A SWOT analysis is usually based on an evaluation of facts and assumption about the company and on market research below, the SWOT graph is presented. It is up to company to plot itself on the graph, based on several criteria.
A company’s strengths are its competitive advantages that will give it an edge in the export markets. Its weaknesses are its constraints, which may inhibit marketing activities in certain directions.
For example, a company lacking readily available funds cannot undertake a large scale promotional campaign. The assessment of a company’s strengths and weaknesses in relation to the competition is essential for competitive positioning. This assessment from the point of the competition should, at least consider:
i. Technology in use
ii. Design, styling, trademarks
iii. Product quality, quality control and the product’s life cycle
iv. Completeness of the product line
v. Customer service
vi. Raw material supplies
vii. Distribution structure and cost
The review of the opportunities and threats in the market should complement the analysis of the company’s strengths and weaknesses; the aim is to identify the best business opportunities and directions of growth.
A Company’s opportunities on potential markets can be evaluated in terms of the firm’s export customers, products, the market structure and competing suppliers. Such an evaluation may reveal the complementary relationship between the company’s strengths and market opportunities.
Finally, the management should examine the so-called marketing threats on the markets being considered. These should include import rules and regulations relating to tariffs, quotas, non-tariff measures and so on.
Management should also determine whether the markets under assessment are mature markets, if they are already well supplied and do not therefore provide a readily niche for the company’s products.
2. Market Segmentation:
An export-marketing plan is not complete until the company has identified its target segment in the export market. Any large market has a variety of market segments that differ substantially. Different consumer groups exist according to income levels, age, life style, occupation and education.
A crucial element of the export marketing plan is to identify the segment that the company intends to reach. In making this choice, the company should answer the following questions-who will buy its products in the export market? Why they buy these products? Where are these customers located? What are their characteristics?
In this exercise, it will be helpful to concentrate on segment similarities and differences. The company should choose the segment with the requirements that fit its products specifications best.
For example, if it produces high-quality, premium-priced porcelain ware, its target segment is likely to be the high-income, we educated young consumers.
A target markets segment should be large enough to be profitable; an assessment of the size of the segment should therefore be made before a final decision is taken to include it in the marketing plan.
3. Market Research:
To succeed in exporting, a company must identify attractive export markets for its products as accurately as possible. Market research and forecasting are therefore of great importance.
Factors to be evaluated include the size of the market, the characteristics of demand in it, consumer requirement, trade channels, and the cultural and social differences that may affect the company’s way of doing business with the market.
A small producer contemplating entering export trade may not be willing or able to allocate resources to expensive data collection methods. Companies in that situation can use published data to assess the market.
They should, however, first evaluate the data for reliability and accuracy. One of the advantages of the European market is that it is very transparent and almost all-necessary information is available somewhere.
4. Product Characteristics:
The company should next consider the products that it has to offer. An analysis should be, made of any modifications required in the products, the packaging, labeling requirements, brand name and after-sales services expected.
Many products must undergo significant adaptations if they are to satisfy the customer and market requirements abroad. Other products require changes at the discretion of the producer, only to improve their appeal on export markets.
5. Export Pricing:
In setting an export price, the company should consider the additional costs that do not enter into pricing for the domestic market. These include such items as international freight and insurance charges, product adaptation costs, import duties, commissions for import agents and foreign exchange risk coverage.
Export pricing analysis should begin with these questions what value does the target market segment place on the company’s product? How do differences in this product in this product add, to or detract from. Its market value?
In practice these are difficult questions to research, but analysing the prices and product characteristics of existing competitive products may reveal critical information.
The analysis may show that it is not the cost of materials that determines the product’s value, but rather the customer’s perception of that value. When calculative, because you may not be willing to increase your end-user prices once you have found the right representative.
6. Distribution Channels:
A potential exporter should consider the following distribution options:
i. Exporting through a domestic exporting firm that will take over full responsibility for finding sales outlets abroad.
ii. Setting up its own export organisation.
iii. Selling through representatives abroad.
iv. Using warehouses abroad.
v. Establishing a wholly owned sales subsidiary.
The choice of distribution channel will depend on the company’s export strategy and the export market. If the company intends to export a product that has a specific feature which is likely to be a good selling point to a market segment that is already well supplied, it may need to create greater awareness of the product through an appropriate promotional strategy.
In this case, it may be better to appoint an agent who does not handle many products and can allocate the time needed to promote those products.
Distribution channels should be chosen very carefully, and efforts should be made maintain good relations between the parties concerned.
The export marketing plan should provide details on the following aspects of the promotional strategy:(1)Publicity methods (2) Advertising (who will be responsible for it, and how much the company can allocate to it) (3) Tare Missions (4) Buyers’ visits (5) Other promotional activities (which methods to use), the effort will be successful as to the extent to which the company provides effective customer support.
An exporter should remember that even the best product may fill without company support to trade intermediaries and the end-users.
In addition, customer support creates goodwill and loyalty to the exporter. Participation in major European trade fair is in many cases a good way to present the company’s products and services to the European trade. One should not expect immediate sales, but it does show professionalism on the exported part and allows for the developing of business contacts.
Participation in exhibitions is a costly affair, but it can certainly pay off when the company has clearly defined objectives of what it wants to achieve at the exhibition and has created the conditions and methods which allow for the achieving of these objectives.
Before actually participating in an exhibition, it is advisable to visit several product-related exhibitions first. Visiting or participating in a European trade fair is also a unique opportunity to gather all sorts of information which helps in conducting proper market research.
8. Budgets and Timetable:
A budget must be established for the export marketing plan. This should cover such basic aspects as sources of financing, use of the financing resources and a forecast of the export venture’s financial position after three to five years. A detailed timetable of activities must also be drawn up.