Market Research

To be successful, exporters must assess their markets

through market research. Exporters engage in market

research primarily to identify their marketing

opportunities and constraints within individual foreign

markets and also to identify and find prospective buyers

and customers.

Market research includes all methods that a company uses to

determine which foreign markets have the best potential for

its products. Results of this research inform the firm of

*    the largest markets for its product,

*    the fastest growing markets,

*    market trends and outlook,

*    market conditions and practices, and

*    competitive firms and products.

A firm may begin to export without conducting any market

research if it receives unsolicited orders from abroad.

Although this type of selling is valuable, the firm may

discover even more promising markets by conducting a

systematic search. A firm that opts to export indirectly

(see chapter 4) by using an intermediary such as an EMC or

ETC may wish to select markets to enter before selecting

the intermediary, since many EMCs and ETCs have strengths

in some markets but not in others.

A firm may research a market by using either primary or

secondary data resources. In conducting primary market

research, a company collects data directly from the foreign

marketplace through interviews, surveys, and other direct

contact with representatives and potential buyers.  Primary

market research has the advantage of being tailored to the

company's needs and provides answers to specific questions,

but the collection of such data is time-consuming and

expensive.

When conducting secondary market research, a company

collects data from compiled sources, such as trade

statistics for a country or a product.  Working with

secondary sources is less expensive and helps the company

focus its marketing efforts. Although secondary data

sources are critical to market research, they do have

limitations. The most recent statistics for some countries

may be more than two years old. Product breakdowns may be

too broad to be of much value to a company. Statistics on

services are often unavailable. Finally, statistics may be

distorted by incomplete data-gathering techniques. Yet,

even with these limitations, secondary research is a

valuable and relatively easy first step for a company to

take. It may be the only step needed if the company decides

to export indirectly through an intermediary, since the

other firm may have advanced research capabilities.

METHODS OF RESEARCH

Because of the expense of primary market research, most

firms rely on secondary data sources. Secondary market

research is conducted in three basic ways:

1.   By keeping abreast of world events that influence the

international marketplace, watching for announcements

of specific projects, or simply visiting likely

markets. For example, a thawing of political

hostilities often leads to the opening of economic

channels between countries.

2.   By analyzing trade and economic statistics. Trade

statistics are generally compiled by product category

and by country. These statistics provide the U.S. firm

with information concerning shipments of products over

specified periods of time. Demographic and general

economic statistics such as population size and

makeup, per capita income, and production levels by

industry can be important indicators of the market

potential for a company's products.

3.   By obtaining the advice of experts. There are several

ways of obtaining expert advice:

*    Attending seminars, workshops, and international

trade shows.

*    Hiring an international trade and marketing

consultant.

*    Talking with successful exporters of similar

products.

*    Contacting trade and industry association staff.

Gathering and evaluating secondary market research can be

complex and tedious. However, several publications are

available that can help simplify the process. The following

approach to market research refers to these publications

and resources described later in this chapper.

A STEP-BY-STEP APPROACH TO MARKET RESEARCH

The U.S. company may find the following approach useful.

1.   Screen potential markets.

*    Step 1. Obtain export statistics that indicate product

exports to various countries.

*    Step 2. Identify 5 to 10 large and fast-growing

markets for the firm's product. Look at them over the

past three to five years. Has market growth been

consistent year to year? Did import growth occur even

during periods of economic recession? If not, did

growth resume with economic recovery?

*    Step 3. Identify some smaller but fast-emerging

markets that may provide ground-floor opportunities.

If the market is just beginning to open up, there may

be fewer competitors than in established markets.

Growth rates should be substantially higher in these

countries to qualify as up-and-coming markets, given

the lower starting point.

*    Step 4. Target three to five of the most statistically

promising markets for further assessment. Consult with

Commerce district offices, business associates,

freight forwarders, and others to help refine targeted

markets.

2.   Assess targeted markets.

*    Step 1. Examine trends for company products as well as

related products that could influence demand.

Calculate overall consumption of the product and the

amount accounted for by imports. Industry sector

analyses (ISAs), alert reports, and country marketing

plans, all from the U. S. Department of Commerce, give

economic backgrounds and market trends for each

country.  Demographic information (population, age,

etc.) can be obtained from World Population (Census)

and Statistical Yearbook (United Nations).

*    Step 2. Ascertain the sources of competition,

including the extent of domestic industry production

and the major foreign countries the firm is competing

against in each targeted market, by using ISAs and

competitive assessments. Look at each competitor's

U.S. market share.

