Export diversification has long been an important aspect for many developing and developed countries, as well as for most export companies. In essence. Export diversification means diversifying the export basket (products) and penetrating new markets.
When done right, this valuable strategy can not only help an export company succeed amidst strong competition but can also help a country improve its manufacturing and export performance and meet the demands of a dynamic global economy.
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To cut off the chase, here the critical takeaways from the infographic below provided by Alba Logistics, discussing the primer on five crucial aspects of export diversification that logistics operators and export companies should consider to stay afloat and succeed in today’s business environment.
- New Target Market
Export diversification typically means venturing into a new market which for the most part include:
- New industrial sales markets in addition to the traditional outlets.
- Exports to other developed and developing countries.
- Exports to the emerging markets of Asia, Latin America and Africa.
However, entering a new target market still requires thorough consideration of many factors, such as the viability of the market, existing regulatory and entry barriers, and the presence of competitors in the target area. Taking these factors into consideration can help an export company determine which target market meets their requirement, and draw up a strategic plan that will them land their products efficiently.
- Your USP and the Competition
Export diversification also requires an in-depth internal and external research and analysis, i.e., identifying the Unique Selling Proposition (USP) of the export company, and the leverage that their competitors have on their new target market. Doing so will allow for benchmarking on critical success areas such as sales, growth, and sales force that will determine if the company can compete in the new market.
- Entry Option
An export company can enter a new market through different ways. These include:
- Partner with distributors
- Sell through agents
- Buy or merge with a local company
- Build from the ground (establishing a company on the new target market country)
Each entry option has their own merits and demerits, so consider those first and see which one fits the capability of your business.
- New Connections
Having reliable networks in a new market is a vital factor in market intelligence gathering, as well as in finding potential customers and business partners. They are also an excellent resource for understanding the local culture, trends, and business practices.
Some ways to find new connections in a new market are:
- Networking (either online or in-person)
- Partnering with local agents, distributor or suppliers
- Partnering with another company
- Establishing a new thought leadership
- Joining associations
- Through digital marketing
- Logistics Operations
Finally, a successful export diversification requires an efficient and productive logistics operations. Transporting goods to a new and foreign territory is much more complicated than delivering new products domestically. As such, your company’s competitive advantage should be supported by capable and efficient logistics operation to ensure a successful diversification.
Check the infographic below to learn more about export diversification.