Companies that want to export face the enormous difficulty of lacking reliable business data on markets. Exporting companies need to be aware of competitive conditions in their current markets, search for opportunities in search of new or emerging markets, as well as seek opportunities to diversify their production or add value to their current product range. At the same time, importers around the world are trying to optimize the possibilities they offer through preferential trade agreements, themselves to improve the efficiency of their supply, always lurking in new, more competitive supply countries. Randall Castillo Ortega, the founder of RACO Investment and an expert in international trade, discusses how an entrepreneur can investigate new markets for his or her business.
Companies have market analysis tools at their disposal to examine statistical data on exports and imports from more than 220 countries and territories and to learn more about supply and demand trends for some 5,300 products that are the subject of sale on the international market. The tools provide exceptional service in terms of product details and broad geographical coverage – particularly to developing and least developed countries. Says Castillo, “With the help of these market analysis tools, companies obtain data on the volume and growth of markets, in terms of value and quantity, unit values paid in different markets, market shares of supplying countries competing with us and their trade performance over time, in addition to customs duties on markets – including preferential tariff rates where regional trade agreements exist between the Countries.”
Researching the international market and its subsequent analysis in order to produce exports is the systematic and objective approach to the development and provision of information that fuels the decision-making process in commercial management. It is both a process that allows us with some certainty to “look before jumping” because, at this stage, potential markets are determined and the most suitable or convenient one is selected with the intention of increasing sales, lowering commercial costs and raising profits.
The sources of all data are grouped into several categories. Secondary or desktop sources are pre-developed information that, systematized or not, different national or international public and private bodies, pragmatic or virtual, have at the disposal of researchers. Primary or specific relay sources provide information that can satisfy unresolved particular concerns, and contacts are usually made directly with residents of the analytics market.
The recognition and selection of the target market are completed with an eventual personal visit on a business trip that, in itself, would be mandatory to personally see if the results, conclusions and strategies we have already designed are in line with reality. But, before hiring expensive market research or starting a business trip, it is advisable to conduct a prospecting from the company itself in order to form a first panorama or potential business scenario.
The market itself needs to be explored. This part details the general and introductory data of the country under review; form and nature of government; indicators and economic policy; current structure of the economy; country’s development plans; communications facilities and physical distribution; characteristics of its Foreign Trade and its status in regional integration processes.
In investigating market access, it is important to find the characteristics of the general import policy, import licenses, tariff and tariff system (levies) on imports. In addition, the investigation of customs systems and their operational regulations, as well as any other types of regulations and factors affecting international trade, is needed.
Lastly, consumers are now analyzed with their most relevant consumption variants; consumer behavior and all those logistical factors that make marketing channels, the letter of office movement; collections and payments; logistics of physical distribution; methods of promotion, and the exhibitions, fairs and exhibitions that were available in the destination country.
In decision making, you cannot analyze all these items individually, but it should be an integrated study. “It is appropriate that the sign or outcome of the management and success of the international trade operation will depend on the skill with which those responsible analyze, compare, weigh and apply this data decision,” concludes Castillo.