Internationalization is one of the biggest challenges a company can face, so it is essential to find a successful strategy with which to address its exit or consolidation abroad. In both its early and more advanced phases, nothing should be left to improvisation, synonymous with inefficiency and little friend of success. Randall Castillo Ortega, an international business expert, offers insight into how to conduct a foreign market study when considering an export business.
In the international environment, uncertainties multiply for a company that starts its international journey or also for those that are in the process of consolidation. As much experience as we have or is clear from common sense, the global world is full of challenges and difficulties that make it necessary to develop the right strategy to implement it in the best possible way. Without a doubt, the best place to start is through rigorous planning that allows you to lay its strategic bases, based mainly on decisions made from the results of good market studies adapted to our needs.
There are many questions that need to be answered to do a good market study but, Above all, we must answer those questions that really interest us to obtain critical information from which to make decisions, among others: make a better choice of markets, assess whether the necessary resources are available, find the objective customers, know if partners are needed and how they should be, define the pricing policy, discover their commercial potential, market niches, how to introduce ourselves or the convenience or not to continue investing in them.
Asserts Castillo, “You will need to know up-to-date and reliable information that is really useful to move forward with a firm step in the internationalization process. You will go to different sources to collect it, and it will be the sum of well-selected data that will eventually contain the essential keys that you were looking for.”
An international market study should include two types of information. The first is market information, basic, more general information about a particular country or countries. The second is information of the company itself and the sector, including analysis of the situation of the company and of the competition.
Relevant market information relates to geographical, cultural, language problems, country GDP, sectoral or governmental financial or other support – in our country and countries of destination – foreign trade data, taxes, approvals and certifications and, in sum, legal and legal aspects that facilitate knowledge of the market or foreign markets analyzed. Within the information of the sector, it is necessary to know the market share of imports, study the competition (including the Spanish one if it has a presence there) from an approximation about the leading firms, strengths and weaknesses and their comparison with our offer in order to detect opportunities and define objectives.
Asking relevant questions and answering them with reliable data will not give the necessary guidelines to develop the market study. Being methodical is important for finding essential information. It is essential to know how to move from the general to the particular, insist on the search until you get an overview and clear of both the basic information of the market and about that other information more related to our product. “Even so,” adds Castillo, “even doing in-depth market research will be difficult to find fully satisfactory answers, because, in the business world, there are no rules to guarantee success, so important analysis work is needed before establishing a plan that minimizes this inevitable risk.”
Proper market choice is one of the most significant aspects for the success of the exporting company. This analysis is performed in two areas: internal and external. Internal analysis seeks to detect which components of the company are most competitive and represent an advantage. It also analyses weaknesses, company deficiencies and areas or resources where it is less competitive. Special importance takes the study of how the objectives, resources and capabilities of the company are adapted to the market.
External analysis focusing on spotting market opportunities. It also studies trends that can threaten and damage the company’s position in it. For example, if you sell children’s products, low Spanish birth is a threat to business, and the same would happen if you teach children and young people. At the same time, market analysis and selection requires the study of many specific aspects of vital importance that influence the possibility of export sales.
Customs barriers have declined in recent years, forcing a more important look at cultural differences and barriers. Cultural differences may not be perceived in a superficial analysis of a country. Deep study and an accurate understanding of these particularities, such as language, beliefs, values and aesthetics, are needed.