4 Free Steps to Start Exporting and Find the 3-5 Best Target Markets for Your Business – Export Marketing 101

Choosing the right foreign market is the most important step in planning export marketing and new market entry. In terms of workload, each country is more or less equal, but the money and opportunities circulating in that market can be very different.

Competition varies greatly. It would be easy to say just do a market survey and you'll know right away, but to do the survey, you first need to know what to study and look for. I can't say that all business opportunities can be measured with the same yardstick or that the same advice applies to everyone. It's not like that.

Below, I outline our main techniques for helping our clients find the most potential foreign markets to launch their export marketing endeavours. Hopefully, this will also inspire your own market research. In some cases, government bodies can offer additional support.

Starting with your market research – 2-4h (the first step)

At the very first step, we complete our least demanding tasks that bring the most clarity. Take out your Excel sheet or open up your notebook:

1. Map out our product/service value propositions and what problems they solve.
2. Define the price range of this product/service (what is the cost for your client, what is the profit margin for your business, what price could it be sold at, possible additional costs such as logistics or customs duties, etc.). We want to note down what it costs us to serve a customer, how much profit we make from it, how much we can pay for acquiring that one customer, and what is the potential lifetime value of a customer in the first year.
3. Next, we exclude countries that would not be profitable for us today or where we definitely do not want to sell for some other (valid) reason. This is not the place for emotional decision-making, like choosing Spain because my friend said the weather’s nice there. Rather, I'm thinking about markets with political or major risks (e.g., Iran, Central African Republic, Russia, etc.), and logistically unprofitable countries where transportation doesn't justify the product's price (e.g., Australia, America, Japan, etc.). Once again, all businesses are different, and you need to do this exercise for your business on your own. Or with a team if you have one.

In the best case, we now have about 100 countries left. In the worst case, 50-70. Go ahead and add country population behind each of those countries and colour code the top 30 export countries with the largest population.

We do the same exercise for GDP and mark down the top 30. Just write the number next to each country in your Excel spreadsheet or notebook. We are likely to see a lot of overlap and that's very good.

Now, exclude all countries that don't have either a population tag or a GDP tag next to them. You should now have a reasonable selection of countries with decent market opportunity.

Please add a new column and include the language (EN, DE, ES, etc.) and region (EMEA, APAC, NA, or SA) for each remaining country. This allows us to assess the actual size of a region's market. For example, the German-speaking market in the EMEA region is not just Germany. It includes Germany, Austria, Switzerland, Belgium, Luxembourg, etc. When you’re successful in one of those countries, it’s a lot easier to expand to other German-speaking markets.

Now that you have successfully completed all seven steps, you have a strong market research foundation in front of you. You have a clear table of global market opportunities. It's time to start choosing.

The next step is to identify your markets with the lowest customer acquisition cost and the highest potential profit margin.

Preparation for entering the right foreign markets – 4-5h (the second step)

I hope the Excel table we made earlier hasn't already been saved, closed, and moved to the far corner of your desktop. Keep it in front of you and let’s continue with the research.

We segment our list of countries into regions and colour code the languages (e.g., Spanish-speaking countries under yellow, with EMEA in light yellow, NA in dark yellow, etc.). We want them to start standing out, but also form language groups.

Now create a separate table where you can calculate the total numbers for each region based on their language group. We add up the population and GDP of the top 4 language-speaking countries in each region to get an approximate size of the entire market, based on their language.

This is because localising all your marketing content, sales materials, and deliverables is super expensive. But expanding into another country in the same language group will require only minimal language localisation work.

Go ahead and add a new column to this new table, showing the average cost of servicing a customer in each region (our cost + customs + logistics). These costs don't need to be to single digit accuracy; a fluctuation of around 20% is perfectly okay. Inevitably, unexpected expenses and various taxes, fees, and policies may change over time when entering a new market. Our pricing can always be adjusted. At the moment, it's not important to make very precise calculations, but to get an overview of foreign market size, opportunities, and barriers of entry.

Now, we review the price lists of competitors operating in the region. If the price is not publicly known, then contact them to find out. We need to know how much money customers in that country are willing to pay for your product/service. We put this in the table (again, we don't need numbers with single-digit accuracy. If it's within +/- 20% accuracy of the product price, then that's quite okay).

Once these four steps are done, it's time for a coffee break. Your brain is probably fried by now. If you're like me and can't do one thing for very long, you probably did or will do this task in separate steps, and will still feel good at the end.

But you can't be resting on your laurels for too long if you want to beat your competition and start exporting.

