Choosing the right market

Robin Godfrey, manager of two bcc schemes run for uKti, discusses the
strategic approach of successful exporters

What does strategic mean? Strategic exporters have export plans integrated within their company’s business plan, including measurable, achievable targets for export business growth. What’s more, exporting is no longer experimental or experiential. It means serious business and is a means to grow their overall business. The BCC’s research of exporters, conducted in 2004, showed this strategic segment of exporters to have grown its exports year-on-year.

Over the next three editions of this magazine, Robin will write about the practices adopted by these successful strategic exporters.

In this edition we feature their approach to selecting export markets. Many less strategic companies are tempted to spend time and resources responding to enquiries from overseas without really considering how that country fits into their overall export strategy. One differentiating feature of strategic exporters is that they have chosen where they will export to.

Rather than merely pursuing an approach from a distributor, existing domestic customer expanding abroad or overseas visitor to its website, a strategic exporter identifies and prioritises its potential markets. The business plan might identify a short list of five to 10 countries for specific attention, further nominating those for short, medium and long-term attention.

A useful way of prioritising markets is considering those which are ‘easy’ to export to (cheap to service, close to reach, low training requirement) and those which offer the highest potential (greatest ROI, highest margins, largest customer volume, highest spend). Short-term attention is applied to easy, moderate size markets; medium-term attention is applied to easy, large markets; finally, long-term attention can be turned to large, less easy markets. Enquiries and initiatives arising in export territories can be handled according to their priority.

The BCC has developed a Market Selection Tool to help companies choose export markets by taking the guesswork out of prioritising potential markets. This XL based software helps companies compare countries and select the most promising. The spreadsheet is designed to be simple and quick, saving companies hours of desk research. A graph illustrates each country’s position.

Penkridge, Staffordshire-based EG Solutions supplies operations management software to financial services companies. The company had already commenced its international strategy, establishing an office in Denmark, and was receiving overseas enquiries. The company was keen to take a planned, strategic approach to export and, from an initial list of 15 countries, used the BCC’s Market Selection Tool.

The Tool contains core data including: GDP, time zones, use of English as a business language etc. This can be supplemented with sector specific information such as the number of financial services organisations.

Markets like South Africa and the Netherlands emerged as having a reasonable level of demand and relatively few potential difficulties such as time zone or language issues. The US and India offered the highest potential demand coupled with relatively easy entry.

EG Solutions acted quickly on this information, carrying out research visits to promising markets where it has subsequently secured significant business demonstrating this strategic approach really does pay off. www.britishchambers.org.uk