How to Analyze a Product or Service's Export Potential
How to Analyze a Product or Service’s Export Potential
Is your companyās product or service a good candidate to sell in overseas markets?
PRODUCTS
What is your product or serviceās export potential? There are several ways to evaluate the export potential of your product or service in international markets. The most common approach is to examine the domestic sales. If your company is successful in the U.S. market, there is a good chance that it will also sell in markets abroad, at least in those markets where similar needs and conditions exist. If you are a wholesaler in the United States or if you want to be a manufacturerās representative, youāll have the means of assessing domestic sales. If you have a startup but havenāt sold anything yet, youāll at least have a good sense of future prospects.
Another way to assess your companyās potential in exporting is by examining the unique or important features of your product. If those features are hard to duplicate abroad, then itās likely that your product will be successful overseas. A unique product may have little competition so demand for it may be quite high. However, even if your product is not unique, donāt be discouraged. Many products and services have competitors in their targeted overseas markets.
Advantages of āMade in the USAā:
- Innovative, creative, cutting edge
- Flexible and prepared to modify products⯠and services
- High quality, durable, safe
- Positive brand values and awareness
- Reputation for excellent after-sales service and warranty coverage
- Creative marketing materials
- Easy to reach and communicate with
- Honest, ethical business dealings
What is your companyās exporting goal? Whatever your goal, consider whether the expected benefits outweigh the costs. If a feature are hard to duplicate abroad, then itās likely that your product will be successful overseas.
Product licensing. Some classifications of products require special approval from the U.S. Department of Commerce before you export and some of those products require export licenses.
Required training. Products that require training to operate place a greater responsibility on your company and distributor or agent, and you must decide how to support that training.
After-sales service. Products that require considerable after-sales support must be handled by a distributor or agent who is well positioned to provide such a service. Providing the means to send the product back to you for repair and replacement is another option.
Product distinctiveness. Products that have unique features enjoy a competitive advantage and better reception in foreign markets. Such unique features include patents, superior quality, cutting-edge technology, and adaptability.
Rather than filling the occasional order from an international buyer. You could sell internationally via your own website or a third party e-commerce site. So-called passive or reactive exporting may be the dominant model among U.S. small and medium-sized enterprises. There is nothing wrong with this method of exporting, and it usually does not require elaborate planning or deep reflection on motives or capabilities. However, to take your business to the next level of performance, expertise, and growth, a strategic approach is needed. The first step is to create a written export plan.
SERVICES
The United States is the worldās premier producer and exporter of services. As the largest component of the U.S. economy, the service sector includes all private-sector economic activity other than agriculture, mining, construction, and manufacturing. The service sector accounts for 90 million jobs, which is nearly 80 percent of the private-sector gross domestic product .
In the future, the service sector will loom even larger in the U.S. economy. Small and medium sized entrepreneurial companiesāthose employing fewer than 500 employeesāoverwhelmingly lead this service-driven business expansion. Over 4 million small U.S. service companies account for more than 16 million jobs. Although small service companies make up most of the service sector, many of the most prominent U.S. service exporters are large companies.
The dominant role that services play throughout the U.S. economy translates into leadership in technology advancement, as well as growth in skilled jobs and global competitiveness. Major markets for U.S. services include the European Union, Japan, and Canada. Mexico is the largest emerging market for U.S. service exports.
Exporting services provides unique challenges, because the export is often invisible or intangible:
- Most likely this will mean travel. Without a tangible product, youāÆmay have to make special efforts to elevate theāÆprofile of your company and the credibility ofāÆyour statements about its services.
- Awareness of labor requirements. You may beāÆin-country for an extended period of time, orāÆyou may need to hire local workers. Be awareāÆof your legal obligations, such as securingāÆwork permits.
- Intensive market research. MarketāÆresearch methodologies and businessāÆopportunity indicators are unique for serviceāÆcompanies,āÆoften requiring more in-depthāÆand detailed activities, information, andāÆintelligence than are routine forāÆexporting goods.
Examples of High Growth Service Exports
Travel and Tourism
The largest single category within the U.S. service sector encompasses all travel- and tourism-related businesses, including recreational and cultural services. The industry is diverse andāÆencompasses services in transportation, lodging, food and beverage, recreation, and purchase of incidentals consumed while in transit. Export sales for this sector in 2018āÆwere $256 billion.
