Marketing Research Vs Partner Search

How to properly organize work when entering a new market for the company.

When a company begins to explore a new market for itself - regardless of the criterion - product, geographic, etc., it is necessary to answer one simple question - whether it is necessary to conduct marketing research or whether it is possible to immediately look for counterparties who will distribute the product on this market. Answering this classic marketing question may require certain efforts from the company's management - the multitude of combinations of various factors influencing the decision on the optimal scheme for entering a new market is difficult to assess. Especially if there are accompanying stimulating measures that distort the businessman's train of thought like a "black hole" distorts light.

About stimulating measures that influence the strategy of researching a new market

In theory, there are many such measures, but now for small and medium-sized businesses, the issue of participation in support measures for export-oriented enterprises implemented at the regional level by special structures is highly relevant. Export support centers in the constituent entities of the Russian Federation have a certain set of funded or co-funded services, which include marketing research of foreign markets and searching for partners in these markets.

What is the problem of making the right choice?

The main "trap" is that marketing research is co-funded (20% of the cost is paid by the service recipient - a small or medium-sized business entity), while the search for business partners is a free service.

Now let's calculate. The cost of marketing research of a foreign market varies greatly depending on the geography and the actual product. The range is from 80 to 500 thousand rubles. Average values are 120 - 200 thousand rubles. We are talking here specifically about marketing research of the market, taking into account the requirements of government structures and achieving the interests of the end customer - the business, and not preparing a formal report by a student-outsourcer for 50 thousand rubles for any market (of which he will be paid 10) and 10 days.

It turns out that the business bears a cost - 25 - 40 thousand rubles, in rare cases - more than 50 - 80 thousand rubles. This is the payment for one marketing analyst's work for a month, actually (taking into account all tax and social costs), but the business does not see the value and is often not ready to pay. Employees of export support centers cannot demonstrate this value, as they are rarely deeply immersed in the issues of marketing research and business decision-making.

Hence, there is a natural desire for the service recipient to choose the search for partners - on the principle - we lose nothing. Moreover, almost always the businessman is sincerely convinced that his product is simply super competitive and finding partners for its sales is easy and simple (strangely, for some reason this task has not yet been solved on their own). What other research - "been there, done that", they buy in Russia, they took it to Kazakhstan a couple of times, which means that conditional France or Iran are waiting for us with impatience tomorrow.

If a business is ready to order research, it should cost a minimal amount. Under pressure from such customers, employees of export support centers find cheap, and therefore almost certainly low-quality options. Receiving final reports, which at best are simply a set of tables with data on the country's market (starting with an analysis of aggregates like gross product and dynamics of population income), and at worst - rewritten old reports with adjusted time series, without any sensible interpretation of information, businessmen become convinced that all these studies are a useless thing for which they also ask for money.

This creates a vicious circle that can be "broken" only by convincing the business that marketing research has value, but also has a corresponding cost.

The search for partners is, of course, a free service, but is it necessary to be guided by the principle of not looking a gift horse in the mouth? It is quite logical that since this service is not co-financed, it is less costly for the state, which means the contractor will not earn much on it. Therefore, if objectively the search for partners for a particular situation is difficult, then a responsible contractor will not take it on (one who values reputation and is in demand), and an irresponsible one will not yield results. That is, the outcome will be dissatisfaction on all sides - the businessman will not get what he wants, the export support center will "deal with" the negativity, and the contractor will run away and not return, even if he is forced by stick methods to "finalize" an obviously losing project.

Unfortunately, so far, regional structures for the most part have not developed an effective scheme for organizing the provision of such services as marketing research and partner search. A typical stalemate situation is this - a small business entity demands a market research of Iran (conditionally) for its products, which only leaves the region on major holidays, and the center has no way to justify a refusal. A reasonable entrepreneur should understand that he can insist, but what will be obtained as a result? Maybe it's worth relying on the objective necessity of a certain service for one's markets and products, and not grabbing "freebies," ultimately leading the situation to the form of "loss (business) - loss (export support center) - loss (service contractor)"?

Marketing Research

Based on the available experience in conducting marketing research (both on orders from regional export support structures and under direct contracts with businesses - small, medium, and large), we can formulate some following "symptoms" indicating the advisability of market research, as well as highlight the advantages of this tool relative to partner search.

Let's start with the advantages.

Marketing research of the market provides a wide range of information that can be used by the company to solve a wide range of tasks. Often these tasks go beyond the actual goal of mastering this market. Many researched markets surpass the Russian one in their level of development, so a kind of benchmarking occurs - based on the data obtained, it is possible to increase the competitiveness of products in the domestic market as well. It is completely normal if marketing research indicates the need to adapt the product or even improve its quality, which will require changes in the technological process.

During marketing research, an assessment is necessarily made not only of the market as such but also of the barriers that stand in the way of the exporter. For some markets, barriers related to commercial activity are more significant (for example, different distribution schemes or specific consumer behavior motives), but in the context of economic globalization, such differences are gradually being erased. However, administrative barriers retain their importance, and for some markets (for example, for the countries of the European Union), they are only increasing due to a high level of regulation. It is unreasonable to look for partners in the EU market if the company does not understand the entry barriers and is not ready to overcome them (not abstractly, but with an understanding of its capabilities and the economics of the project).

