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Step 7: Selecting and researching potential countries/markets abroad

You are here:Step 7: Selecting and researching potential countries/markets abroad > Preparing a research brief > Evaluating the cost/benefit of export marketing research



Evaluating the cost/benefit of export marketing research


You need to weight up research benefits against costs

As export research involves some (or, at times, even considerable) financial outlay, it is important that the company evaluate the cost/benefit of such research. It may be difficult to quantify some of the benefits of market(ing) research and to weigh them up against a given set of costs but the export firm should, in general, have certain criteria against which the effectiveness of the research effort can be measured.

Deciding on reasonable market research costs

The principal benefit of market research is improved decision-making. Two possible criteria for judging the reasonableness or otherwise of the cost of market research are:

  1. The number of profitable sales that the firm achieves by acting on the conclusions and recommendations contained in the research report
  2. The amount of money that the research study saves the company by preventing it from making the wrong marketing decisions

Thus, the value of market research lies not only in its ability to save money and identify profitable sales opportunities but also in its ability to identify problems, competition, and other threats which might cause the company to lose money. In other words, it can help make prudent marketing decisions but can also reduce the possibility of unwise decisions and investments being made.

The question of what constitutes reasonable cost will ways be relative to the firm's total resources and to its involvement (present or proposed) in the particular export market(s) under investigation. What may appear to be a very high cost to a small exporter with limited overseas involvement may constitute but a fraction of the export market research budget of a large exporter with substantial, long-term foreign market commitments.


Take all costs into consideration

An important aspect to bear in mind when determining the cost of market research is that all costs should be taken into consideration. Even information that is 'free' or can be acquired at a nominal charge (e.g. government trade statistics) incurs some expense in terms of analysis, organisation, or storage. In the light of this, companies that conduct their own in-house market research must be discerning in their choice of publications and journals. Not only must the actual subscription cost be considered but also the cost of management and researcher time in reading through an often large number of publications.

A hidden cost in respect of market research is that of lost opportunities. In some cases, it may be critical to move quickly into an overseas market in order to forestall the competition; thus, taking considerable time over an exhaustive study of the market could result in the market opportunity actually being missed.

Finally, the returns in terms of hard data must be weighed up against the costs. It should be noted that there are areas of research that yield only mediocre results in terms of accuracy, e.g. information about people's purchasing intentions. Such research is costly to conduct and difficult to translate into reliable sales forecasts. Ultimately, the usefulness of market research can be judged by whether or not risk is reduced and the results provide an adequate basis on which effective export marketing decisions can be made.

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Step 7: more information

Step 7: Selecting and researching potential countries/markets abroad
      Preparing a research brief
            .Export research budget
      Implementing the research brief
      Preparing a research report


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More information on Step 7
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
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Step 15: Producing the goods
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Step 20: Reviewing and improving the export process
Step 21: Export Management
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