Pollution Control Services
Pollution control, waste management, remediationāÆof contaminated property, designāÆand operation of keyāÆinfrastructure and provision andāÆdelivery of pollution control resources is growing. The industry has evolved ināÆresponse to growing concern aboutāÆthe risks and costs of pollution andāÆabout the enactment of pollutionāÆcontrol legislation in the UnitedāÆStates and around the world.
Transportation Services
This sector encompasses aviation, ocean shipping, inland waterways, railroads, trucking, pipelines, and intermodal services, as well as ancillary and support servicesāÆin ports, airports, rail yards, and truck terminals. Transportation is the indispensableāÆservice for international trade in goods, moving all manufactured, mining, andāÆagricultural products to market as well as transporting people engaged in business, travel, and tourism. If you are welcoming international tourists to yourāÆservice business, you are generating export sales.
Banking, Financial, and Insurance Services
U.S. financial institutions are very competitive internationally, particularly when theyāÆoffer account management, credit card operations, and collection management. U.S. insurers offer valuable services, ranging from underwriting and risk evaluation toāÆinsurance operations and management contracts in the international marketplace.
Telecommunications and Information Services
This sector includes companies thatāÆgenerate, process, and export such electronic commerce activities as e-mail,āÆfunds transfer, and data interchange, as well as data processing, networkāÆservices, electronic information services, and professional computer services.āÆThe United States leads the world ināÆmarketing new technologies and enjoysāÆa competitive advantage in computerāÆoperations, data processing andāÆtransmission, online services, computerāÆconsulting, and systems integration.
Education and Training Services
Management training, technical training,āÆand English language training are areasāÆin which U.S. expertise remainsāÆunchallenged. The export market for suchāÆtraining is almost limitless, encompassingāÆmost industry sectors for products and services.
Commercial, Professional, and Technical Services
This sector comprises accounting, advertising, legal andāÆmanagement consulting services. The international marketāÆfor those services is expanding at a more rapid rate than theāÆU.S. domestic market. Organizations and business enterprisesāÆall over the world look to U.S. companies, as leaders in theseāÆsectors, for advice and assistance.
Entertainment
U.S.āfilmed entertainment and U.S.ārecorded music haveāÆbeen very successful in appealing to audiences worldwide.āÆU.S. film companies license and sell rights to exhibit filmsāÆin movie theaters, on television, on video cassettes, andāÆon DVDs and CDs. U.S. music has been successful in bothāÆEnglish-speaking and non-English-speaking countries.
Architectural, Construction, and Engineering Services
The vast experience and technological leadership ofāÆthe U.S. construction industry, as well as special skills ināÆoperations, maintenance, and management, frequentlyāÆgive U.S. companies a competitive edge in international projects. U.S. companiesāÆwith expertise in specialized fields, such as electric-power utilities, construction,āÆbioremediation, and engineering services, are similarly competitive.
E-Business
This sector, which can be service or product oriented, is expected to growāÆdramatically. It is estimated that there are already 600 million Internet usersāÆworldwideābut that figure represents only a small chunk of the worldās population. Chinaās B2C e-commerce platforms have become a popular means for ChineseāÆconsumers to purchase U.S. brands.
Service exports may be delivered in support of product exports, and you might find it sensible to follow the path of complementary product exports. Many large accounting and banking companies have exported by following their major international clients abroad and continuing to assist them in their international activities. Smaller service exporters who cooperate closely with manufacturing companies are operating internationally and aim to provide service support for those manufacturers abroad.
Also, your service company may seek affiliation with a foreign company. An agent, representative, or joint venture relationship could prove beneficial to your company. An indigenous service company already has knowledge of the applicable regulations and restrictions, as well as the identities of primary participants, potential clients, and competitors, and other aspects of marketing in a particular country. In addition, the indigenous company will have market research, exposure, and contacts that you can use to your advantage.
U.S. Commercial Service offices in foreign countries can help you sell your services in specific markets. Many of the offices have local buyer-focused websites and social media networks that can promote your company.