Developing Product Market Intelligence

1. Developing Product Market Intelligence Madhurjya K Dutta Program Manager Trade & Investment Facilitation, Mekong Institute

2. Match making is important Most successful exporters around the globe agree • Identifying the right markets for the products • Developing the right market entry strategy before entry Therefore research on overseas markets is essential to avoid frustration. SAVE FROM EARLY DIVORCE

3. In a meeting THERE ARE 220 COUNTRY MARKETS • Geographic LUXEMBOURG 80,000 US$ BURKINA FASO US$ 300 per capita GDP WHICH MARKETS SHOULD I GO? WHO ARE MY TOP 10 TARGET MARKET?

4. Poor Market Selection ! • Tang in France • Positioned as a substitute for orange juice at breakfast, but the French drink little orange juice, and almost none at breakfast • Pop-Tarts in Britain • Percentage of British homes with toasters is significantly lower than in U.S., and the product was too sweet for British tastes • Cake mixes in Japan • General Foods spent millions trying to introduce packaged cake mixes, but only 3% of Japanese homes had ovens

5. WHAT ENTRY BARRIERS MY PRODUCT WILL FACE ? Import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, export subsidies, technical barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc.

6. WHO ARE MY COMPETITORS THERE IN THE FOREIGN MARKET ? WOULD YOU LIKE TO FIGHT WITH ARNOLD?

7. HOW OPEN THE TARGET COUNTRY MARKETS ARE ? VENEZUELA CHAD CONGO

8. WHICH MARKETS SHOULD I GO? WOULD THAT SUIT MY REQUIREMENTS? WHETHER MARKET DEMAND IS STABLE ? WHAT ENTRY BARRIERS MY PRODUCT WILL FACE ? WHO ARE MY COMPETITORS THERE IN THE FOREIGN MARKET ? WHAT ENTRY TARIFF RATE I CAN EXPECT WHAT ENTRY TARIFF MY COMPETITORS WOULD BE HAVING ? WHAT NON TARIFF BARRIERS I CAN EXPECT ? HOW OPEN THE TARGET COUNTRY MARKETS ARE ? WHAT ARE THE CULTURAL DIFFERENCE I WOULD FACE

9. What then the intending exporters will do !!! DO RESEARCH LIKE ACADEMICIAN OR , OR …………

10. Anticipate ahead of others • ANTICIPATE : Playing in a foreign market implies competing with exporters from all over the world as well as with local suppliers, all of which implies challenges that can be anticipated and surmounted. • ANALYSE : Therefore, exporters’ research agendas must consider an analysis of competitors, potential customers and consumers, and other influential market forces. • DEVELOP KNOWLEDGE : Investigating routes to market, logistics and regulation concerning entry into the chosen market can also facilitate planning practical aspects.

11. The role of market intelligence in export strategy • Market identification: Identifying prospective export markets and high-opportunity segments • Need understanding : Understanding consumer behaviour and how a product can fulfil or create a need • Decide entry: Identifying the best market entry strategy and product introduction tactics • Know competitors: Getting insights into competitors’ strategies, operations, strengths and weaknesses • Market positioning : Finding out the key success factors to play and win in that specific market. Conducting market research becomes an indispensable business tool

12. Product market intelligence • Initial Assessments • Indentifying a product or product group. • Product or product group situation • Current selling proposition • Understanding • Target markets • Market • characteristics • •Size/growth • • Trends • • Buyers • • Competitors • • Regulations • • Pricing • Openness of • market • • Distribution • channels • •Promotion Analyzing strengths and Weaknesses SWOT •Financial resources • Human resources •Production capacity •Quality levels • Commercial practices Identifying & selecting attractive markets Global supply and demand Trends •Trade flows • Market segments •Market access Export Strategy Development Market intelligence Product

13. Queries of an exporter • An exporter of pineapples is looking to diversify its client base…Which country should be targeted? • A shoe exporter needs an overview of trade barriers he/she would face for exports to Malaysia… • A trade mission needs to know our top export products to Germany… • Where could you import automotive components from?Who are the largest suppliers in your region? • What is the current trade between your country and the United States? Initial answers to these questions and many more are easily found in Trade Map

14. Trade Mapwww.trademap.org • Online applicationto produce reportsoninternationaltradeflows • Everyproduct (HS-6) to and from (almost) every country • Basedonthelargesttradeflowdatabase in theworld • User-friendly interface, report-ready outputs • Flexibilityforcustomisingreports, analysis • Graphicpresentation of outputs tofacilitateanalysis

