Make Decisions. Take Action

Elizabeth Binning

GrowthWheel International Inc. Product and Learning Specialist

Best Practices in Choosing Foreign Markets To Do Export, Think Like a Start-up

Webinar Program45 minutes

Content today

Prioritizing Markets Keys to International Success

Step 1: Consider the ApproachReactive vs. Proactive

Step 2: Choose CriteriaWhat predicts demand?

Step 3: Weigh the CriteriaNot all equally important

Step 4: Consider Barriers What can be overcome?

Step 5: Analyze ResultsNext Steps

Reality, Not TheoryCase Study

Your TurnTest Drive Tools

Burning questions at this point Experiences to share

Prioritizing MarketsKeys to International Success

Selecting the best foreign market Is a first choice in their

international growth strategy

360º Perspective on Decisions and Actions Before

Exporting

Export ReadinessIs there financial and HR support committed to exporting?

Adaptation of products or servicesProduct standardization vs. adaptation?

Development of Country-specific Marketing PlansModifying domestic advertising & direct international advertising?

International PricingCurrency exchange pressures, local market conditions, tariffs?

Logistics and DocumentationShipping, insurance, and payments?

All of these tasks will be uselessIf the company chooses markets

that have poor demand, are overly risky, or are not

competitive

Why do companies choose the wrong markets?

Too often they rely solely on reactive market selection

PollWhat percentage of your clients do you

help with loan applications?

Identify & Rank Opportunities

Selection Criteria What is important?

Weigh the Indicators Not all equally important

Analyze Results But make an intuitive call

Rank Before Further ResearchSaves time and money

Step 1: Consider the Approach

Reactive vs. Proactive

Reactive Market SelectionCompanies enter a market based on “reacting” to opportunities or

from following competitors

Reactive Market

Selection

Past leadsLook for trends in similar countries or regions

Past salesEven better than leads

Competitor BehaviorMaybe they know what they are doing?

Domestic Trade ShowsSuddenly you are an exporter!

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Date: Name: Company:

BUSINESS CONCEPT

v2.0

Licensed to:

Developed by:

DECISION SHEET

grow

thw

heel

.comGlobal Market Focus

Decide which geographical areas to focus on

Intention

Often some international markets seem more obvious to enter than others.

By having all the global markets in mind, we may think of new areas as potential export markets.

Process

Start by marking out the geographic areas that your company covers at the moment.

Continue by circling the company’s most attractive new export markets. Remember to go through all the global areas that are listed in the table.

Finish by listing the most relevant countries by continent or region.

Next Step• Explore which of the potential export markets

are most attractive. • Find out more about the most attractive

markets.• Make contact to possible associates with

connections in the relevant markets.

Y4.16+

/Customer Portfolio

North America South America Europe Africa Middle East Asia Oceania

Proactive Market SelectionA more planned approach that

lists potential markets, anticipates demand, and ranks opportunities

Why do companies choose the wrong markets?

Sometimes they rigidly adhere to their proactive market selection

Step 2: Choose Market Selection Criteria

What is Predictive?

What Data do We Need?Depends on what indicators are

important for the company’s products/services

Selection Criteria

Product SpecificTrade stats, trade barriers, past sales

Industry SpecificProjected industry growth rates, level of competition

Economic & Political SpecificGDP, income distribution, risks

Demand# households, population, density

InfrastructurePaved roads, access to internet

NatureClimate, natural resources

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Date: Name: Company:

BUSINESS CONCEPT

v2.0

Licensed to:

Developed by:

DECISION SHEET

grow

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.comMarket Criteria

Choose the right international markets

Intention

Choosing the right foreign markets to explore further can save time and money.

By ranking markets, whether they be whole countries or regions, based on criteria that makes our success more likely, we make it easier to choose between the potential options.

Process

Start by looking at the different types of criteria for selecting international markets and mark out how important each one is. Then make some notes to each of the relevant items about why it is important or why it is not.

Continue at the bottom table by writing down the potential markets. Give them scores from 1 to 5 according to how well they fit the company’s selection criteria for markets.

Finish by calculating the total score to decide on the best fit market.

Next Step• Call for a meeting with the team to talk over

the choice of market.• Look more into how attactive the market is to

weight importance of each market.• Draft next steps for further research including

potential travel.

