Finding Your Niche in the Global Market
Big Blue Marble inc.
By Brian Gauler
Market research is vitally important to launching a successful international business effort.
Although there may be many reasons to do market research, the one key reason is to determine where a firm should focus its resources. Since there are so many markets in the world (the U.N. consists of over 170 nations), one of the first steps a firm interested in international business should undertake is to identify a few priority target markets on which to concentrate.
In general, a new-to-export firm can expect to initially serve only a few markets. In fact, many companies begin their export efforts serving only three to four. There is no "magic number," but it makes sense in the beginning to do a thorough job serving a few, rather than stretching limited resources trying to serve many. A realistic number of markets should be determined.
Firms wanting to enter global markets generally have three questions: Where can my products be sold? How can I learn about those markets? Who can I contact to sell my products?
How can a firm answer these initial questions? And how can it go about selecting a few from the wealth of markets available? A key element for the plan is the National Trade Data Bank (NTDB).
National Trade Data Bank (NTDB)
The NTDB, first introduced in October 1990, was formed from a legislation directing the Department of Commerce (DOC) to collect in one place the federal government's extensive offerings of information on international trade and export promotion. The result is a collection of DOC information as well as that from over 40 other federal agencies that collect and disseminate trade information.
A firm can contact its nearest Department of Commerce field office or a library that has a government document depository and obtain various reports to assist in determining the answers to three key questions above:
Another avenue for information gathering is the use of direct mail surveys.
- Where products such as those made by the firm are sold
- Information regarding the determined foreign markets
- Trade contacts (agents/distributors) that are potential leads for its products
Direct Mail Survey of Foreign Trade Prospects
In today's instant communication world of faxes and email, making contact by regular mail is generally overlooked. Yet, it can be a significant way to take advantage of one of the key's programs available from various government sources identifying foreign trade prospects. Finding trade leads for a company's products can be as simple as just contacting serving agencies, both state and federal. These might include the closes district office of the U.S. Department of Commerce, Commercial Service; state Departments of Economic Development or Foreign Agriculture Service (FAS) in Washington, D.C. Fees for this service are generally nominal (or free), and information can be provided for specific product interest and for specific countries.
But that's only the beginning. Now the company must become proactive and initiate the first contact!
Direct Mail Survey Process
Following are steps for completing a direct market survey. Components mentioned are available at the Export Development Program website: http://muextension.missouri.edu/export ("Export Marketing Series").
- Conduct a company review. Determine the company's specific product interest by Harmonized Code, country(s) and type of lead (agent, distributor, importer, manufacturer).
- Contact one (or all!) serving agencies available. Obtain appropriate trade leads (ask for the specific program that an agency might have, and/or for "trade leads" for the countries the company is interested in.
- Analyze trade leads. Review each trade lead before sending information (the "lead" may be a competitor!).
- Prepare the mailing. Initial mailings generally consist of:
Application forms, business information form, samples, prices and other information are generally provided only after a trade lead has been pre-qualified.
- Cover letter (refer to Solicitation Letter example at website)
- Collateral materials (see "International Promotion" at website)
Be prepared to provide the following (see website for examples and guidelines):
- Make the mailing. For large mailings, international airmail rates can be expensive; therefore, a company must balance providing too little information with sending too costly a mailing. Send just enough information to create interest and a response.
- Review and follow up on responses. All responses deserve a timely follow-up, even if just to acknowledge receipt. At this stage, each response will require some degree of individual, case-handled follow through, determined by the contents of the response.
- Distributor application form
- Business information form
- International sales program
- Price list
- Order form (with suggested stocking order!)
- Letter of credit instructions