Another plus of marketing research is the higher level of objectivity of the work performed. After all, a geographic market is an object of a sufficiently high order, which is studied from different sides. In particular, according to REC standards, it is prescribed to provide a list of potential partners in the format of cold contacts, which roughly outlines the circle of possible counterparties in this market in the future.

When a partner search service is provided, the customer is given information on only 5 companies that have expressed interest in discussing the export project. Is this a lot or a little? It depends on the quality of the contacts and the specifics of the market, but usually it is quite enough. The problem here is that the result in the form of a supply contract will be achieved only if the product is ready for the market. If it takes many months to adapt, certify, and resolve numerous legal issues, the relevance of the acquired "warm" contacts will drop significantly.

Also, in this case, the customer receives only 5 potential partners. It is difficult to assess from them how much they reflect the market as a whole. It is not always completely clear why they answered "yes" to the project executor and whether they will want to communicate further with the company's representatives in a productive manner.

There is a good example about fish and a fishing rod - that in the first case a person is fed for one day, and in the second - for a lifetime. Searching for partners is fish - you can conclude a contract, but understanding of the market's workings and the value of this particular contract will not increase. Marketing research is a fishing rod that will allow you to build a long-term strategy for daily fishing. If you get fish, you will want more tomorrow, but you don't know how to catch it. It is very easy to become dependent on those who give such fish.

After this analogy, we can move on to the symptoms that describe a situation where marketing research is more appropriate.

It is advisable to order marketing research of the market if the company is entering a non-standard geographic market for it, the level of knowledge about which is low. It is not enough not to know the problems; you need to know the procedure for working in the market to say to yourself - I know the market.

At the same time, marketing research will give a greater effect if the customer has the competence to interpret it correctly. Of course, it is necessary to specify in the terms of reference not only the provision of statistical information about the market but also the design of basic steps for entry, however, the main body of data still needs to be able to "read". A honest answer is very important - will we understand the marketing research if it is written in a sufficiently formalized and scientific way? Often, contractors for export support centers are organizations and people more from science than from practice. You need to be able to work with their materials and writing style.

The product is very important - the less standard and more B2B it is, the stronger the need for marketing research. Let's take a conditionally simple geographic market - Kazakhstan, almost Russia. It is easy to answer the question of when marketing research is more important - when wanting to sell sunflower oil in Kazakhstan or industrial separation equipment.

Of course, there is no need to conduct marketing research for the sake of research, it never hurts, but the question of time and resource costs remains. Sometimes it really makes sense to immediately move on to searching for partners.

Partner Search

The high demand for the partner search service cannot be explained solely by its free nature. It really has many advantages that business values, especially at the micro-enterprise level.

To begin with, the value of this service is more transparent and its content is clear to all parties in the process. A "warm contact" is a "warm contact" even in Africa (now African markets are also starting to gain popularity), it is problematic to simulate it, and the absence of the necessary result cannot be veiled by scientificity and thousands of useless numbers as in marketing research. On the other hand, we also understand that the degree of "warmth" can vary, and both the contractor (failed to realize the potential of Your product) and You yourself can be to blame for its low temperature - the product in the given market does not have pronounced prospects and advantages.

The second point is the speed of provision. If marketing research usually requires about 2-3 months, then partner search is implemented within a month. The difference is not big, but noticeable.

A plus of partner search is also that the contractor company takes on functions that some enterprises, especially at the micro-level, simply will not be able to implement, even if they are provided with a good marketing research with a wide list of "cold contacts". Simply put, a small business entity may lack employees with the necessary language skills, knowledge in the field of business communication with representatives of a given country, and so on.

The partner search service combines very well with participation in business missions. If you are traveling, especially to a distant country, you can pre-select partners for face-to-face negotiations. This is effective, and besides, it is easier for the contractor, since arranging a face-to-face meeting is always less labor-intensive, and the potential partner will be more loyal.

In general, partner search as a service has proven itself well in situations where the company knows the market quite deeply and has a commercial proposal targeted for it. If a ready-made marketing research can be "placed underneath," even if conducted on one's own, the chances of success will be very high.

You can also immediately move on to searching for a partner if we want to sell in a market close to us in terms of consumer behavior and the absence of barriers (for example, the Customs Union countries), the product itself is simple and to a greater extent oriented towards the end consumer. It is usually easier to work with goods for FMCG markets than with an industrial group.

An obvious sign that you need to "take" partner search is requests for your product from companies in this market or geographically adjacent with a similar structure and consumer behavior strategy.

Finally, if the service customer is a classic micro-enterprise without "high" goals for the export market, but simply has a desire to diagnose opportunities and communicate with potential partners through an intermediary, then such a choice is also logical. One only needs to understand that in this case, either a simple product or a very competent contractor in a specific geographic market is needed, and preferably a combination of these conditions. After all, export supplies require certain minimum parameters from the exporter itself - production and financial capabilities in any case. For the project to take place, even with external support, they need to be built up.

Thus, there is no inherently correct choice between marketing research and partner search. Everything is determined by the situation. The main thing is - if the choice is related to the use of state support measures, one should not proceed from the free nature. This is a losing strategy. It is necessary to realistically assess one's needs and capabilities in a specific export project.