You should now have all these data points:

• Regions divided by the top 4 languages along with population and collective GDP. Similar data also for countries separately, in another table.
• How much it roughly costs to service a customer in each region.
• The average price each region and language speaker is willing to pay for your product/service.
• What your rough profit margin would be in each region, and in the top language bubbles.

It's now time to start excluding the unsuitable ones, and we’re going to use different indicators for this task.

Foreign market competition, opportunities, and risk analysis – 6-7h (the third step)

I saved the competition, opportunities, and risk analysis part for second to last, because intuitively it seems like the first step, but in reality, we would be doing a lot of empty work if we hadn't done the preparation beforehand.

I want you to spend your time on the right things.

Competition Analysis

Competition is hard to research. I won't sugarcoat it.

It's possible to spend tens and tens of hours here, but you will never get a full 100% overview. New competitors constantly emerge, and some disappear. A new competitor can come very unexpectedly. For example, when:

• A new company is created that offers the same/similar product or service.
• A company in your field adds a product/service to their portfolio that’s similar to yours.
• A major player in a completely different field adds your product/service to their portfolio and supports its growth with a large budget.
• A startup receives a large investment and offers a product/service that changes the consumption of your product/service or even the entire field, forcing everyone else to adapt.
• A large business form a supporting industry acquires one of your competitors and offers a much stronger service package to your target market.

There are several possibilities, and it's not worth mapping all of them. Just bear in mind that competition is constantly changing, and major change can come at any moment. This must also be part of your export marketing risk analysis, which we will get to soon.

It's important to map competitors at your business size (industry leaders are likely out of this list, and initially, your competition is likely going to represent just 5-10% of the total market share).

Market leaders have certain value propositions (trust, recognition, emotional connections, word-of-mouth advertising, etc.) that a new company entering this market wouldn't have. Building these take time and you’re essentially starting from scratch.

Your competitors are likely to be other less-known names and medium-sized businesses. First, you need to build yourself up from the grassroots level to grow higher.

Find the top 20% of competitors at your level who serve your customer profile to a greater extent (there are thousands of competitors but choose 5-10). That's all you need for now. Competition analysis must be redone and regularly updated when entering a foreign market or when looking to expand your current service or product line.

Market Opportunity Analysis

This step comes next because the competition analysis provides a good overview of what sort of services and products are being offered in addition to yours.

We want to understand what else our target country's customers might want to buy and what they are used to ordering from one place. For example, in the States, people are accustomed to getting a wide range of different goods from one online store, while in the UK, people are used to ordering each product group from different sites (with some exceptions, such as Amazon and Etsy).

In mapping market opportunities, we primarily want to understand local market consumer behaviour, and we don’t want to start educating the consumer. This is an expensive endeavour, which unfortunately many companies (often unintentionally) undertake when entering foreign markets.

It's cheaper to start with your strongest product/service and then, upon gaining initial customers, investigate which of your other products/services might also be of interest. Try to assume as little as possible and communicate with your customers as much as possible. This communication should not only happen after the purchase has been completed, but I recommend reaching out to them before you start exporting. Do it as part of your market research. If the customer is a business, then give them a call. If it is an individual, then conduct a public survey.

The market opportunity analysis is not a one-time thing. At this stage, it is purely indicative, but it becomes a your main indicator of success later on.

Risk Analysis

It sounds scary and complicated, but it can actually be resolved very amiably. We don't want to do too thorough an analysis at this stage because initially, we need to narrow down our very broad selection of markets. We identify the main risks and write them down.

Risks may include:

• Political and legal - import-export taxes, rules, sanctions, etc. for goods and services.
• Financial - inflation, the purchasing power of people in the target country, increased costs of the product/service, etc.
• Demand-based - how easy or difficult it is to replace your product/service with an alternative and whether the pain-relieving effect of your solution is seasonal or continuous.
• Consumption requirements - how easy it is to consume your product/service and whether it can be done in the target country or requires travel, etc.
• Logistical risks - goods getting lost, spoiled, damaged, not meeting customs requirements (e.g., importing wood into Australia), etc.
• Cultural risks - the ethics of the product/service, religious issues, interpretation and understanding of the company name, misunderstandings caused by language, etc.
• Quality risks - the quality of our market may not meet the target country's expectations regarding quality.

Each company's products and services certainly have nuances not covered in the list above, but each entrepreneur should know these best.

Once you've quickly written down your risk analysis, assign a score to the risks of each market on a 1-10 scale. Add up all the scores for a particular market, divide by the number of lines, and you get a very rough average of your initial perceived risk for each market.