*    Step 3. Analyze factors affecting marketing and use of

the product in each market, such as end user sectors,

channels of distribution, cultural idiosyncrasies, and

business practices. Again, ISAs are useful, as is the

Comparison Shopping Service (CSS) offered by Commerce.

*    Step 4. Identify any foreign barriers (tariff or

nontariff) for the product being imported into the

country (see chapter 11 for an analysis of tariff and

nontariff barriers). Identify any U.S.  barriers (such

as export controls) affecting exports to the country.

Country information kits produced by the Overseas

Private Investment Corporation (OPIC) can be helpful.

*    Step 5. Identify any U.S. or foreign government

incentives to promote exporting of the product or

service.

3.   Draw conclusions.

After analyzing the data, the company may conclude that its

marketing resources would be applied more effectively to a

few countries. In general, efforts should be directed to

fewer than 10 markets if the company is new to exporting;

one or two countries may be enough to start with. The

company's internal resources should help determine its

level of effort.

SOURCES OF MARKET RESEARCH

There are many domestic, foreign, and international sources

of information concerning foreign markets. Available

information ranges from simple trade statistics to in-depth

market surveys.

Trade statistics indicate total exports or imports by

country and by product and allow an exporter to compare the

size of the market for a product among various countries.

Some statistics also reflect the U.S.  share of the total

country market in order to gauge the overall

competitiveness of U.S. producers. By looking at statistics

over several years, an exporter can determine which markets

are growing and which are shrinking.

Market surveys provide a narrative description and

assessment of particular markets along with relevant

statistics. The reports are often based on original

research conducted in the countries studied and may include

specific information on both buyers and competitors.

The following sources fall into two broad categories --

general information resources and industry- or

country-specific information resources. Each category is

divided into several subgroups.

GENERAL INFORMATION RESOURCES

One of the best sources of information is personal

interviews with private and government officials and

experts. A surprisingly large number of people in both the

public and private sectors are available to assist

exporters interested in any aspect of international market

research. Either in face-to-face interviews or by

telephone, these individuals can provide a wealth of market

research information.

In the private sector, sources of market research expertise

include local chambers of commerce, world trade centers or

clubs, and trade associations. In the federal government,

industry and commodity experts are available through the

Department of Commerce, USDA, and SBA. In addition, these

agencies provide the following publications, many of which

can be found in local libraries.

Worldwide General Information

*    International Financial Statistics (IFS). Published by

the International Monetary Fund, IFS presents statistics on

exchange rates, money and banking, production, government

finance, interest rates, and other subjects. It is

available by monthly subscription for $188 yearly

(yearbook, $50 alone, included in the price); single copy,

$20. Contact International Financial Statistics,

Publication Services, Room C100, 700 19th Street, N.W.,

Washington, DC 20431; telephone 202-623-7430.

*    UN Statistical Yearbook. Published by the United

Nations (UN), this yearbook is one of the most complete

statistical reference books available. It provides

international trade information on products, including

information on importing countries useful in assessing

import competition. The yearbook contains data for 220

countries and territories on economic and social subjects

including population, agriculture, manufacturing,

commodity, export-import trade, and many other areas. The

latest edition available (1987) is about 900 pages and

costs $100. Contact United Nations Publications, Room

DC2-0853, New York, NY 10017; telephone 212-963-8302.

*    World Bank Atlas. The World Bank Atlas provides

demographics, gross domestic product, and average growth

rates for every country. The latest edition, 1990, covers

data for 1980 to 1989 and costs $6.95. Contact World Bank

Publications, 1818 H Street, N.W., Washington, DC 20433;

telephone 202-473-1154.

*    World Factbook. Produced annually by the CIA, this

publication provides country-by-country data on

demographics, economy, communications, and defense. The

cost is $23 (GPO:041-015-00169-8).  Contact Superintendent

of Documents, U.S. Government Printing Office, Washington,

DC 20402; telephone 202-783-3238.

*    World Population. The U.S. Bureau of the Census

collects and analyzes worldwide demographic data that can

help exporters identify potential markets for their

products. Information on each country _ total population,

fertility, mortality, urban population, growth rate, and

life expectancy _ is updated every two years. It also

contains detailed demographic profiles of individual

countries, including analysis of labor force structure,

infant mortality, and so on. The cost of the latest

edition, 1989, is $7.50 (GPO:031-024-07074-0). Contact

Superintendent of Documents, U.S. Government Printing

Office, Washington, DC 20402; telephone 202-783-3238.

