Market Scan (1/2): Introduction to
Trade Map indicators
Cairo, March 2018

Overview
• Introduction to Market Scanning
• Introduction to Trade Map
• Static indicators (market size, trade
balance, unit values,…)
• Dynamic indicators (growth rates,
…)
• Analysing a target market
• Assigning scores to variables
Learning Objectives
• To understand basic trade data
concepts
• To become comfortable in using
ITC Trade Map
• To compare and analyse potential
target markets in a Market Scan
• To be aware of additional Trade
Map features
Trade Map Indicators

Key steps to get to the right target market
Market Zoom
(9 Ps)
Panorama
People
Permission
Product
Price
Packaging
Placement
Promotion
Prospects
Market Entry
Key minimum
requirements
Differentiation
opportunities
Develop a
winning value
proposition
Identify your
target market
Understand your
target market
Get to the
target market
Market Scan
Size
Dynamism
Competition
Proximity
Diaspora
opportunity
Access
conditions
Market
Profile report
+
Group
presentation

Should we prioritize countries when we
want to export?
Please select the correct answer from the options below.
o Yes, careful selection, based on sound and systematic
research, can deliver huge benefits
o No, you should focus only on finding business leads

Feedback
 Yes, careful selection, based on sound and systematic
research, can deliver huge benefits
o No, you should focus only on finding business leads
Export market research is expensive and prioritizing your
research time and resources is essential. This market
selection process helps to avoid costly mistakes and can
ensure that your organisation is able to build sustainable
exports.

Why is market scanning important? (1/2)
Often markets are chosen with little analysis. Some examples of
potentially false leads that can result in poorly-researched market
selection include:
• Unquestioning acceptance of media articles, seminars and
conferences that focus only on “hot” or “boom” markets
• A “tip” from a business associate whose business may be very
different from your own
• An unsolicited order suggesting that there is high potential for
sales development – when in fact it was a one-off event
• Positive impressions gained on a holiday – that do not reflect day-
to-day reality
• “Following the leader” – knowing your competitors are active in
that market, and assuming you need to be there too
• Looking for “comfort factors” – markets where business settings
appear on the surface to be easy and friendly

Why is market scanning important? (2/2)
A common mistake is to decide on a particular market before proper
research. “It is the best one for your first move into export.”
Even if the exporter is very familiar with a market, it is smart not to
assume it is necessarily the best one for him.
Taking a time to double-check if there is not another market that
might suits his purposes better. He may find it easier –and more
profitable– to establish first somewhere else.
Always approach the choice of export
markets with an open mind.

What is market scanning?
Market scanning involves comparing potential markets
against various criteria to help identify a suitable market

Practical exercise: Brainstorm
What criteria should
you take into
account to identify
an attractive market?
?

What does an exporter need to take into
account to select the right market?
• Which markets are attractive?
• What products should I focus on?
• What are the market requirements to export to these countries?
• What are the consumer trends in the importing country?
• What packaging should I use?
• What pricing strategy should I use?
• How will I promote my product?
• How do I obtain trade finance?
• What are the risks of doing business in these markets?
Exporters must analyse and compare each importing country, then select
the countries with the highest estimated import potential for their product.
 This would be extremely time consuming!

Market Scan
In order to select a market efficiently we suggest a Market Scan.
• Comparing markets across a specific set of criteria that are both
available and comparable across countries
• Method for combining heterogeneous criteria by standardising
them and then combining them to get a single composite score
• Enables results in a ranking of the different export markets
All importing
markets
Argentina
Brazil
Cambodia
Denmark
Egypt
…
Most attractive
markets
1. China
2. India
3. UK
4. Indonesia
5. Russia
…
3. Competition
1. Market Size
2. Market Growth
4. Market Openness
- Tariff level
- Tariff advantage
Market Scan

Market Scan Criteria
During a Market Scan we assess trade and market assess indicators
in order to compare the attractiveness of importing countries:
• Import potential with Trade Map
– Market size: in value and quantity
– Market Dynamism: annual growth rate over a 5-year period
– Competition in each importing market: concentration index of
supplying countries
• Market openness with Market Access Map
– Tariff level: tariff faced by Egypt in each importing market
– Tariff advantage against competing supplying countries

What do exporters have to be aware of?
Legal
system,
regulation
Trade Map
Market
Regulations
(health, safety,
etc.)
Custom tariffs
Import
restrictions
Different
Tastes
Competition
Business
contacts
What is the
demand for
the product
Global and
national market
dynamics
Standards

• Online application to analyse international trade flows
• Based on one of the largest trade flow database in the world
• Provides the trade indicators needed for our market scan
• Graphic presentation of outputs to facilitate analysis
• User-friendly interface, report-ready outputs
What is Trade Map?

