With the following 7 tips you are better prepared to enter the new market successfully!
While your company may have an already established business in a local market, there is usually no reason why you could not compete successfully abroad and increase your revenues and profits. Many new markets abound that your company can gain entrance into.
But before you start exporting, you must have a solid understanding of the potential target markets available to your company or product. You should also research the suitability of your product for the foreign market you are targeting. Do you stand a chance in each target market? Are you well equipped with adequate resources? You must get the right answers and solutions to each of these crucial questions.
Market Research and Feasibility Studies
Before considering exporting your product, you must take enough time to assess feasibility of exporting your product to a foreign market. It is essential to conduct market research to identify and evaluate the target market.
The market research examines:
- The optimal structure of your business both on home and target country
- The expected demand for your product or service
- Competition and how you intend to fit in that new market
- Any necessary modifications to your product or service appealing to the new market.
Develop a Detailed Export Plan
After completing your market research, you can design an export plan that defines how to gain access to the new market.
Consider the inclusion of the factors below in your export plan:
- A marketing strategy that includes the development of international trade, trends and cultural differences
- The financial resources
- The right personnel to develop the target market
- Knowledge of the requirements and demands of your target market – e.g. modify packaging to meet local regulations and rules
- Understanding of payment mechanisms and export finance
- A product suitable for export.
Explore Sales and Distribution in the Foreign Markets
There are many elements that need to be considered to sell successfully on the international market. How will you organise your sales presence in new markets is one of the key decisions you must make.
Depending on your product, you may be able to sell directly, over the Internet or through exhibits at local fairs.
Other companies may seek for partners who already know the local market. Some of the options that are available to a business include:
- You can market to a trusted local distributor, who then sells your products locally.
- You can employ a sales agent who sells products in your name on commission basis.
- You can also start a joint venture with a local business. This gives you a stake in the management and profits of the joint venture, but it is generally the most complex option.
- If you want to have complete control over your sales, you can set up your own sales office in the target country and sell directly to your potential customers. Though it is the most expensive option.
The choice you make will have different financial and legal consequences and that’s what you need to investigate very carefully. Setting up a business abroad needs a proper funding.
By agreeing to a sales contract with an agent or distributor, you should make sure that you properly define the responsibility for distribution and payment to limit the risk of non/late payments.
It is also important to remember that industrial property (trademarks, patents) will only be protected in the destination countries, and such protection would have been discussed before entering new foreign markets.
Oversee All Legal Obligations as an Exporter
You should familiarise yourself with the rules and documentation required to export.
For example the operations of international freight traffic are subject to two types of taxes in the EU: tariff rates and VAT.
Exports are generally not subjected to VAT. The export invoice to the cost of the goods to the purchaser will not affect VAT.
There are also documents and formalities necessary for export are such as DUA, Intrastate paper, certificates (certificates of origin), etc. The documents vary from one country to the other.
You should also keep in mind that, as your products enter another country, they are subjected to the laws and regulations of that country.
Distribution and Logistics
Your responsibility for transport depends on your agreement with the customer or supplier.
For example, you may be responsible for delivering the goods to a warehouse in the client's country. You need to establish very clearly your obligations in a written contract using Incoterms (International Commercial Terms).
The best means of transport depend on the type of goods and delivery deadlines. You might need more than ways of transportation, such as trucking to the port and then shipping. In addition to the above, the goods need a proper packaging and labeling according to the type of transport you are employing to move the product to destination and the requirements and regulations in the target country.
You may also need to get a transporting insurance to cover the liabilities for goods. When you do everything the right way, you would be assured of getting desired results without any setbacks that can frustrate your efforts and will cost you clients.
Financial and Capital Considerations
The space of time between the shipment of goods and receipt of payment will affect your liquidity.
It is important to assess your current cash situation and your financial capabilities before commencing exportation. It is also important to ensure security against defaults in case any of your foreign customers does not meet their payments.
Working Harmoniously with Different Cultures
You must understand the culture of your target market to establish a successful relationship with your prospects.
Being able to speak the language of your potential customers can help to develop mutual trust and build easy rapport.
It is important to research your target market and know the local peculiarities inherent therein. This process may involve, for example, make modifications to the product or it’s packaging to suit local tastes and requirements.
Awareness will be the roadmap towards realistic internationalisation
Do you have other ideas that you have put in place to define your target market?
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