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Spotlight on Market Research

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Spotlight on Market Research

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Market research is vital to sustainable export success in international markets. It is a process that can help you avoid costly expansion mistakes and identify extraordinary business opportunities, allowing you to minimize risk before you enter a foreign market through proactive data collection and analysis.

The following Spotlight will outline the foundation of performing market research on an international scale to identify a target market. From differing research methods to valuable profiling elements, this short guide can help your company prepare to engage in market research in order to solidify potential exportation opportunities and avoid the risk of entering the wrong market.

“Take the time to examine the local culture, find out how things are done there and adapt. Part of the process includes finding the right local partner.” – Export Award Winner

The benefits of market research

When performed correctly, market research can be instrumental to your company’s global success and can provide you with a wealth of business intelligence on prospective target markets. In general, the process identifies exportation opportunities, detects new or emerging markets, and uncovers the preferences of potential customers. This process can be beneficial regardless of your company’s size.

Market research involves the collection and analysis of data at successive levels of detail, with the overarching intent of identifying compatible target markets. When performed on an international scale the process becomes especially important due to the increased level of investment required to reach foreign markets.

The Canadian Trade Commissioner Service (TCS) is pleased to present the following Spotlight on Market Research, which compiles information and external resources for firms looking to identify lucrative target markets on a global scale, allowing them to minimize risk and be confident when making exportation decisions.

For further information and resources on market research and the exportation process, consult the TCS Step-by-Step Guide to Exporting, which has a section in step four dedicated to finding your next target market.

What is market research?

Market research is the process of gathering, analyzing and interpreting information about a market and the individuals it consists of. Internationally, market research is crucial to determine potential market compatibility and draw comparisons between markets.

Types of market research:

Some forms of market research are more economical and less time consuming than others; however, it is always recommended to collect as much relevant information as you can during the process. This ensures that you have the resources you need to make the most educated decisions possible. Typically, this is why a combination of different forms of market research is usually the most sensible strategy.

Did you know?

The TCS offers a free database of market reports on a wide range of locations, including intelligence on prominent industries in each market. You can access this free service by region or by sector.

Market Highlight: Agri-Food industry

In certain industries, a wealth of secondary market research may already be available to domestic companies. For example, Agriculture and Agri-Food Canada provides free market intelligence on the agriculture industry to Canadian businesses that are looking to gain insights and export their goods internationally. This service provides information on current opportunities, trends, forecasts and existing distribution channels in foreign markets, as well as reports on regions around the globe. To access this service, visit the International Agri-Food Market Intelligence webpage.

Strategy Highlight: Varying primary research methods

There are a number of methodologies commonly used to collect primary research data. Examples of these approaches include questionnaires, focus groups, and personal interviews. Each of these processes requires a different degree of respondent involvement which may influence the research method you choose to implement. For example; information that is highly personal in nature may require a more individualistic approach of data collection than what is offered by a questionnaire or focus group. A personal interview would likely be a good selection in this instance, seeing as the client will not be influenced by the presence of other respondents and is free to communicate honestly and without judgement. A full breakdown of these methods and when to use them can be found under Market research methods from Innovation, Science and Economic Development Canada (ISED).

Strategy Highlight: Crowdsourcing

Some companies conduct market research projects entirely online, finding success through the inexpensive collection format known as crowdsourcing.  This process involves a mass virtual outreach to undefined groups to gather information.  This approach typically works best for large enterprises with vast backgrounds in social media, and in locations with high social media and internet penetration rates. For more examples of crowdsourcing market research, consult the CanadExport article on Crowdsourcing your market intelligence.

Tip:

Attending trade shows can be a great way to discover market trends and obtain other valuable market intelligence. You never know where you might find your next export opportunity!

Steps in the process

While detailed, the market research process can be simplified to three relatively straightforward steps. Companies first need to screen several markets before making a more in-depth assessment, at which point they can ultimately come to an educated decision.

Figure 1: The international market research process
Figure 1: The international market research process

 

Did you know?

The World Customs Organization (WCO) offers a subscription service known as the Harmonized System Database, which allows users to view reports of nearly all goods that cross country borders. Tools like these are useful in market research projects where information is more difficult to acquire.

Market profiling considerations

What is profiling?

Profiling is applying sets of characteristics to potential markets with the objective of comparison or segmentation.

One strategy commonly used during the market research process is profiling, which can help you narrow down the amount of potential markets using a comparison of consistent aspects. Any factors you choose to evaluate can also be personally weighted according to the priorities of your company, highlighting the adaptability of the profiling approach. When profiling markets it is wise to consider aspects that can be compared uniformly across multiple regions, with examples such as:

Tip:

Many of these factors can be combined to determine a market’s degree of risk, which is an effective way of filtering out less desirable markets. For example, a location with political unrest, high chance of conflict, and a depreciating currency would indicate a high-risk destination which you should likely avoid.

Did you know?

The Centre for Intercultural Learning (CIL) at Global Affairs Canada (GAC) offers a free database of cultural insights on a wide spectrum of countries around the world.

Market Highlight: Markets with free trade agreements

When evaluating prospective markets, it is wise to take free trade agreements (FTAs) into consideration. Countries that have already laid the groundwork for simplified trade can be much easier to export to than others, not-to-mention much cheaper. An example of such an agreement is CETA, otherwise known as the Comprehensive Economic Trade Agreement, which eliminates a multitude of tariffs and regulations between Canada and members of the European Union.

In the absence of an existing FTA, companies can choose to consult the Canada Tariff Finder, a joint venture tool from the Canadian Trade Commissioner Service (TCS), Business Development Bank of Canada (BDC) and Export Development Canada (EDC). This tool can help companies considering global expansions identify the relative costs of entering each of their potential target markets.

Common challenges

Market research can be a relatively complicated procedure, especially when it is performed on an international scale. This means there are a host of challenges that many companies encounter during the process. Some of these challenges include:

How the TCS can help:

The TCS can provide owners and representatives of SMEs with on-the-ground support in potential target markets, including localized market intelligence. Trade commissioners can help your business scope out prospective export locations and get you connected with the right people.

Fact:

More than half of TCS staff working abroad are local specialists who are hired for their first-hand knowledge of the country in which they live. You too can benefit from their market intelligence and valuable connections.

80% of TCS clients say…

Trade Commissioners helped them connect with foreign business contacts that would have otherwise been difficult to identify or access.

Trade Commissioners helped them gain the confidence to explore or expand their operations in to new global markets.

Are you export ready?

The Step-by-Step Guide to Exporting will help you to:

Download this free guide and gain access to all TCS export publications through My TCS.
Access these additional resources:

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