Trade Map – www.trademap.org
Click here to login or create your
account

Identify the HS-6 code of your product
• HS-6 digit Code
• National tariff line code
Analyse demand conditions and
performance for your product
• Market size and growth
• Market shares
Assess the target market
• Competition and distances
• Customer information
Market Scan using Trade Map

Which HS revision is used in Trade Map?
• Revisions in 1996, 2002, 2007, 2012 and 2017
• In each revision, product codes may be:
– created (new significant product)
– removed (product have become marginal)
– reallocated (trade volume changed)
The analysis of such products codes should be approached with caution!
For time series, the revision applied by the country in the reporting year is
used.
For calculating trade indicators, HS revision 4 (2012) is used.

Products we will use as an example
080510 – Oranges
(fresh or dried)

Trade indicators in Trade Map
Market size
Market growth /
Dynamism
Other performance indicators
More indicators…

Imports of buttermilk (040390) from all
countries using trade indicators
What do the colours mean?

Mirror statistics
Australia
(reporting country)
Myanmar
(non-reporting country)
Iran
(non-reporting country)
Australia –
direct data
Iran –
mirror data
Impossible to get data
In Trade Map mirror
data is presented in
yellow colour

Mirror data: be careful
Imports
Export
Transportation and
insurance costs
Price of
the
product
CIF: Cost
Insurance Freight
FOB: Free On
Board

Mirror data: example
Australia
(reporting country)
Iraq
(non-reporting country)
Exports of Iraq
Invoice Value $920
FOB value $920
Imports reported Australia from Iraq
Invoice Value $920
Insurance Paid $20
Freight Paid $60
Total CIF Value $1000

Market size
Market size

Market size can be measured in terms of
• Imported value (USD, EUR, SAR, …)
• Imported quantity (tons, litres, pairs,…)
Unit Value = Value / Quantity
Market size and unit values

Unit Value
Unit Value = Value/ quantity
Careful when interpreting, it is not a price paid in a shop by a customer.
• Unit values are an average over the whole period covered, however prices
vary across the year: e.g. vegetables
• Every product code contains many different product sold (even at NTL level)
• Value added by importing companies, tax, custom tariffs, etc. are not included
UV = Time and product average of prices paid
by importing companies

Trade Balance
• One indicator of the health the economy and its trade relationship with
the rest of the world
• Most well known indicator is the nominal trade deficit or surplus
• Usually broken down by product and by country (bilateral balance)
Trade Balance = Exports (X) – Imports (M)
X > M  Trade surplus
M > X  Trade deficit

Growth indicators
Market growth

• Identify the top 5 importers of Oranges
(080510) in 2016 in value terms
• What is the growth rate of the top importer in
terms of value between 2012 and 2016? And in
terms of quantity?
• Identify the top 5 net exporters of Oranges in
2016
 Time allowed: 3 minutes
Quiz: analyze the market for a product

But what does a growth rate of 2% really mean?  You need to compare the
growth with a benchmark!
 Demand is growing
 Demand is stagnating
 Demand is declining
• If annual growth rate (%) is greater than 0?
• If annual growth rate (%) is equal to 0?
• If annual growth rate (%) is less than 0?
Compare growth of Egypt’s exports to the
world with the growth in world exports
overall
How does Egypt perform
as compared to other
suppliers?
Compare growth rate of target market’s
imports with the growth in world imports
overall
How dynamic is the target
market as compared to the
world market?
Compare growth of target market’s
imports with the growth of the market’s
imports from specific suppliers
Which of your competitors
are gaining or losing shares
in the target market?
What else can we do with the available
indicators: Benchmarking growth rates

What else can we do with the available
indicators: Trend in unit values
Growth in value
Growth in quantity
Growth in
Unit Value
Increasing
UV
Stable UV
Decreasing
UV

• What is Egypt’s export growth rate in value
of Oranges (080510) in 2016?
• Is Egypt’s unit value for Oranges increasing
or decreasing in its main export market?
• Is Egypt gaining or losing market shares in
the world market of Oranges ?
Time allowed: 3 minutes
Quiz: analyze the export performance of a
country

Identify the HS-6 code of your product
• HS-6 digit Code
• National tariff line code
Analyse demand conditions and
performance for your product
• Market size and growth
• Market shares
Assess the target market
• Competition and distances
• Customer information
Analyzing trade using Trade Map

Other performance indicators
Other performance indicators:
Worldwide Imports of Buttermilk (040390)

Do you think that the French market for
oranges (080510) is concentrated or
fragmented?
List of countries exporting oranges to France in 2016
Source: Trade Map (March 2018)
Concentration in the Oranges (080510) market
Exporters Import Value ($ mill.) Market share (%) Method to calculate share
World 423 100
Spain 296 70 =296/423
South Africa 45 11 =45/423
Italy 14 3 =14/423
Tunisia 10 2 =10/423
Rest of the World 58 14 =58/423

The Herfindahl Index
• A tool to measure concentration: can be used to measure
product or market diversification
• The index ranges from 1 to 0
1 = only one supplier  market very concentrated
0 = many suppliers, each with very small share
 market very diversified
• Rule of thumb:
< 0.01 = highly diversified
< 0.15 = not concentrated or diversified
Between 0.15 and 0.25 = moderately concentrated
Above 0.25 = highly concentrated

Quiz: analyze the competition in the market
• What is Egypt’s #1 importing market (in value) for
Oranges (080510)
• Who is Egypt’s main competitor in its #1 importing
market (in terms of value) for Oranges?
• Is this market fragmented or concentrated? Why?
Is this good or bad for Egypt?
 Time allowed: 3 minutes

Back to our Market Scan Methodology
All importing
markets
Argentina
Brazil
Cambodia
Denmark
Egypt
…
Most attractive
markets
1. China
2. India
3. Lebanon
4. Indonesia
5. Russia
…
3. Competition
1. Market Size
2. Market Growth
4. Market Openness
- Tariff level
- Tariff advantage
Trade evaluation
criteria

Assigning scores to variables
• Go through the criteria for evaluating a market
• Use a scale to assign a score to each indicator
Note: this is not a scientific model. The choice of scales and criteria is subjective. This is
nevertheless a good screening exercise to identify the most attractive market that you feel
warrants more research.
Score Scale
5 Very large: above 25%
4 Large: between 15% and 25%
3 Medium: between 8% and 15%
2 Small: between 2% and 8%
1 Very small: below to 2%
• Each indicator has its own scale
• Each scale can be adapted to the
data range
Scale example

Assigning scores to Market Size
Indicator: Market share in 2016 of the importing country in the world market
Explanation: Relative size determined by the world import market share
Market share data are based on the list of importers of “080510 Oranges” in
Trade Map.
Importing
country
Market
Share
(%)
Score
(1- 5,
5=best)
France 8.2
Germany 7.4
Netherlands 6.9
Russia 5.3
Hong Kong 5.2
Score Scale
5 Very large: superior to 25%
4 Large: between 15% and 25%
3 Medium: between 8% and 15%
2 Small: between 2% and 8%
1 Very small: inferior to 2%

Assigning scores to Market Growth
Indicator: Market growth
Explanation: expected growth is determined relative to the annual growth in value
between 2012-2016 of the importing country.
Figures are based on the list of importers of “080510 Oranges” in Trade Map.
Importing
country
Market
Growth
(% p.a)
Score
(1- 5,
5=best)
France
Germany
Netherlands
Russia
Hong Kong
Score Scale
5 Very Fast: superior to 10%
4 Fast: between 5% and 10%
3 Slow: between 0% and 5%
2
Stagnate -Slow decrease: between
0% and -5%
1 Fast decrease: inferior to -5%

Assigning scores to Competition
Indicator: Concentration of supplying countries
Explanation: knowing the degree of market concentration is useful, as it reflects
the degree of competition present in the importing market. If the market is
diversified, it is more likely for a new exporter to enter the market.
Figures are based on the list of importers of “080510 Oranges” in Trade Map.
Importing
country
Concentration index
of supplying
countries
Score
(1- 5,
5=best)
France
Germany
Netherlands
Russia
Hong Kong
Score Scale
5
Highly diversified :
below 0.05
4
Diversified:
between 0.05 and 0.15
3
Moderately concentrated :
between 0.15 and 0.20
2
Concentrated:
between 0.20 and 0.30
1
Highly concentrated:
above 0.30

Key points
• Market scan involves comparing potential markets against
various criteria to help identify a suitable market.
• The Market scan methodology combines heterogeneous
criteria by standardizing them and then combining them to
get a single composite score.
• Trade Map provides indicators that can used to in the
Market Scan methodology to identify attractive markets.

Market Screening (1/2)
Please complete the table below by using a specific scale.
Which importing country ranks first according to your market scan analysis?
Market scan of the top 13 largest importers of 080510 Oranges
Importers
Market Growth Market Size Competition
Annual growth in
value between
2012-2016 (%)
Score
Share in world
imports (%)
Score
Concentration of
supplying countries
Score
France -1 8.2 0.51
Germany -3 7.4 0.59
Netherlands -2 6.9 0.2
Russian Federation
-12
5.3
0.32
Hong Kong, China +11 5.2 0.28
China +22 4.7 0.26
Korea -1 4.2 0.91
UK -2 4.1 0.21
Saudi Arabia 0 3.8 0.39
Canada +1 3.5 0.56
USA +5 3.2 0.35
UAE +2 2.7 0.36
Japan -6 2.5 0.53

Market Screening (2/2): Scale
Please complete the table below by using the scales provided in the second page.

Limitations of with international trade statistics
• Inclusion of re-imports and re-exports
• The export value refers to the total or contract value, not the local
value-added
• Similar products may be categorized differently
• Exchange rate fluctuations are not always recorded
• Trade data are not complete: smuggling, non-reporting, mistakes, …
Mirror data

Let’s recap…
By the end of this section you should have a good
understanding of:
How to analyse world market demand and export
performance using Trade Map
How to analyze a target market using Trade Map