Successful companies concentrate on one foreign market at a time, moving on to the next only after succeeding in the last. Demand and trend are the two key factors that determine which countries 
to select first and how to set priorities.

Market research helps you identify promising markets through objective analysis of available facts and statistics. Its true, many companies start export whenever it receives unsolicited orders from abroad. Although this type of selling is valuable, the company may discover even more promising markets by conducting a systematic search.

Primary and Secondary Market Research

Market research is conducted by analysing primary or secondary data resources. In conducting primary market research, a company collects data directly from foreign marketplace through interviews, surveys, feedback and other such direct contact with potential buyers. Primary market research has the advantage of being tailored to the needs of the company and provides answers to specific questions, but it is invariably time consuming and very expensive.

Secondary market research is based on analysis of statistical data such as trade statistics. To be effective, the data should be reliable and cover significant historical period. Though it is considerably less expensive than primary research, one should be aware of its limitations. For example, the most recent statistics for some countries may be more than two years old. Moreover, the data may be too broad to be of much value to a company. Statistics may also be distorted by incomplete data-gathering techniques. Finally, statistics for services are often unavailable. Yet, even with these limitations, secondary research is a valuable and relatively easy first step for a company to take. It may be the only step needed if the company decides to export indirectly through an intermediary, since the later may have advanced research capabilities

Step 1 - Collect Data

Collect export statistics published by authentic sources. In India, there are two major sources for reliable trade statistics - Directorate General of Commercial Intelligence and Statistics (DGCIS) and Customs.

DGCIS publishes 'Monthly Statistics of Foreign Trade of India' Its March issue contains cumulative data for whole financial year (April to March). After publishing extremely voluminous books for years - DGCIS has started publishing this data in CD-ROM from 2004.

Step 2 - Identify Promising Markets

Identify five to ten large and fast-growing markets for products in your export basket. Check volume as well as trend for a historical perspective of 5 to 10 years. Ask critical questions - has market growth been consistent year to year ? Has there been a shift in product choice ? Was there a seasonal bias ?

For example - analysis of spice export data for last few years may show increasing sale of curry-type mixed powder spices and modest or decreasing sale of whole seeds.

Another example - increased rice export to Bangladesh may be traced to floods in that country rather than any long term change in demand profile. Such spurt in demand is unlikely to sustain for long and should be considered a temporary phenomenon.

In both cases - historical analysis of foreign trade statistics can help you identify seasonal bias or shift in demand.

Step 3 - Identify Emerging Markets

Identify some smaller but fast-emerging markets that may provide ground-floor opportunities. If the market is just beginning to open up, there may be fewer competitors than in established markets. Growth rates should be substantially higher in these countries to qualify as up-and-coming markets, given the lower starting point.

Step 4 - Assess Target Markets

Ascertain the sources of competition, including the extent of domestic industry production. Analyze factors affecting marketing and use of the product in each market, such as end-user sectors, channels of distribution, cultural factors and business practices. Finally, identify tariff and non-tariff barriers (if any) for the product being imported into the target country

Step 5 - Draw Final List

After analyzing the data, the company may conclude that its marketing resources would be applied more effectively to a few countries. In general, if the company is new to exporting, then efforts should be directed to fewer than ten markets. Exporting to one or two countries will allow the company to focus its resources without jeopardizing its domestic sales efforts.