Question

Explain the importance of shifting spending patterns and quality in the selection of products for exports.

Answer 1

Fundamental determinants of how much a customer buys a product is the taste and desire of the individual, as well as the price of the product compared to the price of other goods. Consumer income is another major factor. When the consumer's income rises, it would raise demand for certain goods. Nonetheless, the demand for commodities that people consider to be necessities, such as gasoline, cigarettes, food, or meat, continues to decline and exporters of these items are unlikely to benefit greatly from increasing consumer incomes elsewhere. Demand for luxuries, including new vehicles or expensive food, is growing faster.

Exporters would therefore typically place more focus on products that customers find to be "luxuries," due to changing patterns of expenditure in response to increasing revenues.

An entrepreneur should choose the right export product because choosing the right export product is key to export business success. An entrepreneur preparing to enter into exports can recognize the product / product groups that have potential in foreign markets by examining export patterns – country-wise and commodity-wise – over time. A analysis of the patterns is expected to produce some valuable knowledge over a period of five years. The Ministry of Commerce had also prepared a matrix of fifteen countries and products based on an analysis of the export trends.

The exporter can select those goods for which the country has ample production capacity and the commodity can be supplied for the quantities needed. A stable supply base is therefore necessary to ensure that the exporter is able to deliver the goods to the international buyer in compliance with the negotiated delivery time schedules.