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Step-by-Step Guide to Exporting – Step 4 – Setting out: identifying your target market

Take the time to examine the local culture, find out how things are done there and adapt. Part of the process includes finding the right local partner.

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Table of contents

  1. Step 4 – Setting out: identifying your target market
    1. 4.1 Understanding international market research
    2. 4.2 Types of market research

4.1 Understanding international market research

After the export plan, market research can be the most important contributor to your international success. There are more than 190 countries in the world and you want to target the right one(s) for your product or service.

To do this, you need information that will provide a clear picture of the political, economic and cultural factors affecting your operations in a given market. Market research is the key to understanding your opportunities. It can confirm that an opportunity actually exists, provide you with insight into how a new market can be developed, or help you discover what's important to your potential customers.

The three basic stages of international market research, while detailed, aren't particularly complex:

Stage 1. Screen potential markets

Collect statistics that show your sector's product or service exports to various countries.

Identify five to 10 large and fast-growing markets for your product or service. Look at their performance over the past three to five years. Has market growth been consistent year over year? Did import growth occur even during periods of economic slowdown? If not, did growth resume with economic recovery?

Apply the same research questions to select smaller emerging markets that may not have as many competitors as an established market.

Target three to five of the most promising markets for further study.

Stage 2. Assess target markets

Examine trends that could influence demand for your product or service. Calculate the overall consumption of products or services like yours and identify the amount imported.

Study the competition, both domestic and international. Look at each competitor's Canadian and foreign market shares.

For marketing purposes, become familiar with channels of distribution, cultural differences and business practices.

Identify any foreign barriers (tariff or non-tariff) for the product or service being imported into the country, as well as any Canadian barriers (such as export controls) affecting exports to the country.

Research potential federal, provincial or foreign government incentives to help you promote the export of your product or service.

Stage 3. Draw conclusions

After analyzing the data, you may decide that you should restrict your marketing efforts to a few countries. In general, one or two countries are usually enough to start with.

With these conclusions in hand, you can begin to develop your marketing strategy (see Step 5 – Reaching the customer: developing your export marketing strategy).

Source: Adapted with permission from Western Economic Diversification Canada.

Tip

Be prepared for additional expenses for market research, product launches and personal visits so you don't miss potential opportunities.

4.2 Types of market research

There are many ways to study a market, but the more detailed and objective your research, the better.

There are two main types of market research: secondary and primary.

4.2.1 Secondary research

Secondary research can be done in Canada, using data sources including periodicals, studies, market reports, books, surveys and statistical analyses. Many of these are available online, as well as from chambers of commerce, economic development organizations, industry and trade associations, and Canadian companies that are already doing business in your target market.

4.2.2 Primary research

After completing your secondary research, collect market information through direct contact with potential customers or other sources. Primary research almost always demands direct, personal involvement through on-site interviews and consultations.

State your company's objectives at the outset and present your questions clearly. For example:

  • Company description: give a brief description of your company, its history, industries and markets served, professional affiliations (if any) and your product or service.
  • Objectives: briefly list or describe one or more objectives for your planned export product or service, based on your secondary market research.
  • Product or service: clearly describe the product or service you want to export.
  • Questions: base your questions on your secondary research and be as specific as possible. You'll get a better response if it's clear that you've carefully researched your subject.

4.2.3 Online resources

Canada Business Network

The Canada Business Network's export section is a hub for the Canadian export market and includes links to market and sector information, trade statistics and sources of trade leads and potential partners.

Canadian Trade Commissioner Service

The TCS site offers access to contact information for trade commissioners that can provide advice and skills to further your business abroad.

MY TCS provides access to hundreds of market reports, export publications and guides as well as upcoming trade events, webinars, podcasts and videos. Create a profile and opt-in to receive email notifications of new opportunities to expand your business through exporting.

Agri-Food Trade Service

The website of Agriculture and Agri-food Canada's Agri-food Trade Service offers a wealth of market studies and country reports for companies in the agri-food sector.

Export myth: I can't compete overseas

That's not necessarily true. If your business sells domestically, why wouldn't it find customers abroad? Remember, price isn't the only selling point—other factors such as need, utility, quality, service and consumer taste can make you competitive.

Customer success story

Canadian businesses AND TCS working together -When this Vancouver-based company was ready to expand worldwide, they called upon TCS to sell to the US, Africa, Vietnam and beyond.

Watch the video

Spotlight

Some companies conduct market research projects entirely online through the inexpensive collection format known as crowdsourcing.

To learn more about how crowdsourcing and other forms of market research can benefit your company, consult the Trade Commissioner Service's (TCS) Spotlight on Market Research.

4.2.4 Profiling potential markets

Here's a checklist to help you summarize what you can learn about a possible market. After you've created two or three profiles, compare them to see which market(s) present the best overall opportunities.

  1. Market type. Is it:
    • a fully developed market (e.g. Germany, the U.S.)?
    • a developing market with rapid growth (e.g. China, India)?
    • a developing market with marginal growth (e.g. many African nations)?
  2. Political highlights. Describe:
    • the government
    • who's who
    • major political themes
    • relations with Canada, including trade agreements
  3. Economic highlights. Describe:
    • the domestic economy
    • economic trends
    • general imports and exports
    • imports and exports to and from Canada
  4. Business information. Specify:
    • the currency
    • the language(s)
    • business practices and regulations
    • differences in legal framework
    • government procurement practices
    • work relationships
    • office hours
  5. Partnering options. List:
    • Canadian firms doing business in the target market
    • major firms from the target market doing business in Canada
    • options for local partners
  6. Support for market-entry strategies. Identify:
    • industry associations
    • trade events in the target market
    • other networking options
    • trade media
    • research facilities
    • market research sources
  7. Cultural considerations. Specify:
    • greetings and forms of address
    • do's and don'ts
    • cultural differences
    • attitudes toward Canadians
    • general tips
  8. Travel tips. Describe:
    • visa, work permits or other entry requirements
    • business support services
    • suitable hotels
    • telecommunications standards
    • tipping customs
    • electrical voltage
    • religious or statutory holidays
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