Evaluating Potential International Markets

Trade Guide

20 April 2023 • 10 min read

Evaluating Potential International Markets

Raghav Sand

Global marketplaces can present a range of exciting possibilities. You may develop a successful international strategy and find the best business opportunities with the support of market potential analysis.

Every company has a customer base who represent its market share. In general, a company can expand by releasing current products and services in new foreign markets or by expanding its current product and service offerings into the regions where it already has a presence. By pursuing overseas clients, it allows the company to take advantage of global demand, generate economies of scale, and improve its competitiveness on a global scale.

What is Export Market Potential?

The evaluation of the potential sales revenue from all the channels in prospective exporting nations is known as the export market potential. It usually has something to do with how many customers are interested in or might be interested in a company's product or service. The entire market potential is determined by summing the number of consumers, the quantity they purchase on average, and the cost of a single unit of the product.

Importance of Evaluating Market Potential

It is crucial for a business to understand and assess the market potential of the good or service being provided. Small and medium enterprises (SMEs), which sometimes lack the resources and expertise necessary to properly analyse the possibilities of global markets, must not pursue expansion mindlessly.  Businesses are frequently encouraged to adopt an opportunistic approach and go for geographically close and more accustomed markets.

Questions Answered by Market Research:

  • What markets or nations currently purchase goods similar to yours?
  • What size are the potential markets for you?
  • What are your rivals' names and how big are they?
  • What standards, tests, and certifications are necessary?
  • Do you need to change your products' labels or packaging for one or more markets?
  • Is your price attractive to the market? What can you do to improve it if it isn't already appealing?
  • What channels of distribution are there?
  • What taxes, tariffs, and other expenses you may expect?

A Step-by-Step Method to Market Research

After obtaining the export statistics, your business could find the following strategy helpful. It requires screening possible markets, assessing the targeted markets, and making judgement calls.

Screening Potential Markets 

Step 1: Find Potential Markets

Choose five to ten substantial, rapidly expanding markets for your company's goods. Look at patterns from the last three to five years. Has the market's growth remained steady from year to year? Did imports increase even when there was an economic downturn? If not, did growth pick back up after the economy recovered?

Finally, look at some smaller, fast-emerging markets that may present high growth chances. There can be fewer rivals than in more mature markets if the market is only starting to develop. These nations' growth rates should be significantly greater for them to be considered emerging markets.

Step 2: Choose the Most Promising Markets to Target

Choose three to five of the markets you have discovered that are statistically the most promising for additional analysis. To further assess the targeted markets, speak with trade specialists as well as business partners, and freight forwarders.

Evaluating Targeted Markets

Step 1: Study Product Trends

Look at both your products and any connected products that might affect demand. Compute overall consumption of the product and the amount imported. Market research studies are available from commerce ministry of respective countries, and they include economic context and market trends by nation and industry.

Step 2: Examine the Competition

The domestic industry in each target market as well as rivals from other nations are sources of competition. Look at the market share and the targeted market for each competitor.

Step 3: Analyse Marketing Aspects

Consider aspects like end-user markets, distribution methods, cultural quirks (does the name of your product have an unsuitable meaning when translated into the local language, for instance), and business procedures when analysing how your product will be marketed and used in each market.

Step 4: Ascertain Every Barrier

Tariff or non-tariff barriers from abroad can prevent imports. Export restrictions could be a barrier. You might require an export licence if your product has potential uses in both the military and the civilian sectors.


Step 5: Find Any Incentives

The government may provide incentives to encourage the export of your specific good or service.


Drawing Conclusions

You may conclude after evaluating the facts that a small number of certain countries will benefit more from your marketing efforts. In general, if your company is new to exporting, then efforts should be concentrated to less than 10 markets. You can concentrate your efforts by exporting to a modest number of nations without risking your efforts to increase local sales.

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