*    Worldcasts. This eight-volume annual series presents

60,000 abstracted forecasts for products and markets

outside the United States (150 countries). Forecasts are

arranged by modified standard industrial classification

(SIC) codes and are typically one-line entries providing

short- and long-range projections for consumption,

employment, production, and capacity. A product volume and

a regional volume are published each quarter. The complete

annual set of four product volumes and four regional

volumes costs $1,300; the product set and the regional set,

$900 each; single volumes, $450 each. Contact Predicasts,

11001 Cedar Avenue, Cleveland, OH 44106; telephone

800-321-6388 or 216-795-3000.

GENERAL INDUSTRY AND AGRICULTURE INFORMATION

Industry Information

*    Foreign Trade Report: Monthly Exports and Imports _

SITC Commodity by Country, FT 925. This monthly publication

by the Department of Commerce provides statistics on all

export and import trade engaged in by the United States.

Annual subscription cost is $139 (GPO:703-091-00000-8).

Contact Superintendent of Documents, U.S.  Government

Printing Office, Washington, DC 20402; telephone

202-783-3238.

*    U.S. Industrial Outlook. This annual publication of

the Department of Commerce provides economic and commercial

assessments and forecasts on U.S. industry, including

statistics on trade, investment, and finance. The cost for

the 1991 edition is $28 (GPO:003-009-00586-8).  Contact

Superintendent of Documents, U.S. Government Printing

Office, Washington, DC 20402; telephone 202-783-3238.

*    Export Information System Data Reports. Produced by

the SBA, each data report covers approximately 2,700

product categories. XIS helps small businesses determine

which export markets to pursue. Upon request, SBA provides

a small business with a list of the 25 largest importing

markets for its product, the 10 best markets for U.S.

exporters of that product, the trends in those markets, and

the major sources of foreign and UN data. This service is

available free to small business. Contact the local SBA

field office or telephone the Small Business Answer Desk,

800-368-5855 or 202-653-7561.

Agriculture Information

*    AgExporter. This monthly magazine is published by the

USDA's FAS.  Appealing to the farm exporter, the articles

analyze conditions affecting U.S. agricultural trade.

AgExporter highlights market development and export

activity. The annual subscription cost is $14.  Contact

Trade Assistance and Planning Office, Foreign Agricultural

Service, U.S. Department of Agriculture, Washington, DC

20250; telephone 703-756-6001.

*    Export Briefs. This weekly bulletin produced by the

FAS presents current news and statistics on world

production and trade of agricultural commodities and

highlights upcoming trade shows. Available free and on line

(electronically). Contact High-Value Products Division,

Foreign Agricultural Service, U.S. Department of

Agriculture, Washington, DC 20250; telephone

202-447-3031.

*    Trade Policies and Opportunities for U.S. Farm

Products. Published by the FAS, these reports document the

policies other governments use to help their agricultural

exporters compete against U.S. suppliers. Also identified

are import barriers to U.S. farm products and marketing

opportunities for U.S. agricultural exporters. Fifty

countries and the trading blocs of the European Community

(EC) and the Gulf Cooperative Council are covered.

Available free. Contact Trade Assistance and Planning

Office, FAS, U.S. Department of Agriculture, Washington, DC

20250; telephone 703-756-6001.

Country and Area Information

*    Country marketing plans (CMPs). CMPs are prepared

annually by the commercial sections of U.S. embassies for

the US&FCS, covering 67 countries. Each CMP is a planning

tool that analyzes an individual country's business and

economic climate, emphasizing the marketing and trade

statistics, development, and issues. CMPs are available at

$10 per report through the Commercial Information

Management System (CIMS).

*    Foreign Economic Trends (FETs). Published by the

Department of Commerce, each FET covers a single country

and provides in-depth assessment of political, commercial,

economic, and investment conditions and developments.

Special emphasis is given to implications for U.S.

business opportunities. Annual subscription cost is $50

(GPO:  803-006-00000-8). Contact Superintendent of

Documents, U.S. Government Printing Office, Washington, DC

20402; telephone 202-783-3238.

*    Overseas Business Reports (OBRs). Published by the

Department of Commerce, the OBRs provide background

statistics and information on specific countries useful to

exporters, current economic and commercial profiles, and

information on U.S. foreign trade with the country. Annual

subscription is $14 (GPO:803-007-00000-4). Contact

Superintendent of Documents, U.S. Government Printing

Office, Washington, DC 20402; telephone 202-783-3238.

