Many import and export opportunities have the potential to be lucrative. Others that are seemingly excellent ventures at first can lead to lost time, effort, and capital simply because the product didn’t perform as well as you intended.
Even with a promising concept, predicting how well your product will sell in a new market is tricky. Although there are unfortunately no guarantees in business, thorough market research will arm you with the necessary information to take a calculated risk. Let’s look at the fundamental steps of market research and the data importers and exporters need before starting a new venture.
Phase 1: Desk research
With so much information readily accessible online, a huge section of market research can be done at little or no expense using secondary data.
Secondary data refers to any information that is of value but was not specifically compiled for the purpose of investigating the business opportunity. This includes sales statistics, price trend reports, and consumer purchasing reports holding valuable general insight regarding consumer behaviour.
Important calls you can make based on desk research are:
Eliminating unsuitable markets
It is especially important for exporters to research the consumer groups who would be interacting with their products. For example, could the colours and design of your branding be considered culturally unlucky or offensive? Are you targeting female clients in a country where men have predominant purchasing power? If so, is your product adaptable to accommodate this market, or should you rather look elsewhere?
Scoping the competition
Identify the market leaders in your intended sales zone and do a thorough cost comparison to see if you’ll be able to compete with the price tag of existing alternatives after factoring in transport, duties, taxes, and the exchange rate. Also compare the features, range, and quality of your competition. Preferably obtain samples of their products for real-life comparison.
Can you identify a compelling reason why your product is superior, more innovative, or at the very least on par? If not, your customer won’t be able to either.
Your reputable sources
Various service providers and institutions in the trade sector have access to valuable insights and see the ins and outs of commerce daily. Make connections in the freight forwarding industry, your local chamber of commerce, the financial sector, and your intended market. The opportunity you’re perusing may also have come to their attention, which means they may already have identified potential profits and pitfalls.
Bigger picture challenges
Follow sources who report on trade and freight news. Although you may be on to a great product, other moving parts in the supply chain will affect the cost and feasibility of shipping your goods. These factors can be fluctuating exchange rates, global events, sanctions, regulations, quotas, and any political unrest that affects your profits. In trade, delays are always costly.
Some great sources of information are:
The Department of Trade and Industry: http://www.thedti.gov.za
Freight Trade Weekly: https://www.freightnews.co.za/
MBendi: https://mbendi.co.za/
Hellenic Shipping News: https://www.hellenicshippingnews.com/
Note: It is just as important to research regulations, restrictions, and legal requirements of your import or export commodity and its packaging to avoid delays at customs.
Phase 2: Field research
In-market or field research is undertaken to answer more specific questions and monitor the finer points of the product’s demand as well as the intended distribution or fulfillment channels. As a rule field research should consist of gathering primary data. I.e. information collected by yourself or your company for your specific needs.
Field research for the purpose of exporting likely means going abroad and incurring the expense of holding focus groups or giving out samples to collect feedback. It is important to invest this time wisely and be clear on the data points you want to report on.
Collect customer feedback
To understand the demand of your product you must first pinpoint your customer. Are you marketing to a reseller or do you intend to sell directly to your client? What demographic is your end user? Where do they live and work? What need of theirs would your product address and how will they interact with the product to fulfill it?
Ask your target group for clearly defined feedback once they’ve had an opportunity to use your product. For the sake of data comparison, it helps to rate specific features on a scale, but also allows for open feedback on shortcomings and suggested improvements. Doing so will not only tell you a lot about your product, but also whether you’re targeting the correct clientele.
Some examples of valuable questions to include in your survey are:
Name the 3 features of the product most valuable to you.
If you could change just one thing about our product, what would it be?
How would you rate the value for money of the product?
Consider points of distribution.
Look at points of distribution where your customer is already focused. What alternatives to your product can they find there, and how is it fairing in terms of sales?
Bear in mind the requirements of distributors and retailers may be predetermined. Find out whether you can meet their volume and turnover requirements before getting too invested in negotiations.
Phase 3: Reporting
Capturing the findings of your market research in a report makes it easier to distinguish a good import export opportunity from one that you may likely regret perusing. A well-structured report also enables you to keep a record of ideas so that you can re-visit them later when the circumstances you’re operating under may be more favourable.
Don’t know where to start? Download our easy-to-use market research report template for a helpful guide to keeping a record of your findings.
For the best possible start in import and export, speak to our consultants for guidance in customs registration, easy international payments, and getting your business up and running in no time.
