Countless companies have attempted to enter the US market, only to crash and burn. Many of them made three common mistakes.
1. Apply the Same Secret Formula
Whatever combination of business model, product differentiation and marketing has proven successful in a company’s local market, it will not necessarily translate directly to another market. When exploring why a company is struggling with their US market expansion, a common chorus rings out. “Because we’ve always done it that way” is often the answer given to explain policies and decisions that are not working. Successful new market entry requires a recognition that a alternate approach may be needed, combined with a deft tweaking of a business’ secret formula to fit the new market’s requirements.
2. All We Need is a Marketing Campaign
Marketing is the most obvious area of a business to re-examine when entering a new territory. While it’s true that a localized marketing campaign is important, it’s just the tip of the iceberg. A comprehensive review of all aspects of a business is critical as all are affected by a new market expansion – particularly if this is a business’ first international effort. The marketing basics of the pricing, product, promotion and placement are good starting points, but new product development, operations, finance and human resources also need examining.
3. Unexpected Costs
While a company may have a profitable business model within its domestic market, there are often unanticipated new market expansion costs that can quickly add up. Again, due diligence across all functional areas is important to identify additional costs. These costs range from transport and import duties to local costs of doing business such as taxes, surcharges, and compliance. It’s important that companies anticipate and understand these costs to ensure that the new market business model stacks up.