When choosing to sell internationally, market selection is an important but potentially daunting task. There are approximately 194 countries around the globe, and selecting where to begin exporting can have a significant impact on finances and long term success. Often, suppliers begin as an “accidental exporter”, selling to those customers and countries who proactively contacted them, whether through a trade show, supplier’s web site or email communications. Without even planning, suppliers can find themselves selling to disparate customers in different regions around the world. While not an ideal export strategy, this method can certainly give one an indication of the regions that are interested in a supplier’s brand and which products might be most interesting internationally. However, a more strategic and proactive approach to exporting is suggested.
International export strategies often begin with closest geographies or common language and/or cultures for both supply chain and packaging efficiencies. For instance, a U.S. exporter might naturally begin by choosing Canada as a first export market given its proximity, shared language and even possibly a shared retailer base. Similarly, Mexico can be a natural export market also due to its proximity and shared (food and family) culture to America, as well as the fact that the Spanish language may already be included on a supplier’s product packaging due to U.S. customer base or retailer compliance.
A recent survey of IHA members confirmed that primary countries of export fell along these closest geography lines, with Canada being the most common export destination, followed by Mexico, Western Europe, Latin America and then Australia. Regions further away and with fewer language and/or cultural similarities then followed, such as Asia, Eastern Europe, Middle East and Africa respectively.
Product Suitability
Product selection is a typical first consideration before deciding upon the international markets to target. There will naturally be international customers and markets for which a supplier’s products are best suited. For a seller of industrial sized bakeware, knowing in which countries the households have ovens large enough to fit the bakeware pans would be key. For many countries in Europe and Asia, homes have smaller kitchen storage spaces and ovens, which may only suit bakeware products with small footprints. However, in Australia and the Middle East, homes, kitchens and ovens are larger, and thus more suitable for the larger U.S. sized bakeware products.
Similarly, a purveyor of cheese boards and knives would do well to know that certain countries in Asia are not particularly fond of cheese, and therefore would not be good target markets for cheese-related products. Of course, suppliers of electrical products would do well to know which countries around the world share similar electrical standards. Therefore, taking the time to first understand what countries might be most suitable for a supplier’s existing products would be time saving and beneficial. This is where the “accidental exporter” might benefit from reviewing existing global sales and products.
International Travel
Another key to deciding on market selection is understanding the travel constraints that might limit market opportunities. Long term success in a market will likely require multiple visits to review the existing retail market, to meet potential distributors, reps and retailers, and then to assess the progress being made by chosen market path. Selecting a market halfway around the world when budgets or time will not allow more than one visit per year or even more seldom may not be a smart decision. Similarly, attempting to sell into too many markets at once, requiring an international seller to spend lots of time on the road visiting multiple countries can quickly drive up travel spending and strain budgets.
Product & Packaging
Selecting initial markets that require little to no product or packaging revisions can also be a great time and cost saver. Conducting a cursory study into a market’s labeling or packaging requirements may quickly help determine whether the region is suitable for immediate entry or one that should be a longer-term candidate. Cooking gadget suppliers with only imperial measurements on accessories such as measuring cups should know what regions use metric versus imperial measurements to better understand what are existing market opportunities. If current international product development budgets do not allow for extensive packaging or product changes, then short-term selection should be on those markets that require minimal product revision for market penetration.
Market-by-Market Review
International sellers should take the time to conduct an overall market review of potential markets. Market potential should take into consideration the size of the region or market (population), the market attractiveness (affordability and affinity towards supplier’s products), and suitability of products (product readiness for market). Those regions that best meet the target market selection criteria would be the most attractive markets for immediate consideration. Those that meet some but not all the criteria would be more suited for mid-term consideration. Those markets that least meet the selection criteria would be best long-term candidates for potential sales opportunities.
Pick Three Countries
For the reasons mentioned above, as well as strategic focus, an exporter looking to penetrate new markets should pick their three best opportunities as a starting point. This will minimize travel costs, thus allowing a seller to make multiple visits to each market for maximum understanding and channel management. This will also allow the seller to learn which product categories or specific products within the seller’s assortment are most attractive to retailers (and therefore consumers). Finally, this will also allow the international seller to first achieve some level of success, thus warranting (to company management) further activity and budgeting for additional markets in the longer term.
An IHA/IBC Trade Mission is a great introduction to a new export market. Trade Missions include a review of the overall local market(s), a retail tour visiting major retailers and shopping areas, and pre-arranged meetings with key buyers from major and specialty retail chains. Participation in an IBC Trade Mission give sellers an immediate and thorough understanding of the market opportunity and pitfalls to avoid. For further information on current and future missions, see IBC Member Page.
