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Trade Routes: The Challenges of a U.S. Launch
By: Michael Long and Chris Czajkowski
Posted: March 5, 2007Back to the March Issue
While many international companies would like to sell their products in the U.S., they have the impression that the U.S. market is too vast, expensive and competitive to take on. This fear is fueled by a preconceived notion of the U.S. market as being an overwhelming and unmanageable myriad of distribution channels that require significant levels of brand investment. This fear is further fed by horror stories of unsuccessful attempts by other brands to penetrate the market. As a result, international companies often choose to postpone or forgo profitable and rewarding opportunities in the U.S. Indeed, the basis of this fear lies in one undeniable truth: first impressions are lasting impressions.
There are, in fact, challenges associated with launching overseas in an unfamiliar market: multiple distribution channels to consider—each with its own margin and cost structure; absentee management unable to effectively oversee and react to day-to-day business needs and opportunities; and the absence of a localized logistics infrastructure. All become impediments to smooth operations and steady growth. Lastly, there can be frustration in dealing with time differences, regulatory and governmental requirements, insurance issues, and the loss of critical details due to language barriers.
Still, many brave companies attempt to introduce brands into the U.S. on their own. The results vary—at times they are met with only mild disappointment; at other times, they suffer failure and significant loss of credibility—and smaller brands in particular, those managed directly from overseas, rarely maximize results.
But why should an international brand reject what could be a potentially profitable and rewarding experience? A launch in the U.S. provides strategic diversity in a global distribution plan and PR exposure in the most important beauty market in the world, not to mention supplemental cash flow and operational efficiencies.