How to select markets for Exports

 

Selection of Export Markets

One of the most important decisions in international marketing is market selection. The global market, made up of well over 200 independent nations with their own distinctive characteristics, is very vast. It would be very difficult for a company to operate in all these markets. There are barriers, which make entry to a number of markets impossible or very difficult. There may be markets, which are not profitable or may be very risky due to political or other reasons. Moreover, the company resources may not permit the operation in a large number of countries.

The factors to be taken into account in export market selection process are:

(a) Political Embargo: The countries to which there is a political embargo on exports should be straight away excluded from the list of potential markets. For example, there are restrictions on export of certain items from India to certain countries. Similarly, there are countries, which do not allow import of certain items from certain countries of the world.

(b) Special Requirements: Every market has a special requirement in terms of product specifications, quality and a different price edge. The very fact that a product has found a niche in some market does not necessarily mean that the same niche exists in the other market of the world or that the attitudes affecting buying decisions are similar all over the world.

(c) Product Specification: Product specifications differ from market to market. For example, many countries require electrical goods with 110 voltage current as against 220 voltage in India. An exporter should avoid exporting to such market, where product specification is different from the national ones. This is because the cost of product adaptation may be very high.

(d) Distant Location: Markets which are comparatively at a longer distance and for which regular shipping services are mot available, not only make adherence to delivery schedules more difficult, but also render the goods uncompetitive on account of higher incidence of freight. Hence, while selecting markets, long distance markets should be avoided.

(e) Market Accessibility: Certain markets are comparatively less accessible due to import regulations and quota restrictions. Similarly, Indian products may not receive preferential treatment under the MFN clause or there may be restrictions on remittances and convertibility of currency in some countries. All such markets should be avoided as they render marketing uncompetitive.

(f) Business Community: In several countries, the business community mainly comprises of Indians, Pakistanis, Sri Lankans, Bangla Deshis, etc. Such people are more familiar with the trade practices in India and thereby more receptive to our goods. It also helps in breaking the communication barriers. Hence, it is better to exploit such markets for initial exploration.

(g) Preferential Treatment: While accessibility to certain markets is difficult, there are a few countries which accord preferential treatment to the products from developing countries. For example, EU, Australia, USA, etc., have instituted the scheme of Generalised System of Preferences (GSP) for imports from developing countries. Such markets may be selected for immediate exploitation for export.

 

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