In a recent special report, The Economist noted that emerging markets are among the toughest in the world where distribution systems can be hopeless, income streams unpredictable, pollution lung searing, governments infuriating and sometimes failing to provide basic services. “Pirating can squeeze profits, and poverty is ubiquitous.”
This fairly accurate description underlines the importance of developing a comprehensive marketing plan. To manage successful entry into a new market the Forum for International Trade Training (FITT) suggests your plan should cover:
• The business. Set out a brief summary of the product or service, the organization’s business objectives and the competitive advantages.
• Market selection. Draft an outline of the selected market and the reasons for choosing it, including the overall role it will play in the organization’s operations.
• Market research. Provide details of the research used to determine the choice of this particular market, including the sources of information.
• Market characteristics. This is where the depth of market analysis is revealed and it should include answers to the following questions:
1. What domestic and foreign competitors are already in the market? What are their strengths and weaknesses and approximate market shares? Is there an appropriate niche market opening?
2. Will sales be to industrial businesses or retail consumers? Large or small, public or private? How large is the overall market and what drives the main buying decisions?
3. How different is the new market likely to be from the domestic one (or from other export markets already being serviced), and what challenges will have to be met to satisfy potential demand? Languages, customs, and the importance of relationships are likely to be different.
4. What are the sales and margins likely to be and over what period? When will the operation break even? Have all the extra export-related costs been taken into account? Will prices be set for volume and market penetration, or for margin? Will margins be adequate to bring a reasonable contribution? Will market size allow for economies of scale?
5. What local adaptations (such as technical, packaging or promotional) will be necessary for your product or service in the new market and have their costs been fully calculated?
6. How will the market be penetrated? Depending on the nature of the product and the market, it may be by direct sales, through agents, representatives or distributors, by an independent trading house or a combination of these. It might even be more interesting to license a local partner, establish a joint marketing venture or set up a local assembly operation. Outline any local standards and potential bureaucratic, customs, tariff, or other barriers that may inhibit progress. Will profits be easily repatriated and is the currency stable? Evaluated anything that could affect the viability of the project.