Identifying markets with which to trade involves two stages: desk
research, where you examine all the information available from published
sources; and in-market research, where you physically visit the selected
market to investigate the market conditions for a product or service.
Registered users of the MBendi website can download a Market Research checklist. Otherwise, Whitehouse & Associates
provide an excellent market research capability, particularly for African
countries.
Once you have decided to export, you should complete the export
readiness questionnaire and will need
to register as an exporter. Before embarking on any export drive, you need to
be familiar with the phrases and terms commonly used in international trade.
These cover payment terms, shipping terms, customs terms and common acronyms.
An understanding of international trade agreements and customs conventions is
also important. You should also investigate what assistance might be available
from government through the EMIA scheme.
Desk research is an exercise which
enables you to focus on the foreign markets that offer the most potential for
your products and involves the collection of information from published sources
of information. Generally the following factors will be examined during a desk
research exercise:
- Economic factors
- Political stability
- Demographics
- Specific industry
information
- Size of the market
- Competitive activity
- Distribution norms
- Price indications
- Technical data such as import
tariffs, documentary requirements, product standards and packaging
requirements
- Identification of potential
customers
It is generally more cost effective
to commission a specialist research company to undertake the desk research on
your behalf. A specialist research company will have a point of contact in the
market and will know where to look for information. They will also have
experience in conducting international research and will provide an objective
assessment of the market.
The Internet provides a new resource
for finding information on target markets.
In-market research involves the
collection of information in the target foreign market itself. There is a great
deal of information that is not available from the desk and you need to visit
the market to fill in the gaps. You need to conduct in-market research to
determine whether your products compete in the foreign market in terms of
quality, packaging, presentation and price. You need to establish mark-ups and
margins and finalise your distribution channels. Hopefully an in-market visit
will also allow you to meet with potential customers. Obviously, any in-market
visit requires thorough homework and careful planning.
As an exporter you need to plan a
visit to your target market for a number of reasons. Initially this is an ideal
way to meet with potential buyers of your product and to solicit orders. You
also need to get an understanding of the way the market operates, what the
market characteristics are, what your competitors are doing and whether or not
your product is going to compete in terms of quality and price. This is not
information that you can obtain from desk research.
Since international travel is
expensive, you need to plan your visit carefully so that you maximise your time
in the market. There are a few steps that can assist in the success of your
visit:
- Find out about the country you are
visiting (Use MBendi's country guides as a first step).
- Decide on the dates for your visit
and then check to make sure that there are no public holidays, religious
festivals or big events that will clash with your visit.
- Check whether a conference or
trade fair will be taking place at which you can meet industry
players.
- Make a list of the companies that
you need to see while you are in the foreign market and make appointments with
the relevant individuals at these companies. Confirm your appointments in
writing prior to your departure.
- Apply for a visa, if necessary,
from the representative office in South Africa
- Make all travel arrangements
before departure. Arrangements should be confirmed on the day before you are
due to leave.
- Check to see whether there are any
official health requirements or precautions applicable to the country you are
visiting. (For example, most African countries have a malaria risk and malaria
prophylaxis is recommended.)
Ideally you should time your visit
to any foreign market to coincide with a suitable conference or trade fair.
To maximise sales abroad you will
need to spend money on international promotion. Your promotional activity will
largely be dependent on your budget, the type of product involved and the
characteristics of the target market. Mailshots, advertising and trade fairs
are some of the promotional channels you need to consider.
Mailshots can be a relatively
inexpensive means of gaining exposure for your product. The success of your
mailshot will depend on the quality of your mailing list. A mailing list will
normally be compiled using trade directories and is a typical component of desk
research. Even with a good quality mailing list, a 2 per cent response rate is
the internationally accepted norm.
Full-scale advertising in a foreign
market can be extremely expensive and should only be considered by large
companies aiming at a significant share of the foreign market. Smaller
companies can consider advertising in industry specific journals or newspapers
that provide access to a targeted audience at a reasonable cost.
One of the most successful ways of
developing export sales is via participation in trade fairs. This not only
gives you the opportunity to meet prospective customers but also to gain first
hand knowledge of the market and of your competitors' activities in the market.
The initial step is to identify relevant fairs in your target market. You can
search for relevant fairs using the events search facility. Organising
participation in an international fair can become a logistical nightmare. It is
worthwhile and cost effective in the long term to employ the services of an
expert.
Finding the right buyer for your
product in the international market can be a time-consuming process. There are
a number of ways to go about identifying potential buyers. A good starting
point is via a company search on the MBendi website.
A standard feature of most desk
research exercises is the identification of potential buyers in the market.
Once a list of potential buyers has been identified using published trade
directories, it is then necessary to contact each of the companies to assess
their interest in purchasing your product. It is advisable to get a specialist
organisation to do this on your behalf, as the process can be very
time-consuming. Whitehouse & Associates provides a service for qualifying
potential buyers.
In recent decades, international aid
organisations have assumed a significant role in stimulating economic and
social development in third world countries. They have emerged as major sources
of funding for development projects and programmes, procuring millions of
dollars worth of goods and services. This provides a good opportunity for
exports. You can also search for relevant projects using the projects search
facility.
Companies that are serious about
pursuing project opportunities need to develop a detailed understanding of
procurement procedures, they need to register where necessary with the
procurement section of the respective organisations and they need to develop a
close relationship with international organisations. It is wise to employ the
services of an expert to assist in navigating this route.
Today the Internet provides a
powerful set of tools for finding and researching trading opportunities and
partners. The company search facility on the MBendi website allows you to
search a database of more than 20,000 companies, while you can either search
the MBendi Trading, Tenders and Business Opportunities facilities or register
to have news, trade leads, tenders and business opportunities sent to you by
E-mail. With so many companies having websites, it's no longer good enough to
simply set up a website and hope customers reach you; MBendi's Guide to
Internet Strategy assists you in using all the tools of the Internet in an
effective way.
Having taken the decision to start exporting, you need to register as an
exporter with the Department of Trade and Industry
(DTI) in Pretoria. You will need to complete the Department's
official form UHB 006, which is available from the Export Promotion
Directorate of the Department of Trade and Industry.
Once the registration is completed you will be issued with an Export
Registration Number. Registration entitles you to apply for financial
assistance under the Export Marketing and
Investment Assistance Scheme (EMIA). You are not required by law to register as an
exporter but registration is a prerequisite to claiming any incentives.
As a new exporter, you need to apply for a customs code number from the Department of Customs and
Excise. This is a reference number used as a computer check number for
export control purposes. This number must appear on all documentation presented
to the South African Customs Authorities. You need to fill in form DA163 which
can be downloaded from the Internet.
