penetration strategy. Your strategy should involve or anticipate the response from the competition and the customers.

Product Development

When developing a new market, it is important to understand that different markets come with different requirements and needs. Businesses must be ready and flexible enough to adapt to the new market requirements. The product development process may consist of several complex activities that may require a certain level of change. Products may need to be developed according to the market demand on both the customers and the market standards.

Product development in a new market requires an understanding of the clients’ wants and needs, the competitive environment and the nature of the market. The main variables for a product development are cost, time and quality when it comes to customer’s needs.

In developing a product in a new market, it is obligatory to pay attention to what the competition is offering the market in terms of quality and value in other to stay competitive.

Also, the market may require certain standards, certification, technical requirements, and quality management systems before the product or service can be introduced in the market. Above all, the packaging and labeling may require an indication of compliance with certain requirements.

Certain measures are put in place to ensure quality and address quality-related issues. In developing a new market, quality can be considered a prerequisite for success and it is very important to put standard quality measures in practice and for continuous satisfaction. An above-standard quality product in the market will place a business on a competitive edge over other suppliers in the market.

Market Testing and Market Introduction

After defining the target market, run a comprehensive market research, and develop a plan of action, all that’s left to be done is to take action and introduce your product or service in the market. At this time, a business must have had all the information they need to make decisions at all levels of the market development process.

The market entry plan should focus on three key areas which may include promotion, how to deliver the product or service to the customers, and cultivating and sustaining the new market share through customer satisfaction.

To start with promotion, businesses may find it difficult to promote their business in a foreign market in which they have limited or no presence. At this stage, it will depend on the supplier’s market entry strategy or distribution channels put in place. A business willing to work with distributors or agents in the market can use them for promotion or let them handle the promotion all by themselves. Promotion may require advertisement, media, points of purchase, telemarketing, and mailing.

Product or service delivery is another key factor in the market introduction.  It is important to establish a veritable delivery network from the factory to the market. The decision of which distribution strategy or channels to be used needs to be clear and put in place and tested for effectiveness. Will the customers receive the product or service in a timely manner and will there be a constant supply with the anticipated demand for the product or service? These are the questions to answer and implement a smooth delivery channel.

In cultivating the new market and as new customers are being established in the target market, it is important to make sure their needs are being met and satisfaction is guaranteed. At the introduction stages, it is very important to run customer surveys to learn how to serve the customers better and develop your strategies as you get feedback. It is important to find out what the customer likes or dislikes. Businesses with limited access in the market can use market agents or distributors on what the customers think about their products and how they can improve on them.

Market Testing

Market testing is highly recommended to mitigate risk and if a product or service will actually be a success. Market testing is “a way to test multiple marketing scenarios and focus on the most promising for expansion.” Market testing aims to forecast a market potential for a product or service concept.  It is very important to test the market as it makes it possible to identify the market KPI’s (Key Performance Indicators) and how best to leverage these KPI’s for achieving the market objectives.

Market testing can be achieved in various phases and a comprehensive testing strategy aims to answer key questions and investigate the reason behind purchases or non-purchases or better still reasons behind how a market interacts with the company’s products and services. To obtain such information, there is a need for rich data and the need to ask the right questions.

Market testing can help you answer key questions like the demand for a product or service, what instigates a buying decision, what makes your customer to choose you over the competition, at which precise points does your customer buy your product, and how are purchases made? You can also learn about your pricing strategy and what’s the optimal price point?

A market testing can be done through surveys, feedback, and even a competitive analysis which can make it possible to identify loopholes from the competition and on which a business can capitalize on. Surveys and feedbacks can also be obtained through online sources which makes it easy for businesses with limited presence in the market.

In other to decide whether test marketing can be a relevant marketing strategy when developing a new market, the investment and scale of risk implied must be evaluated. This may differ in different industries like heavy industrial manufacturing of which the investments involve cannot be limited for just testing as the cost for production might not differ.

EndNote

Developing a new market successfully can be essential for business growth and success in that market. It can really be challenging if not enough information can be obtained from the market and it can be easy to be blind-sided if inaccurate information is obtained. With this in mind, at every level of the market development process, the information obtained should be evaluated and tested for accuracy.

Above all, information is the key for any market development success. All through the process of a market development strategy involves the collection of information. From defining the target market, running a comprehensive market research and even testing the market.

However, without the ability to interpret the information and make value decision with the information obtained will lead to a market development failure. This implies, emphasis should not only be on getting information but also on how to make use of the information to develop the products and services to meet the needs of the customers. Information is money but it is worthless in the hands of any who lacks the knowledge to make use of it.