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How To Select A Market For International Business?

How To Select A Market For International Business?

After you have conducted the primary analysis of your company, the next step for you to focus on is to choose the right market for your international business. This is one of the most crucial parts of the internationalization of your business, as the success of your business is totally dependent on choosing the right market. The market you choose for your business expansion will be responsible for shaping the international development and growth potential of your business.

Strategies For Selecting The Right Market

Before you finalize the decision, you need to think about your product and try to create a list of the markets that will be an appropriate place to sell your product. No one strategy can be claimed to be universally accurate, as it will depend on the type of business you have and the marketing techniques that you follow, You need to focus on the available resources and the product lifestyle to choose the right strategy for the business expansion.

1. Market Concentration

Start with a few markets at the beginning. It will help you to solidify your company’s presence in these areas and will help in achieving constant growth in sales.

Advantages

  • You will be able to gain information about each of the markets and can easily alter the design of your products to match the needs.
  • Costs of management and logistics will be reduced if you follow the market concentration strategy.
  • You will be able to use more resources for promotion.
  • You can easily gain more risk control for all the international activities of your business.

2. Market Diversification

It means to introduce the product you have to maximum number of markets that are possible. But make sure to introduce small shares of the products in the markets.

Advantages

  • There is a possibility of rapid growth in the sale of your product.
  • The prices of the products can be adjusted according to the market, and you can easily make a lot of profit because of the fluctuation of the exchange rates in different markets.
  • The risk can be diversified if you follow this strategy.

Criteria For The Selection Of International Market

You need to keep the following criteria in mind while running the initial research for market selection for your business.

1. Environment and market Analysis

Create a list of all the countries that you wish to expand your business to. Your research to make the final choice should be based on these factors.

GDP Growth: You need to consider the factors like the growth prospect of the particular country along with the tourism opportunities to get an idea for the product demand.

Country Risk: you need to consider currency value, along with the social and political unrest going on in the country.

Political Factors: consider the political intervention that might happen in a particular country and can affect business decisions. You need to also study the trade agreement with respect to the country of origin of your business.

Other Factors: You need to consider the geographic proximity and that the destination market of your choice has the same social and business culture as the source market.

Market Appeal: Consider the demand for the product you are selling in this particular market and the risks associated with it.

Possible Difficulties: It is never wise to avoid the operational difficulties that might possibly occur, including state protectionism, legislation, taxes, other inclusive costs, and the competition for your business.

2. Analysis of the competition

The next step for you is to examine and analyze the competition that you might have in the market you are considering for business expansion. First, you need to identify the businesses that are your major competition and collect some details about them. The next thing after obtaining information about them is to analyze their sales for the last couple of years along with the evolution made in their economy. The last thing for you to complete this analysis is to identify the difference between your strategies and business. You will have to include factors like market maturity, prices, channels, financial stability, the development made, or the strategies they follow to calculate the distinguishing points.

3. Distribution Channels

The choice you will make regarding the distribution channel will have a major role to play in determining the scale for the expansion of your business in that particular market. You will have to keep proper track of the supply chain till it reaches the customers and gets a clear idea of the operations to be performed to increase the sale. Gather all the important information about the sales and business culture in a particular country so that you can be sure about the adaptations needed to be made in your products and the services you offer.

There are following different kinds of distribution channels

  • Distributing your product to the international market from your source market.
  • Dealing with a local distributor working the market you want to target.
  • Taking help from the internet is also a viable option for distributing your product.
  • Creating joint ventures with some local businesses
  • A delegated company in the destination market can ease the distribution process for the product.
  • Commercial agents are also proven helpful and are reliable distribution channels for expanding your business in the foreign market.

4. Demand Analysis

The last thing for you to consider the expansion of your business is to analyze the demand for your product. You need to consider both the current and potential demand and count in the factors like the expected evolution of the product you are dealing in. This process will help in confirming your pre-selected choices for your business expansion. You will also have to learn and grow with your business and design the marketing strategy based on your product and the market you are taking it to. The marketing strategy you follow should be based on the distribution, promotion, presentation, and price of your product. The demand analysis will also help you understand customer demand and better ways to satisfy the customers.

These are some key aspects that can help you in selecting the best marketplace for your international business.

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