How to Find New Export Markets - 5 Easy Steps

Organic Food August 31, 2017
Author: Jasur Salakhitdinov
Head of International Sales Department
Download
5 Easy Steps Handout

In this post, I would like to tell you about how to choose the right export market to grow your business. In other words, in which country will you have the best chance of boosting your sales. I’ll be using our own methodology that we’ve developed at IndexBox, which includes 5 simple steps.

This guide will help you to answer the following questions.

  • How do I choose the best geographic market to enter?
  • Should I opt for the biggest market of the fastest growing?
  • Should I prefer the highest margin or take the lowest risks?
  • Do I need a friendly business environment or a non-competitive market?
  • Should I search for loyal customers or be a pioneer?

You can find this post in video format below, which contains the same 5 steps.

Before we dive into the five steps export guide, let me introduce you to the hero of our post. Our hero is a producer of bananas who sells his products on the local market. The competition here is quite severe, and the market size is limited. He needs new ideas to grow his business. The producer decides that the time has come to supply his goods to other countries.

As he looks at the map, he understands that there are great opportunities before him. There are more than 200 countries and in each of them people eat and love bananas. But here’s the question – 200 countries are too many for him. Our hero would really love to choose one country – the best and most promising country.

As he starts weighing up his options, how does he make sure, that he doesn’t make the wrong choice?

How can he be sure, that he will not lose his time and money trying to enter a market, where nobody is waiting for him?

Entering a new market is a long road. We will help the banana producer make his first steps in the right direction.

For your convenience, in the very begining of this post you will find a handout, which will allow you to move from reading the article to putting your knowledge into practice.


#1 Market Size and Growth. Looking for the Best Performing Markets

The first question we will help banana producer answer is: Which markets performed best in terms of banana sales in the last 5 years? And which markets were among the outsiders?

In order to do that, we will build our own map. Let’s take a square and divide it into four parts. On the right side, we will mark the countries with the highest level of consumption of bananas – these are the largest markets. On the left we will input the small markets. We will put the countries, where banana consumption has been growing for the last 5 years, on the top of the graph. While on the bottom, we will input countries where consumption has been declining or showing very little growth.

Now let’s take the necessary information here and put the countries in the relevant quadrants.

Market Size and Growth Map. How to Find New Export Markets - 5 Easy Steps

In the lower left quadrant, we see countries with small markets, where consumption of bananas is falling. These countries are not appealing to our hero, so cross them out and leave them out of further consideration. The rest of the markets showed a relatively good result. The best countries, in terms of volume and dynamics, can be found in the right upper quadrant. But let's not rush to conclusions, so let's take the remaining countries and move on to the next stage of our analysis.

You will find a template to fill out the quadrants in the handouts on page 2. 


#2 Market Saturation. Looking for the Most Promising Markets

At this stage, we will answer the following question: which countries are the most promising, in terms of banana consumption growth, and which ones are already saturated?

To answer this question, we will be using information on per capita consumption. In other words: how much bananas does one person consume yearly?

We will take this data here.

Let’s arrange the countries in descending order. 

Market Saturation. How to Find New Export Markets - 5 Easy Steps

Thus, at the top, we have countries with the highest average per capita consumption. This means that these markets are saturated and, most likely, will no longer grow. They don’t have any further growth potential. That is why we will exclude them from our analysis and move on to step 3.


#3 Imports and their Growth. Looking for Markets the Most Depending on Imports

The next question is: in which countries are local producers unable to satisfy the increasing demand for bananas? Or, in some cases, which countries do not produce bananas, at all?

In order to find out, we will draw a new map. We'll simply take a square and divide it into 4 parts. On the right, we will mark the countries where a large volume of imports is observed. To the left – those countries where import levels are low. At the top, we will mark countries with growing imports. Below - where imports are falling or showing little growth.

Let’s take the necessary data here and place the remaining countries in accordance with the volume and dynamics of imports.

Imports and their Growth Map. How to Find New Export Markets - 5 Easy Steps

As you might guess, in the left lower quadrant are countries with a low volume of import of bananas and negative dynamics. Most likely, local producers hold strong positions in these markets. Importers have nothing to do in this market. We will exclude these countries from our analysis and move on to the next stage. 


#4 Market Entry Barriers. Looking for the Most Accessible Markets

At this stage, we will answer the following question: what barriers should the manufacturer overcome in order to enter new export markets?

Entrance barriers can be associated with high tariffs, the need to obtain licenses or certificates, the complexity of logistics, etc. For each of the remaining markets, we will conduct an analysis of the barriers for entry, information about which can be found here.

Market Entry Barriers List. How to Find New Export Markets - 5 Easy Steps

If a barrier is insuperable, we will mark it with an X. In the end, we will end up with markets with relatively low or surmountable barriers.


#5 Import Prices. Looking for the Most Profitable Markets

In the last 5th stage of our analysis, we will answer the following question: which markets are the most profitable for producers of bananas?

In order to do this, we will draw a new map. Take a square, divide it into 4 parts. On the right, let's mark the countries where we observe the highest price of imported products. On the left are the countries with the lowest prices. In the upper half, we mark the countries where the prices of imported products have grown in the last 5 years. In the lower half, we'll input countries where they fell.

Take the necessary data here, and place the countries in the corresponding quadrants.

It is easy to see that the countries with the highest and growing prices for imported bananas are in the right upper quadrant. For our hero, these are the most profitable markets.

Import Prices Chart. How to Find New Export Markets - 5 Easy Steps

 

Summary

We’ve gone through 5 steps.

First, we chose the largest and fastest growing markets.

Of these countries, we took the markets which are still unsaturated.

Then, we chose the markets with a large and growing share of imports.

After, we filtered out markets with insurmountable barriers to entry.

Of the remaining countries, we selected markets with the highest price of imports.

As a result, we helped our banana producer find the most promising market for him to target.

If you want to grow your business and enter new export markets, you can use the 5 easy steps to conduct your own analysis.

You can find all the learning materials and required data below.

Take the data out of the box, and think outside of it with IndexBox.


Testimonials

Many of our clients have already found new export markets for their products. Check out what they are saying about their experience: