It’s hard enough for U.S. companies to be successful in their own market but it’s even harder for companies based in Europe, Asia, and other continents to achieve sustainable profits in the States. Competition is fierce, the cost of running a business is expensive, and consumers are uncompromising in their demands for technology products and services.
For European companies considering U.S. expansion, it’s crucial to thoroughly research and analyse the market to validate your product market fit. In such a competitive market, how can European businesses thrive?
Here are our top five pitfalls foreign companies should avoid if they want to succeed in the U.S.
1) