Market research for would-be exporters
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CTA. 2008. Market research for would-be exporters. Rural Radio Resource Pack 08/5. Wageningen, The Netherlands: CTA.
Permanent link to this item: http://hdl.handle.net/10568/57249
What kind of information do farmers need if they want to export their produce internationally, and how to get it
Market research for would-be exporters Cue: Have you ever woken up in the morning with a fantastic idea for a new business ? or perhaps lain awake thinking about a new idea that is sure to be a success? If you want to follow up your idea, what?s the next step? We may rush straight in, determined to make our idea a reality as quickly as possible. We sometimes even avoid thinking about the possible problems, just praying the idea will work. Occasionally we might be lucky, but without proper preparation, failure is a strong possibility. A better approach may be to start with some market research. We need to find out whether our new venture is really going to meet a market need ? that people are really going to buy what we are planning to produce. But what kind of things do we need to find out, and how do we go about it? Bruce Mtingwe advises on market research strategies, and he offered some useful advice to Busani Bafana. IN: ?It is very important first of all? OUT: ?exporting their produce.? DUR?N: 5?38? BACK ANNOUNCEMENT: Bruce Mtingwe, with some useful experience of selling to foreign markets. He was speaking to Busani Bafana and the interview comes from a resource pack produced by CTA. Transcript Mtingwe It is very important first of all to not spend a lot of money before you know where to spend most of your effort. And so the first step that is really important is to undertake an extensive desk research that will enable you to know exactly where to go and look for what information. That is very important. Bafana What then are the advantages of doing market research? Mtingwe Well market research is a very advantageous process. Trying to market without market research is trying to shoot in the dark. You may or you may not get your target but when you do market research you increase the prospect of getting your target. You get more precise information that you require to undertake a successful marketing activity. Bafana Such as what? What sort of precise information are we looking at here? Mtingwe You are looking at things like consumption habits. How does my market consume my product? Where do they buy this product? How often is the purchase cycle? Which shops do they want to buy from? Why do they not buy from those? What is their perception in terms of foreign products? Do they think foreign products are better products than local products? How do they view foreigners? Those are some of the things that you are able to isolate through your market research and without having done market research you will not really know, except through mistakes that you will then be making in the market, but by that time it may be too late. Bafana You talked about the issue of expense. What expenses can I as a farmer incur when I am doing market research? Mtingwe There are expenses of travelling to your market. There are expenses of information acquisition. There are expenses of accommodation. There are expenses of talking to people because sometimes you find that you need to organise focus groups with individuals and you need to pay those individuals for that time that they are according you and indeed the information that they are giving you. It can become quite a costly exercise. But let me add also that this cost should in fact be viewed as an investment because at the end of the day it pays back to invest in a market research exercise because the alternative is worse. Bafana Would you then just relate to us an example of an organisation that has used this approach and with what results? Mtingwe We have a group of farmers in the Plumtree area, Matabeleland, south of the country. They have decided that there is a lot of potential in marula. They have marula in abundance and then have decided that they want to start a project that is based on marula and indeed export marula by-products. At the moment they decided that they were going to start with marula oil processing. And so the challenge then that they faced was that in Zimbabwe there was no market for marula oil. At least not a market that appreciates the value of the marula oil. Bafana So what did they do? Mtingwe And so what they did, they decided that they are going to export this marula oil. But the problem that they faced was that they did not have any export market knowledge and so they then decided that they are going to seek help. And a particular organisation, a local NGO came and assisted them in terms of identifying a potential market outlet for their product. And this market outlet happened to be an organisation in South Africa that deals with marula oil and so they basically decided that they are going to export to that organisation. However the organisation then further exported the same product to France. And so at the end of the day the local farmers were exporting to France via another organisation in South Africa. Bafana What challenges did they have to overcome, in fact, to realise that success? Mtingwe The first challenge that they faced was that they did not have the significant volumes that were required to do the business on a reasonable scale. And so what the South African importer did, they offered to take orders from this organisation until they had satisfied a certain minimum quantity and then at that point then the export would be done. So they would be exporting to South Africa let?s say for example two hundred litres per month of oil until say a quantity of twenty thousand litres was achieved at which point the South African organisation would then export to France. That was the first challenge that they had in terms of quantity. The second challenge that they had was in terms of payment. Now unlike the local market, that when you sell something you immediately get your proceeds or do so within a short period time. In the case of an export market you need to wait quite a long time, from anything between thirty to one hundred and eighty days and that made things a bit difficult in the sense that they now needed and go and seek loans to finance their working capital. Bafana There you are listeners, it is an important step to actually undertake the market research particularly for organisations or for farmers who are thinking of exporting their produce. End of track