CATEGORY MARKET CRITERIAIMPORTANCE

WHY IS THIS (NOT) IMPORTANTLow Med. High

Product Specific

Trade statisticsTrade barriersPast sales

Industry Specific

Projected industry growth ratesLevel of competition

Economic and Political

GDPIncome distributionProjected GDP growth ratesPolitical risks

Demand

PopulationPopulation growth ratesDensity of populationNo. of households

Infrastructure

No. of facilities linked to demandExtent of paved roadsAccess to internet

Nature

ClimateNatural resourcesSize of country

MARKET #1____________

MARKET #2____________

MARKET #3____________

SELECTION CRITERIA SCORE (1-5)

#1:

#2:

#3:

#4:

#5:

TOTAL SCORE

Y4.16.7+

/Customer Portfolio

Tips for Selecting

Market Criteria

Total Size of the MarketWhat is the total market available?

Use a Single SourceEnsures the numbers are consistent

Incorporate Trade StatisticsEspecially if there is not a strong local industry

Demand for Comparable ProductsHS codes may be misleading

Quantitative Measures are BestDifficult to compare attitudes

Foreign Market Entry ModeRisks higher with DFI

DiscussionYour reflections so far

Burning questions at this pointExperiences to share about GrowthWheel

Step 3: Weigh the CriteriaNot All are Equally Relevant

Weighing the FactorsDepends on what indicators are

important for the company’s products/services

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Date: Name: Company:

BUSINESS CONCEPT

v2.0

Licensed to:

Developed by:

DECISION SHEET

grow

thw

heel

.comMarket Attractiveness

Review attractiveness of the focus markets

Intention

Often we can choose from several different international markets and they may seem equally attractive.

By reviewing the markets on a set of attractiveness parameters, we can get closer to selecting the most relevant market(s).

Process

Start by making a list of countries and cities in the continents that the company is considering exporting to.

Continue by writing down what you find most and least attractive, respectively, about the markets. Find inspiration in the checklist.

Finish by giving points to the markets according to how attractive you think they are.

Next Step• Use evaluation to decide which export

markets to focus on.• Explore selected focus markets more in

depth. • Make action plan where you prioritize sales

and marketing efforts towards new focus markets.

CONTINENT COUNTRY CITY OR SEGMENT MOST ATTRACTIVE ABOUT THE MARKET

LEAST ATTRACTIVE ABOUT THE MARKET

ATTRACTIVENESS(TICK OFF)

1 2 3 4 5

CHECKLIST: MARKET ATTRACTIVENESS ✓The market Market size and growth

Competitiveness of environment

PricingNational conditions

Political conditions

Legal conditions

Language and culture differencesRelations Existing customer and supplier relations

Potential for partnerships

Personal network in the market

Personal preferencesResources Distance to home market

Cost levels

Y4.17+

/Customer Portfolio

Weighing Each Criteria

for Importance

Is it Directly Related to Demand?Higher connection to demand = higher weight

Accuracy & Dependability of Data?Out of data or suspect data = lower weight

Barrier to Entry?If barriers can be mitigated = lower weight

Step 4: Consider BarriersWhat Can be Overcome?

Map the barriers to

entry

EconomicPrice level, purchasing power, financing

Competitive# competitors, barriers to switch

CostDuties, taxes, freight/storage costs, exchange rate stability

Technical Lack of Tech, Local standards, infrastructure

Legal & Political Product approval, sanctions

Cultural Customs, religions, language

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Date: Name: Company:

BUSINESS CONCEPT

v2.0

Licensed to:

Developed by:

DECISION SHEET

grow

thw

heel

.comBarriers to Entry

Map the barriers to entry in international markets

Intention

Entering an international market often involves bigger or smaller barriers.

By mapping out the barriers to entry and their significance we can focus on actions that can help us overcome the most important barriers.

Process

Start by noting for which market you are mapping the barriers to entry. Go through the listed examples of export barriers and add more points yourself if needed.

Continue by deciding how significant the barriers are.

Finish by describing the actions you can take to overcome the most significant barriers and note who is responsible for each task.

Next Step• Explore the barriers you know little about.• Figure out if some barriers are related and

the actions to overcome them can be combined.

• Make action plan to carry out actions to overcome most significant barriers.