*    Background Notes. This series surveys a country's

people, geography, economy, government, and foreign policy.

Prepared by the Department of State, it includes important

national economic and trade information, including major

trading partners. Available by set or by subscription.

Price of the set is $58 (GPO:844-000-914-7); with binder,

add $4.75. Annual subscription cost is $18

(GPO:844-002-00000-9).  Contact Superintendent of

Documents, U.S. Government Printing Office, Washington, DC

20402; telephone 202-783-3238.

*    Commercial Activities Report (CAR). The CAR is

prepared annually by the economic and commercial sections

of the U.S. embassies, covering 67 countries where the

Department of Commerce is not represented. Designed as a

planning tool, each CAR provides the basis for an ongoing

evaluation of a particular country's political, economic,

and business activities. Special emphasis is given to

identifying U.S. marketing opportunities, particularly to

assessing market potential and strategies for increasing

U.S. sales. Topics include the commercial setting and

trends, import data, best prospects, major projects, and

trade information and event activity. CARs are available at

$10 per report through CIMS. Contact the local

Commerce district office or telephone 202-377-4767.

*    Congressional Presentations of the State Department's

Trade and Development Program. This annual document reports

Department of State dollar expenditures by industry in

specific countries around the world for the past several

years. (For a description of U.S. Trade and Development

Program [TDP] activities to stimulate U.S. exports, see

chapter 7.) Contact U.S. Department of State, Information

Office, Trade and Development Program, Room 301, SA-16,

Washington, DC 20523; telephone 703-875-4357.

*    Country information kits. Covering developing

countries and 16 regions worldwide, the kits are put

together by OPIC. Each kit includes most of the background

information considered necessary when a business is

considering entry into a specific foreign market. Available

free.  Contact Overseas Private Investment Corporation,

1615 M Street, N.W., Washington, DC 20527; telephone

800-424-OPIC or 202-457-7128.

*    Exporters Encyclopedia. This extensive handbook on

exporting is updated annually and contains exhaustive,

in-depth shipping and marketing information. More than 220

world markets are covered country by country. Topics

include country profile, communications, trade regulations,

documentation, marketing data, health and safety

regulations, transportation, and business travel. The

annual price is $535. Contact Dun's Marketing Services, 3

Sylvan Way, Parsippany, NJ 07054-3896; telephone

800-526-0651 or 201-605-6749.

*    Foreign Agriculture. This annual factbook published by

the FAS presents agricultural profiles of 65 countries,

focusing on production, marketing, and trade, and it

includes a full atlas of world agriculture with maps and

graphics. The cost is $12. Contact Trade Assistance and

Planning Office, Foreign Agricultural Service, U.S.

Department of Agriculture, Washington, DC 20250; telephone

703-756-6001.

*    Investment climate statements (ICSs). ICSs are

prepared annually by the commercial sections of the U.S.

embassies for the US&FCS, covering 67 individual countries

and designed as a planning tool. Through statistics,

policies, issues, and analyses, each ICS comprehensively

assesses a particular country's environment for direct

investment, particularly foreign direct investment.

Available at $10 per report through CIMS and NTDB. Contact

the local Commerce district office or telephone

202-377-4767.

*    Organization for Economic Cooperation and Development

(OECD) surveys. These economic development surveys produced

by OECD cover each of the 24-member OECD countries

individually. Each survey presents a detailed analysis of

recent developments in market demand, production,

employment, and prices and wages. Short-term forecasts and

analyses of medium-term problems relevant to economic

policies are provided. The surveys are shipped from France.

The complete set costs $180 ($203, airmail); a single copy,

$13. Contact Organization for Economic Cooperation and

Development, Publications and Information Center, 2001 L

Street, Suite 700, Washington, DC 20036; telephone

202-785-6323.

*    OECD publications. OECD publishes widely on a broad

range of social and economic issues, concerns, and

developments, including reports on international market

information country by country, such as import data useful

in assessing import competition. The chartered mission of

OECD is to promote within and among its 24-member countries

policies designed to support high economic growth,

employment, and standard of living and to contribute to

sound economic expansion in development and in trade. For

information and prices on these publications, contact

Organization of Economic Cooperation and Development,

Publications and Information Center, 2001 L Street, Suite

700, Washington, DC 20036; telephone 202-785-6323.

