By Craig Frank

Initial Considerations

The U.S. market is attractive to foreign enterprises because it gives access to more than 280 million people - most with disposable income or credit. This mass of potential consumers is under one rule of law, shares one language, one currency, and essentially the same culture. The U.S. economy is the largest in the world, and success in the United States often leads to possibilities globally, as the U.S. economic reach spans the entire world.

For all the benefits, the U.S. market is extremely competitive, expensive to penetrate and requires high levels of expertise to develop, maintain and grow a presence. Success in the United States is a combination of superior product, skilled marketing, service, proper allocation of resources, and creativity. These elements need to be integrated into a comprehensive strategy that lends itself to the American way of conducting business and the distinctive qualities of the company's product.

The high profile of U.S. culture around the world leads scores of non-American entrepreneurs to feel comfortable with their level of familiarity with the United States. Driven by an ambition to capture a share of the U.S. market, and confident in their abilities, these men and women leave their native countries to open up offices in America's large cities. Once there they are confronted with a host of challenges - human resources, contacts, competitors, and business culture - that stifle their efforts at integrating themselves and their businesses into their new environment. These challenges shift the focus and efforts of the entrepreneur, further hindering the chances of success. Suddenly, after the loss of time and invested resources, the non-U.S. entrepreneur realizes that watching Seinfeld and eating McDonald's does not an American make.

The logic behind the opening of full-fledged operations in the U.S. is to accelerate market penetration through the creation of a presence. The assumption is that being on the ground will expose the company to market events, useful contacts and business opportunities. These are compelling advantages, but the side effects are often too costly, as well as disruptive in obtaining the desired goals. The solution is a two-fold strategy that employs U.S. based firms at initial penetration stages, while non-U.S. entrepreneurs are prepared for the U.S. market. The shifting of company operations to the United States can come at a stage when the product is more mature and the company better equipped to exploit its advantages.

Rather than have product development, business strategies, and marketing concepts conceived in the isolation of the home country, Tudog submits that the orientation toward the United States be introduced at the earliest possible moment. This can be achieved through a carefully executed process that acquaints the company with a variety of contacts and opportunities in the United States, while enabling the core entrepreneurial team to remain in its home environment, with all the inherent benefits.

Concepts & Perceptions

The Tudog methodology for successful penetration of the U.S. market is built on a number of concepts and perceptions we deem to be critically important. They are:

• The foundation of a successful U.S. market penetration campaign includes strategy planning, partnership development and the appropriate collateral materials.
  
  
• Contacts and important information regarding the U.S. market can be obtained through a series of well planned missions to the U.S. Early transfer of part of a company's leading talent on a full time basis is not required.
  
  
• Marketing is much more than creating the environment and tools for the sales team. It is an enterprise-wide consideration defining the company, what it sells and to whom it sells.
  
  
• The objective of marketing is not only customer acquisition, but also customer retention and customer expansion.
  
  
• Positioning a company can be achieved only after the market, target audience, and product category history have been studied and analyzed.
  
  
• Branding is a critical element in successful U.S. market performance and should be a central goal of a marketing strategy. The branding aims should be set at the company, brand and product levels, with a focus on company, followed by brand, and then by product.
  
  
• Every market is distinctive and no market serves as a viable example of how the U.S. market behaves.

The Seven Steps to Successful Penetration

Tudog has defined seven steps that should be followed to better the chances for a successful introduction to the U.S. market. These steps should come alongside working in conjunction with a U.S. based business consulting firm, so that they can be built upon and supported in an appropriate and constructive manner.

We believe that the first step for any company planning to market its goods or services in the United States is a visit to the target market. A U.S. based consulting firm should be retained and they should be charged with arranging a series of friendly meetings with potential clients, industry consultants, analysts, journalists, industry associations and others who can provide insight into sector trends, product preferences, strategies, distribution channels, pricing and more. The objective of these meetings is to listen and learn, to eliminate the guesswork and discover what is happening within the market simply by asking the right people the right questions. These are not meetings intended to land partnership agreements or make sales. They serve to introduce the market to the company, and on some level, the company to the market.

