Introduction
We were pleased to ask Alberto Scanziani , an expert consultant for SME exports, to help us draft a handbook containing the fundamental criteria for quantifying the potential of a foreign market . This post is therefore dedicated to all sales managers who work in a SME and who must carry out an initial analysis to choose in which markets to concentrate their marketing and promotion activities.
(You can request a case study of him at the bottom of the post)
Here's how to do it
Let's suppose that an SME does not have the tens of thousands of euros needed to purchase the Global Market Research "packages" (consumer, industrial, demographics, etc.) and that it needs to understand by its own means where the most suitable markets for its products/services are located.
To do this, here are 10 simple criteria to create a ranking of the markets/territories with the greatest potential , not in absolute value but in the context of the company .
“The potential of markets is also a function of the Time variable”
Markets that are valid today could be less interesting tomorrow: this is the case, for example, of Russia, which is giving so many headaches to the “made in Italy” brands. Or the case of Brazil, which has been a bit stagnant for some time. However, we are interested in providing criteria that are independent of social, geopolitical and macroeconomic factors: in short, “riskless” criteria .
“The criteria must be disjoint from each other, that is, not correlated”
5 “external” criteria
These are parameters determined on the basis of the experience possessed by the company in operating in the markets themselves:
Periodic reports from intermediaries present in the market (for example agents and distributors ), not left to their good will, but made according to criteria of utility for the company; for example by developing points such as the analysis of the competition and the local commercial network, the analysis of local needs and purchasing habits , the analysis of prices , of the necessary communication and channels etc;
Presence of trade fairs , an indicator of the importance of the territory in that sector and the possibility of finding intermediaries; for example, the Batimatec fair in Algiers confirms the great vitality of that market in the Construction sector (but also the Big 5 Dubai ); the Eurobike fair in Germany makes complete sense as this is a territory where there is a huge tradition and industry in the cycling sector.
Number of prospects present in the market; assuming – perhaps optimistically – that the company carries out regular research and approaches to potential customers in that market; sector directories can be of great help; for example, for the DACH area there are prestigious directories (such as “ Wer liefert was ” and VDMA ) which collect the names of many players in various industrial sectors;
Public and private projects underway or planned in the market (only where relevant, for example infrastructure, construction, plants, retail etc); here too it is necessary to identify local sources of information; for example, the site www.sauditenders.com lists Saudi projects in multiple sectors; for the oil & gas sector, the directory www.gulfoilandgas.com and the Projects Zawya directory can be used.
Consumption data of goods or services , available free of charge in local sector directories; for example, on the website of the Confederation of the European Bicycle industry there is everything on the production and use of bicycles in Europe.
5 “internal” criteria
These are the parameters that can be obtained from simple market research and scouting actions to be carried out in the company using free tools , such as:
ICE data on exports of Italian companies in the market of interest; just use the ICE website and view “Data on trade in goods” (you need to register on the portal) using the NC8 codes;
ICE or Eurostat data on the overall import volumes from that territory; I add, in the relevant sector; for Eurostat just enter and consult the database.
Data from the world of associations ; for example Federmacchine in the sector section publishes in-depth reports on various industrial sectors of capital goods (machinery); even better are the detailed economic data from Federmeccanica, always for the manufacturing sector.
White papers from Global Market Research portals: they periodically publish free industry insights, just sign up to the portals; very interesting are those published in www.businessmonitor.com
Statistics relating to visits to your company website , blog, and social platforms (so be careful to monitor the analytics!);
To these criteria must be added that of constant monitoring of the best competition and the resources it deploys in the various markets; it is essential to know how the competition moves because it will supposedly do so based on valid criteria.
Of course, it is necessary to create a document for each market/territory to group the collected data and keep it updated, for example a couple of times a year , oh well... once.
For the more willing, it is possible to assign value indices to the criteria listed above - in particular to those having a numerical value - for example using a scale from 1 to 5, in order to carry out a qualitative-quantitative approach to the potential of each market.