DETAILED PRODUCT-AND INDUSTRY-SPECIFIC DATA RESOURCES

U.S. Government Product and Industry Resources

*    Comparison Shopping Service. CSS is a custom market

survey service produced by US&FCS. On request, CSS provides

a U.S. firm with detailed market information on a selected

single product in a selected market worldwide. CSS answers

basic questions about the marketability of the product, key

competitors, comparative prices, customary distribution and

promotion practices, trade barriers, and other factors.

Available at fees ranging from $500 to $4,000 depending on

the particular country market chosen. Contact the local

Commerce district office or telephone 202-377-4767.

*    Industry sector analyses. Prepared by the commercial

sections of the U.S. embassies for US&FCS, ISAs provide the

basis for quickly sizing up one particular commercial or

industrial market in a particular country. ISAs present

market demand, market size, competitive analysis, end user

analysis, and market access criteria as well as marketing

opportunities. Available at $10 per report through CIMS.

Contact the local Commerce district office or telephone

202-377-4767.

*    Alert reports. Prepared on an ad hoc basis by the

economic and commercial sections of U.S. embassies and

consulates for US&FCS, alert reports help to identify

unique market situations and marketing opportunities for

U.S. business. Available at $10 per report through CIMS and

EBB. Contact the local Commerce district office or

telephone 202-377-4767.

*    Agricultural Trade Highlights. The Highlights,

published by FAS, provide economic analyses of major

overseas markets and demand trends.  They also provide

in-depth monthly summaries of major activities and events

affecting U.S. agriculture exports and imports, and

year-to-date summaries of commodity performance. Available

as a single free copy or by subscription. For a single free

copy, contact Information Division, Foreign Agricultural

Service, U.S. Department of Agriculture, Washington, DC

20250; telephone 202-447-7937. For the annual subscription,

contact Trade Assistance and Planning Office, Foreign

Agricultural Service, U.S. Department of Agriculture,

Washington, DC 20250; telephone 703-756-6001.

*    Staff papers on best prospects. These reports,

produced by FAS, offer the best overall prospects for

expansion of U.S. agricultural products over the next three

to five years. They cover about 15 countries and are

available free. Contact Trade Assistance and Planning

Office, Foreign Agricultural Service, U.S. Department of

Agriculture, Washington, DC 20250; telephone 703-756-6001.

Private Sector Product and Industry Resources

*    American Export Register. This two-volume directory of

38,000 U.S.  exporters and the materials, products, or

services they sell internationally is published annually.

Advertising is accepted. The cost is $120. Contact Thomas

International Publishing Company, Inc., One Penn Plaza, New

York, NY 10119; telephone 212-290-7343.

*    Export Shipping Manual. Published annually and updated

weekly, the manual is a three-volume looseleaf reference

service containing up-to-date, country-by-country shipping

and market research information.  Social, political,

economic, and commercial conditions of each country are

profiled. Detail is given to policies, regulations, issues,

development, and laws pertaining to commerce, especially

foreign trade.  The cost is $524. Contact Bureau of

National Affairs, Inc., Distribution Center, Keywest

Avenue, Rockville, MD 20850; telephone 800-372-1033 or

202-452-4200.

*    FINDEX: The Directory of Market Research Reports,

Studies and Surveys. This reference guide to commercially

available market and business research, including

international market research, contains more than 10,000

listings of reports, studies, and surveys. The 1991 edition

(900 pages) costs $325 (ISBN:0-942189-03-5). Contact

Cambridge Information Group, 7200 Wisconsin Avenue,

Bethesda, MD 20814; telephone 800-227-3052 or 301-961-6750.

*    Inside Washington: The International Business

Executive's Guide to Government Money and Resources. This

publication is a complete source book on government

assistance programs and services. It is organized the way

executives think about international business and includes

comprehensive contact information. The latest edition, 1988

(ISBN:0-8191-6934-X), is 295 pages long and costs $49.95.

Inside Washington publications are now available for

specific industry sectors and have a special emphasis on

financial support programs. Each book contains case studies

and a comprehensive exporters telephone directory.  The

following editions are available at $24.95 each:

Environment-Money, High Technology, and Food-Business.

Contact Delphos International, 600 Watergate N.W., Suite

960, Washington, DC 20037; telephone 800-288-2582 or

202-337-6300; fax 202-333-1158.

*    Electronic data bases. A number of private sector data

bases are available to provide specific marketing

information for firms interested in doing business

internationally, such as the PIER service of the Journal of

Commerce and DIALOG. Many of these data bases are

accessible both at local public libraries and universities

and directly by personal computer.