15. Key characteristics • Where does the data come from? • National Authorities • COMTRADE, produced by the United Nations Statistics Division database • What is Trade Map’s geographical coverage? • Information for over 220 countries and territories using data reported by 160 countries and territories • Data for non-reporting countries is taken from mirror statistics • What is Trade Map’s product coverage? • For the Harmonized System • over 5,300 products at the 6 digit level • For the National Tariff Line • up to 30,000 products for 90 countries (~84% of world trade)

16. Data classification • The Harmonized System (HS) • Is used as a basis for the collection of Custom duties and international trade statistics by almost all countries, representing about 98% of world trade • Developed by the World Customs Organisation – WCO (www.wcoomd.org) • Harmonised different existing nomenclatures • Adopted by almost all countries in the world • Basis for all trade conversations internationally

17. More and more specific HS-2 HS-4 HS-6 • The Harmonized System (HS) • Is a numerical classification system of productsused as a basis for international tradestatistics by almost all countries. • isharmonized up to six digits (HS-6) - You can compare HS data between countries. • Is broken down into 3 clusters: • HS-2: the chapter of the good (sector) • E.g. 09 = Coffee, Tea, Mate and Spices • HS-4: groupingswithin the chapter (sub-sector) • E.g. 0902 = Tea, whether or not flavoured • HS-6: product(s) within the grouping (productlevel) • E.g. 090210 = Green tea (not fermented)

18. HS-2 HS-4 HS-6 NTL • National TariffLines (NTL) codes • Classification of goodsafter the 6 digit level of the Harmonized System classification. • National TariffLines go from 8 digits to 12 digits. • Why use the HS and NTL classification? • The HS classification isstandardisedinternationally • The NTL classification isnot standardisedinternationally. Each country decidesitsownfurther classification after the Harmonized System. Hence, National Tariff Line codes canbedifferentfrom a country to another. More and more specific

19. Data classification HS(International standard) 08 Ediblefruit and nuts; peel of citrus fruitormelons. 08.04 Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, freshordried. 08.04.50Guavas, mangoes and mangosteens. Australia 08.04.50.00Freshordriedguavas, mangoes and mangosteens Japan 08.04.50.01.1 Mangoes, fresh 08.04.50.01.9 Guavas and mangosteens, fresh UnitedStates: 08.04.50.40.40Mangoes, fresh, ifenteredduringtheperiodfromSeptember 1, in anyyear, tothefollowingMay 31, inclusive 08.04.50.60.80 Guavas and mangosteens, fresh, ifenteredduringtheperiodfrom June 1 toAugust 31, of thefollowingyear, inclusive 08.04.50.80.00 Guavas, mangoes and mangosteens, dried NTL(NONstandard)

20. http://www.doingbusiness.org

24. WHAT ARE THE CULTURAL DIFFERENCE I WOULD FACE In a meeting American: would want a prompt answer Scandinavians: would take their time • Geographic Latin American: would likely to interrupt and argue Japanese: would close eyes and may sleep even Arabs: would leave table and attend tel call Mexican: would arrive late Italian : would try to make impressive statement Germans: would insist on background information Chinese : would argue among themselves www.geert.hofstede.com-power distance,individualism,masculinity/feminity,uncertaintyavoidance,long term orientation

25. Group assignment IDENTIFY THE HARMONIZED SYSTEM CODE OF THE PRODUCT YOU WANT TO FOCUS ON ANALYZE WORLD TRADE FOR YOUR SELECTED PRODUCT CHOOSE AN IMPORTING COUNTRY AND TRADE PERFORMANCE FOR YOUR SELECTED PRODUCT FIND IMPORT RELATED NON- TARIFF MEASURES FOR THE PRODUCT IN THE DESTINATION COUNTRY Group presentation

26. Steps Identifying market Login in trademap (www.trademap.org) Select a product HS code of your country (exporter) use 6 digit code Decide/Indentify importer (country) of the product (e.g United States of America) Partner (your country /exporters e.g Thailand) Select Trade indicators- to identify e.g USA imports from Thailand- value, share Importer (USA) import from world- value Identify top exporters of the product (HS code) to the destination country- list three top exporters – imported value and share. Non Tariff measures Go to market access map- Quick search- Non tariff measures E.g a Hongkong exporter of T shirts (HS 610910)wants to know NTM in USA for T shirts. View results by NTM categories-Reporter field- Hongkong, Partner –USA, Product/HS code, exporter. then proceed. Cost of doing business- go to www.doingbusiness.org Find ease of doing business in the destination country, select the country to observe ranking, trading across border in that country.