Why do market research, when the internet can make direct contact with potential customers? Nicholas Watkis explains.
We now live in a global marketplace. Historically, businesses have always had the ability to operate in foreign markets, but communications and costs have meant that comparatively few have ventured into business beyond their own locality or national borders. Modern communications and especially the internet have changed business perceptions.
Companies now can and do outsource their administration wherever it may be advantageous so to do, even to the other side of the world. At the same time, businesses can now present their products and services to customers and potential clients via the internet enabling substantial businesses to be developed as mail-order in a cost effective manner that was previously impossible only twenty years ago.
Using the internet is an effective way of passive selling. It enables potential customers who know what they want, to see and access products and services displayed on websites. This is a great advantage for small specialist businesses which have limited markets within their home territory, allowing them to have access to specialist demand on a global scale via the internet.
While it costs relatively little to set up a website for goods and services, which can be accessed throughout the world, it is not a substitute for old fashioned market and marketing research. Different countries around the world have different problems and needs. While a product may be very successful in its country of origin, because it answers specific problems, those same problems may not exist in other countries, or may not be considered sufficiently important.
Similarly, there are potential customers overseas that may be unaware of the products and services available to them that would satisfy their needs. Just because a business displays its products and services on a website, does not make its potential markets aware of its existence. Direct advertising and promotion in other countries can make a potential market aware of a product, but unless that market has a need for that product, the investment in marketing communication will have been wasted.
So what should be done? Why do market research, when the internet can make direct contact with potential customers?
The questions to ask
The internet is a good initial source for information about countries, needs, and existing competition, and may give indications for the direction of further research. However, caution must always be exercised regarding the reliability of internet websites, the information they contain, and its suitability for informed decision making.
Desk research should still be the first port of call, but it is amazing that so many businesses do so little if any market research. “Reconnaissance is never wasted”, so that in the commercial world, research always pays dividends and saves on unnecessary costs.
Chambers of Commerce are a useful source of information about overseas markets, and can provide a wealth of information from their commercial libraries. Trade associations can also provide insight into other markets, while in the United Kingdom, the government provides a wealth of information and advice to would be exporters through the “UK Trade and Investment” organization.
When contemplating the potential opportunities of any overseas market, the first questions that need to be asked are:
- Is there a market for the product in the selected territory? How do you know?
- How big is the market?
- What is the size and nature of the completion?
- Is the product suitable for the market or would it need to be adapted?
- Are the unique selling points and branding suitable for the target market?
- Would the market bare the extra cost of freight and transport, packaging and agent’s commission and still allow a competitive price?
- Are there any potential trade barriers or restrictions?
A lot of in-country market research can be obtained through the Commercial Attaché’s at the British Embassies or High commissions. Not only can the Commercial Attaché’s provide market and local information, but they are also able to find and introduce potential contacts and agents. So the executive responsible for developing business income has a number of sources for potential help in investigating and launching into new overseas markets.
Chambers of Commerce frequently organise trade missions to overseas markets, providing a cost effective way of visiting new territories as well as finding potential partners, distributors, and agents. Visiting trade shows abroad can facilitate an initial assessment of the business opportunities, as well providing an opportunity to meet potential contact and assess competition
If the market research is favourable, it will be necessary to prepare a marketing plan specifically for that area, taking into account, local values, customs, language and currencies will all impact on business activities.
There are many opportunities to develop profitable income from the global market, but businesses must be prepared to invest in some research and make the effort to find them.
Nicholas Watkis is the founder of Contract Marketing Service, established in 1981. He is a fellow of the Chartered Institute of Marketing and a certified management consultant of the Institute of Business Consultancy. For more articles from Nicholas, click here.