Just to emphasise, at this stage, it's not important to have a total 100% accurate overview, but to get an indicative perceived risk indicator.

After Completing These Three Analyses

At the end of the three analyses, you will have:

• A competitor assessment (can be a written, a numerical, or any other format you prefer).
• An assessment of market opportunities (how much initial growth potential there is and to what extent consumers in that market need to be educated before you can increase the average lifetime value).
• A perceived risk score (according to my guide, it would be numerical on a 10-point scale but can also be a written one if you prefer it this way).

At this point, two full days of work have been done, and the situation of your chosen potential export markets is much clearer. However, there’s one more task you need to do, which will give you the top 3-5 markets to choose from.

When you're ready, let's begin.

Finalising the choice of foreign market – 1-2h (the final step)

I'd like to say that there's not much work left to do here and you onle need to add up the numbers, but that’s not true and you need to find your final surge of energy. Maybe grab a coffee or do 25 push-ups?

Let’s start with your first round of target market exclusions. This exercise will give you a better understanding of the day to day ops you face when working in each of your chosen markets.  

Please take a moment to play through some major market shift scenarios:

If you have a product:

1. A disruption occurs in the supply chain, and suddenly some specific part or the entire list of goods must be ordered from a new supplier. What does this mean for the product price, description, regulations, waiting times, quality, etc.?
2. Transporting goods one by one doesn't pay off, and a local warehouse needs to be found. What are the possibilities? What will it mean for your profit margins and project management?
3. Clients' expectations of the product and the way your product is used are completely different from what you expected, and the product quickly receives a lot of negative feedback. What are the options, and how much would you be willing to invest to turn this reputation around?

 

If you have a service:

• Workloads become so high that it becomes difficult to serve new customers, and you need to start recruiting people in a much quicker pace. How do you organise training and onboarding? Who keeps an eye on their performance? What does it mean for the quality of your service?
• Locals are not accustomed to consuming the service online, or the existing market leader has built a customer habit where the service is consumed significantly differently than how you plan to offer it (e.g., face-to-face vs. online). What could you do to turn this to your advantage?
• It turns out that someone needs to be physically present on-site to successfully land customers and understand the people, culture, and customs of the target country more clearly. Who could be sent on-site, and what will it cost your business? What are the legal requirements, visas etc?

In reality, there are tons more questions, but all these six are real-life examples. Quite often, obstacles arise where no one expected them to appear, and this is an inevitable part of entering a foreign market. It will happen to everyone sooner or later and it’s impossible to prepare for everything. In fact, don’t prepare too much and start doing more. Fail fast and fail as cheaply as possible.

Not every situation applies to all markets, and in some cases, one or the other of these situations may quickly exclude a presumably good target market. Especially if someone needs to be physically present and accommodated for several months, which is either too expensive or the process of getting the correct visa can take over a year.

Now it’s time for exclusion round two.

In the second round, we try to exclude the majority of markets in your list. We calculate all the indicators together and find the countries with the most optimal profitability, potential, and size, where the risk factors are manageable, and major obstacles are not deal-breakers.

There shouldn't be any ideal markets left on the screen. They don't exist, and if one seems to be, then too little information has been collected about that market. Take 1-2 hours to learn more about that market.

In the end, there should be 3-5 target countries or markets left, which are better than the others for one reason or another.

What to Do with All This Now

You should have a lot more clarity in terms of what regions to focus your attention on, and which ones to put on the backburner for the time being. It’s now time to work on your target audience in further detail.

• Mapping customer profiles - communicating with potential customers in the target country or market (to find out if they would be interested in your brand or at least find out what they think of you at first glance. Maybe your brand name means something derogatory in their language, you never know)
• Testing market fit with a small budget (product-market-fit). It could easily be a €200-300 budget.
• Develop a market entry strategy - think about your supply chain and customer service journey step by step. Write down your customer acquisition pipeline from initial brand touchpoint to return purchases.

In other words, make preparations to take the first steps.

If you don't have time to do all this

Everyone can do these initial steps themselves and completely for free. There's no need to hire an agency or specialist because the data are available on the internet, ChatGPT can help you out or just call the right number of people.

Involving agencies and specialists only pays off if you either don't have time to do such analysis yourself and your time is more valuable than what you’re paying for outside help.

If you're sure you want to involve an agency (or at least want to request a quote), then contact us. We have done market research for various export markets, and prices generally range from £ 3,000 to £ 10,000, depending on the client's budget and desired workload.