The first step in expanding overseas: overseas market research

Overseas market research is a very important foundation for expanding overseas. With the yen continuing to weaken, an increasing number of Japanese companies are considering entering the export business, which they have not handled before.
However, whether a company is used to expanding overseas or doing so for the first time, there is some anxiety as failure can mean stumbling over the first step in trade.

In this article, we will briefly introduce the "basics of overseas market research" and the key points that Japanese companies should keep in mind when conducting overseas market research.

The Need for Market Research

Market research is necessary to ensure success in expanding overseas while keeping unnecessary costs to a minimum. The difference with domestic market research is that it takes a considerable amount of time and cost due to the many unknowns. Please refer to the following to alleviate your concerns.

6 Market Research Analysis

There are six analysis subjects for market research: 1) Company analysis, 2) Market analysis, 3) Consumer analysis, 4) Competitor analysis, 5) Partner analysis, and 6) Legal and regulatory analysis. All but 1 require analysis that is different from that in Japan.

1) In-house analysis

First, start with step ① and review your company's strengths and weaknesses. By taking this step, you will be able to return to basics when you become overwhelmed with information in steps ② to ⑥.
Specifically, you should reflect on whether your company has experience exporting overseas, whether it has employees with the relevant knowledge, the funds available for exporting, the strengths of your products, and your company's recognition overseas.

② Market analysis

Next is ② market analysis. We will broadly investigate whether the countries and regions where our company's strengths identified in ① can be utilized are suitable. This is to avoid omissions and overlaps, and to prevent irrelevant market research.
Specifically, you should not only research the market size of the product category, but also the macro research of the country or region's economic and political situation. When doing so, use statistical materials and data published by public institutions such as the local government.

③Consumer analysis

Next is ③ Consumer analysis. We will investigate whether we can draw a picture of consumers in the country set in ② actually picking up our company's products. This is because even if we find out how large the market size is in ②, the reason why consumers pick up the product may be completely different from Japan. We must be flexible in responding to the unique tastes and culture of each country.
Specifically, it is necessary to accurately set the key buying factor (KBF), decision maker (DMU), and purchasing channel.

④ Competitive analysis

Next is ④ Competitive analysis. If there are already many competitors, it is essential to differentiate yourself from your competitors, so first make a list of your competitors. Items to consider include product sales, price, production method, organizational structure, etc. It is a good idea to understand what is selling well and add information to the consumer analysis in ③.

⑤Partner analysis

Next is ⑤ Partner Analysis. When expanding overseas for the first time, partnerships with local companies are extremely important. This is because there are benefits to entrusting local companies with distribution and production operations, as well as providing information that can only be obtained locally. Partner analysis is carried out together with ④ Competitive research, and we look at whether the company is accustomed to international business.

⑥Legal regulations analysis

Next is ⑥ analysis of legal regulations. Restricted raw materials and other items vary by country, so double-check to see if your company's products are subject to regulations. If licenses or permits are required, find out how long it will take to obtain them and make a plan with plenty of time. Legal systems overseas are frequently revised, so keep up with the latest information.

Points to note when conducting overseas market research

When conducting overseas research, there are also language and geographical aspects to be aware of.

1) Language issues

One of the biggest obstacles in conducting overseas market research is the language issue. While statistical data released by local governments and public institutions is useful for desktop research, it is often written in the local language.
Not only are the official languages English, Spanish, and French used in Asian and African countries, but official documents are often written in the local language. In addition, business-level language skills are essential when actually visiting the local market for market research.

It's not a problem if you have people in your company who can speak the local language, but when it comes to minor languages, it's difficult to keep such people on hand. That's why some companies hire market research personnel in the local area in advance, or outsource the work to an external company in Japan that specializes in overseas market research. Consider it an investment in the cost of conducting market research from scratch in-house, and try using external services.

2) Geographical issues

 Along with language, geographical issues are also difficult. Depending on the country, religions and ethnicities vary from area to area, so physical market research in the same area alone is not enough. Even if you can find the route from the airport to the research site on the Internet, when traveling within the country, you may have to use local routes that are difficult for Japanese people to understand, which is also risky in terms of safety.
In order to minimize unnecessary time and risks, it is a good idea to actively consider using external services such as those mentioned above.

For overseas market research

In this article, we have explained the basics and precautions for Japanese companies to take when conducting overseas market research. As mentioned at the beginning, overseas market research is a difficult task that must be approached carefully, but it is also true that if successful, it has the potential for unpredictable high returns. Following the steps carefully will help your company take a leap forward.

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