DC Electronics manufactures custom-built electrical systems for the motorsport industry. With an enviable customer record, the systems are used by championships worldwide including, NASCAR, Formula 1, Le Mans Endurance Series, World Rally, Superbike and F1 Powerboats. The company was established in 1997 by David and Sandra Cunliffe and is based in Maldon, Essex.
For several years, David and Sandra had been working with UKTI enjoying the guidance of their International Trade Advisor, Simon Fennelly, and the support and networking opportunities available through the Passport to Export and Tradeshow Access Programme (TAP). Whilst they had enjoyed some sales to the USA, it was becoming increasingly apparent that this market presented a huge opportunity for DC Electronics. As Sandra explained, "The market for our products here in the UK is estimated to be only 1% of the size of the USA!" With such huge potential, and with limited resources, David and Sandra knew they needed a robust plan for entering the USA; Simon recommended they look at the Export Marketing Research Scheme (EMRS).
Understanding the dynamics
The EMRS is a UKTI scheme to help businesses understand the dynamics of a potential overseas market before creating the optimal strategy for launching in this market. Having already undertaken some background research, DC Electronics had identified the Californian Desert Racing market as potentially lucrative. An initial meeting with the region’s Research Advisor, Alice Mamier, helped David and Sandra to identify the key decisions they would need to make before entering this market: would DC Electronics’ products require adaptation, what pricing points would the market stand, would they be accepted as a UK-based company, how would they establish a US base if required. Ultimately, was the market sufficiently attractive to warrant their investment?
Having prepared a detailed itinerary, and armed with a comprehensive list of questions, David and Sandra went to Las Vegas and San Diego in November 2010, and carried out 13 interviews with a mix of race teams, engine and chassis builders, industry experts, journalists and a race-series promoter. Whilst the market clearly offered potential, it was apparent that some of DC Electronics’ key products would require major development, and the dominance of an existing US-based supplier might hinder their sales. As a consequence of the insights they discovered through these interviews, David and Sandra were able to take the difficult decision not to focus on this market. "Without the EMRS we might not have done this initial research" explained Sandra.
NASCAR – another opportunity
Undeterred, DC Electronics started to re-look at another opportunity within the US market: NASCAR. "It’s even bigger than Formula one", enthused Sandra. The announcement of a forthcoming change in NASCAR regulations, allowing fuel injection and thereby necessitating many of DC Electronics’ products, gave David and Sandra the boost they needed.
The EMRS can support two trips to certain large markets: USA, India and China; so DC Electronics were able to call on Alice’s support once again to help them to structure their research, and plan a comprehensive programme of interviews, which would enable them to make these previously-identified decisions for this new market.
Their trip to North Carolina, in July 2011, comprised 14 meetings over 5 days, and included interviews with the NASCAR governing body, engine builders, similar UK companies already in the US, the Motorsport association, attorneys, estate agents, banks and employment agencies.
A competitive advantage
David and Sandra discovered that, because fuel injection was new to NASCAR, there were no existing suppliers; DC Electronic’s proven expertise would give them a real competitive advantage. They found the pricing structure was comparable to the UK, with many of the teams expecting to spend large sums on new electronics! The origin of the products would not be an issue for this market, but it became apparent that a reliable and readily available team of qualified engineers who were locally based would be vital. It was clear that good service and speedy response were more important than price. Ultimately, they concluded that this was a market they could enter, and with confidence to establish a US base."
In 2012, DC Electronics opened their first US production facility in Mooresville, North Carolina, servicing the NASCAR market. DC Electronics’ exports have grown from 10% to 80% of the business, and turnover has doubled since entering the US Market. In addition, the winner of the 2012 NASCAR Sprint Cup season was using DC Electronics’ products!
Sandra would happily recommend the EMRS scheme to other businesses, "It amazes me that people haven’t heard of this: it makes you analyse the market you’re looking at in more detail, enabling you to think more carefully about your strategy and plan, and importantly your cash flow, in more detail!"