These missions should be repeated every three months. They serve to refresh and update the company on current market status and, at the same time, serve to develop strong relationships and ties with industry players.

The fact-finding mission to the U.S. should provide clear insight into genuine market needs and which compelling benefits a specific product or technology can offer. More importantly, the meetings can direct a company on how to best apply technologies in order to ensure a compelling offering at time of product launch. A company's assumptions with regard to technology applications, product features and functions, and the importance of the solution offered can be verified at these meetings, with significant changes made in compliance with the feedback and comments made.

Once a product is more clearly defined and the technologies are more in tune with the needs and wants of the market, the development of an integrated business strategy can begin. The elements that require careful consideration at this stage include potential targeted industries, price points and projected product benefits. It is more effective to construct a strategy around product benefits, rather than product features, since the benefits of a new technology are what excite people. Benefits are perceived as solutions.

Once the technology and the strategy have been better defined, the company can begin developing the tools it will need to enter the market and project its image.

Perhaps the most significant barrier for non-U.S. companies attempting to penetrate the US market is a difference in perspective regarding the importance of branding and corporate identity. The American perspective is that marketing is about engaging consumers -including corporate clients - and developing a relationship with them. Two key tools to achieving these goals are the way the company presents itself - its image - and the message the company transmits through that image and its collateral materials.

The branding and corporate identity should be developed in close cooperation with the U.S. based business consultancy being used to guide and assist in implementing the company's processed entry into the U.S. market. People with a deep understanding of U.S. culture and corporate environment should execute corporate identity, graphics, language and the planning of the branding campaign.

Too many non-U.S. companies are running beta sites in their native land, after which they attempt to apply the lessons learned on the American market. Other than technology verification, beta sites in another country are ineffective as a reliable source of data regarding how Americans will perceive, use and interact with a product or technology. As mentioned earlier, while we are indeed exposed to high profile aspects of the American culture, most countries have prevailing and dominant cultures of their own. These additional cultural influences compromise the beta site's effectiveness to serve as an example of the response of the American market.

The contacts developed and maintained via the fact-finding missions should be leveraged to identify and secure viable and practical U.S.-based beta sites. The beta sites are later converted to customers, providing the company with its first U.S. based customers.

One of the primary reasons non-U.S. corporate managers currently rush their companies off to the United States is that they are concerned about time-to-market. They seek to accelerate the growth of their companies by placing them in the highly competitive environment within which they need to flourish. We consider this to be potentially counter-productive.

We believe that the competitive barriers and costs of launching rapidly are so significant that the more effective path to quick market entry is through the development of a network of strategic partnerships. These partnerships can include sharing of technologies, joint marketing projects, distribution agreements and a variety of additional scenarios. Similar to beta sites, they can be identified and established through contacts made during the periodic missions to the U.S. and through the good offices of a U.S. based consulting firm.

Upon completion of its technology and successful verification in beta testing, a company can begin preparations for launch by securing distribution and activating a well-planned, integrated marketing plan. It is at this stage - immediately before the sales effort is initiated - that Tudog believes U.S. offices should be opened. We also believe the relationship with the company's escorting consulting firm should be maintained, as well as Americans hired to fill key positions in marketing, sales, logistics and management.

The Launch & Beyond

As a product is launched, a company traditionally engages in customer acquisition. It is, however, at this stage that the strategies for retention and expansion should already be in place, for it is the task of a good marketing plan to not only gain customers, but also to expand customer purchases.

Key components of the successful U.S. penetration scheme is the post-launch trial and error analysis that allows the company to examine which tactics are effective and which require adjustment. Insofar as marketing is well-planned trial and error, there needs to be a certain tolerance for error, without which the creativity and calculated risk taking of the marketing team will be stifled.

This article has been a challenge to the current strategy used by many non-U.S. companies to penetrate the American market. It is a call for unifying the entrepreneurs and using American talent to build a more effective U.S. presence. It entails drawing data from the U.S. market, returning home and applying the lessons learned in the culture and intellectually dynamic environment within which the innovations were first conceived. Alongside American experts the non-U.S. company can focus on its core competencies and craft its product to best suit then needs and wants of the rewarding U.S. market.