Explain the criteria to be assessed when selecting a potential target market for export?

Question

What will be an ideal response?

Answer 1

There are six criteria that should be assessed:
1. Market Potential. What is the basic market potential for the product? To answer this question, secondary information (that which is already assembled and available) is a good place to start.
2. Market Access. This aspect of market selection concerns the entire set of national controls that apply to imported merchandise and any restrictions the host-country government might impose. These can include such items as import/ export licenses, import duties, nontariff barriers, foreign exchange regulations, and preference arrangements.
3. Shipping Costs and Time. Product modification, export packing, and shipping costs can affect the market potential for a product. If a company's export product is similar to what is already being manufactured inside the target market, shipping costs, duties, and "time on the water" may render the exported product uncompetitive. It is important to investigate alternative modes of shipping as well as finding ways to further differentiate the product–the exporter may need to offset a price or delivery disadvantage.
4. Potential Competition. A country's overseas-based commercial attachés or representatives can be a valuable resource. When contacting a commercial attaché in a prospective country market, it is important to provide as much specific information as possible. Many home-country governments offer a broad range of services, including assistance in finding potential local agents and distributors.
5. Service Requirements. If service, regular technical support, or warranty offerings are required for a product, it must be delivered at a cost consistent with the size and profitability of the market. The growing universality of the Internet makes it possible to offer cost-efficient web-based global service support in addition to or in some cases as an alternative to in-country support.
6. Product Fit. With information on market potential, cost of access to the market, and local competition, a final step is to decide how well a company's product fits the market in question. In general, a product fits a market if it satisfies the criteria discussed previously in the chapter and is profitable.