How to Estimate Market Potential

Prof. A.K. Sengupta Former Dean, Indian Institute of Foreign Trade

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 Need to answer three basic questions.

- What is the market potential of a specific export market

What is the companys sales potential in that market On which specific segment of the chosen market should expect management concentrate its marketing effort?

Answer to these questions lead to the selection of a target market. Factors that limit market potential can be grouped under five heading.

- Exporters own countrys trade regulations

- Limitation on market access.

- Market size & growth. - The competition. - Acceptable prices. Trade Regulations - Exporters countrys foreign Trade Policy. Market Access - Tariffs & non-tariffs barriers.

- Internal Taxes
- Currency Restrictions - Health and Safety Regulations

- Political Factors

 Market Size Imports - How much imported - From where imported - How market share of the various foreign suppliers have been shifting or likely to develop. - Prices Consumption - (Product + Imports) Exports - How much the product consumed annually - Who consumes - How often is the product bought - How is the product used? - What other products are competing for the same usage.
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Market Segmentation - In any market only a certain portion of the total population or the total number of industrial users are buyers or potential buyers. - Consumers of shared characteristics such as income level, age, level of education, profession ethnic background. Factors affecting Demand - Economic factors purchasing power, employment levels. - Climate - Social and cultural factors - Negative attitude towards a certain country and its products - The frequency of shopping can affect size of packs. - Special liking or disliking for particular colours
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Competition

- Structure and extent of competition.

- Reasons for success of major competitors.

For studying structure & expect of competition, researcher must try to answer.

- Who are the major suppliers

- Whether competition from domestic products - What share of the market does each important supplier have. - What particular cost advantage do each supplier have (raw material, labour etc.) 6

- Whether foreign competitors enjoy tariff, transport cost advantage? - Do the main competitors have a strong grip on distribution channels (price discounts, quantity discounts) piggy backing Prices - Prices to end users

Trade Relations and Agreements.

Import Regulations. Distribution Channels & mark ups. Transport including internal transport shipping frequency, freight.
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Packaging requirements labeling.

Specific consumer preferences. Promotion methods and cost Trade fairs & exhibitions Whether the country belongs to any Trade Bloc Names of leading buyers and agents.

Source of Trade Information

Websites
1. www.commerce.nic.in for import and export figures, policies on SEZ, Indias stand on WTO etc 2. www.dipp.nic.in for policies related to investing in India

3. www.europa.eu for information on European Union 4. www.kompass.comBuyers & sellers, Company profiles
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5. www.dnb.co.in for buyers,sellers ( mainly US) . They also offer Factoring services 6. www.oanda.com for news on Currency, conversion rates etc 7. www.infodriveindia.com for information on actual importers, shipment data from Indian Ports 8. www.cia.gov.in for country information (please go to the section World Factbook)
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Internal Sources: Your own files newspapers, trade journals

Company records

Institutional Sources:
The institutions which provide market information are listed below: 1. Libraries 2. Foreign Missions 3. International organizations like FAO, OECD, UNCTAD, ITC, etc. 4. Government agencies

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5. Chamber of Commerce

6. Trade Associations
7. Research Institutions 8. Bank 9. Documentary sources Bibliographies, Directories, Trade Statistics, Newspapers & Journals.

A list of selected sources of information (International) is given below:

UN

a) Yearbook of International Trade Statistics

b) World Trade Annual c) Commodity trade Statistics

d) Country-wise Reports

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Food & Agriculture Organization (FAO)

a) Production Yearbook
b) Monthly Bulletin of Agricultural Economics & Statistics. Economic Intelligence Unit, London (EIU) a) Quarterly supplements on Countries b) Annual Supplements on countries

c) Special Reports on countries & commodities (Adhoc)

Banks Report on countries by Lloyds Bank Barcleys Bank, Chase Manhattam Bank.
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OECD Publications a) Foreign trade statistical series

b) Annual Economic Survey for different countries.

International Monetary Fund (IMF) a) Annual Report b) Direction of Trade c) International Financial Statistics World Bank

a) Country Reports
b) Annual Reports
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Yearbooks & Directories a) Europa Yearbook : A World Survey b) Kellys Directory of Manufacturers c) Corners Reference Book for World Traders d) Owens International Register (Importers, Manufacturers of Developing Countries) e) Financial Times Yearbook, Business Information f) Commodity Yearbook, (USA) g) Stores of the World

Exporters,

UNCTAD / WTO / ITC a) Forum (Quarterly) b) Market Survey Reports c) Monographs on Trade Channels 15 d) Handbook of International Trade and Development Statistics

US Department of Commerce a) Overseas Business Reports b) Commonwealth Trade (Annual) c) Wool Intelligence (Quarterly) EU

Official Journal of European Community

International Customs Bureau, Brussels International customs Journal on countries (Doannes) Individual countries a) Plan Document, (b) Statistical publication c) Investment Laws & guidelines, (d) Trade Statistics, (e) Publications from leading chamber of commerce and Industry & trade Associations. 16

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