MARKET:

CATEGORY EXAMPLES OF EXPORT BARRIERSSIGNIFICANCE

ACTIONS TO OVERCOME BARRIERS

PERSON RESPONSIBLELow Med. High Don’t

know

Economical

Price levelPurchasing powerExchange rateFinancing

CompetitiveMany competitors (local/international)Customer barriers to change of supplier

Cost related

Duties and taxesFreight costsExchange rate stabilityStorage costs

Technical

Poor production conditionsLack of technologyDifferent local technical standardsInfrastructure, logisticsAdministrative import barriers

LegalProduct approvalRules of dismissal (partners, employees)

Political

Political instabilityLegislationExport controls prohibiting exportSanctionsTrade barriersQuotas

Cultural

Cultural differences and dress codeReligious considerationsLanguage competences, dialectsPoor understanding of consumer behaviorBusiness customsCorruption and bribery

Y4.18+

/Customer Portfolio

Step 5: Analyze ResultsNext Steps

Goal of the Market ScreeningNarrow down choices before

doing in depth research

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Date: Name: Company:

BUSINESS CONCEPT

v2.0

Licensed to:

Developed by:

DECISION SHEET

grow

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.comMarket Check

Do a market check before market entry

Intention

Before investing vast resources in a market entry, it may be a good idea to do a market check.

By describing the results we want to get from a market check and the resources it requires we can more easily prioritize the possibilities.

Process

Start by noting the market that you want to do the market check for. Then, get an overview of the different types of market checks. Add more activities if you like.

Continue by writing down how each market check should be carried out. Note also which results you want to end up with. Next, figure out how much time and money you want to spend on the market check.

Finish by prioritizing the different types of market checks.

Next Step• Explore more in depth the market checks you

have given the highest priority.• Make action plan for market check(s) to make

clear if you should enter the new market. • Delegate tasks to team members.

MARKET:

TYPE OF MARKET CHECK

HOW TO CARRY OUT MARKET CHECK THE RESULTS WE WANT TIME TO

SPENDMONEY TO

SPENDPRIORITY

Low Med. High

Individualmarket visit

1.

days2.

3.

Joint export campaign(Business delegation)

1.

days2.

3.

Participation in trade fairs

1.

days2.

3.

Participation in conferences

1.

days2.

3.

Pilot marketing campaign

1.

days2.

3.

Invitation to visit home market

1.

days2.

3.

Host trade missionin home market

1.

days2.

3.

1.

days2.

3.

✓ CHECKLIST: DESIRED RESULTS

Get more information

Find partner candidates

Identify possible facilities

Get market insight

Make the first sale

Y4.29+

/Customer Portfolio

Primary Vs. Secondary DataFurther research

Putting Results in PerspectiveTop performing markets should

be seen as likely candidates, but more research will be needed

Current level of international experience

International expansion goals

Consider similarities of markets - geographic and cultural

Do trade agreements (eg, NAFTA) have impact?

Put Rankings in Perspective

Hypothesis - Test - RevisitExperiment with an Iterative

Process

Reality, not TheoryCase Study

Small manufacturer in Central IL

Tents on trailer bases

So light weight, motorcycles can pull

Customers are baby boomers

Not the cheapest option

Tent Trailer Co

Past Leads - Costa Rica

Past Sales - Canada

Not sure where competitors are selling

Step 1: Consider the

Approach

Step 2: Choose Criteria

Population, ages 55+

Motor vehicles per 1000 people

US export of 871610

GDP per capita (PPP)

# of Camping Participants

Step 3: Weigh the Criteria

Population, ages 55+ - 1.0 (neutral)

Motor vehicles per 1000 people - 3 (predictive)

US export of 871610 - 2

GDP per capita (PPP) - 3 (predictive)

# of Camping Participants - 3 (predictive)

Heavy to ship (freight & storage costs)

CE Mark needed for recreational vehicles in EU

Local Competitors with lower costs

Step 4: Consider Barriers

Top 5: Canada, Australia, New Zealand, Japan, EU

Because client was new to exporting, they chose to focus on Canada

Pilot program with N. American trade shows (Cabin Living)

Will look into finding a manufacturing facility in Oceana area to reduce costs

Step 5: Analyze Results

PollHow many hours do you typically spend

helping clients with their loan applications?

TO EXPORTTHINK LIKE A START-UP

Be the Best Advisor You Can Be

GrowthWheel is the FrameworkJust add your expertise

Thank youLet’s continue the conversation

Elizabeth @ growthwheel.com