Looking For The Perfect Market For Your Business? Read This First.
I know that you have probably heard that the three largest markets for U.S. products are Canada, Japan, and Mexico, but these may not be the best or strongest markets for your product or service. If you’re not sure where to look for the answers, I have a few tips on deciding where to go and then some specific factors I want you to consider.
Choosing a market: look at …
Where are your domestic competitors expanding to?
Have you tried: The Small Business Administration’s Automated Trade Locator Assistance System (SBAtlas)?
You might also try the Foreign Trade Report FT925 and the U.S. Department of Commerce’s National Trade Data Bank (NTDB).
Once you’ve identified several countries that you think have the market potential for your product or service, you’re ready to do serious market research.
Look very closely at the Demographic and Geographic Factors such as population size, growth and density, and climate. Is there compatibility with your product in this market and what does it take to ship. I mean is it economically feasible?
Regarding Distribution and communication, you want to make sure there are sufficient physical distribution and communication networks.
Obviously considering some of the changes in the world Political Factors are crucial is the government amenable to trade with the United States? Is the country politically stable? Does the government have heavy involvement in the business? And their trade restrictions, tariffs, non-tariff barriers or bilateral trade agreements?
Other Economic Factors to consider:
Who are you actually selling to and is the economy sufficiently developed to support your product?
Is foreign trade a significant part of that economy?
What about the inflation rate, availability, controls, and stability of the exchange rate?
Is the per capita income and distribution of income sufficient to support your product?
We have discussed the social and cultural Factors before, but make sure you know what the literacy rate is and the average educational level in the country? If you are selling to or your product is designed for the middle class, make sure there actually is a middle class that would support your product? Many times products are not “necessities,” but luxuries. Make sure the people in the country have sufficient disposable income and a propensity to spend money on products similar to yours.
Specific trade access is crucial. We want to know what the trade limitations are. You know your product will be subject to tariffs, but what are they and are there quotas?
What documentation for distribution and logistics is important, but so is intellectual property protection. Have more questions? Call us 708-531-1740 for a free business consultation.*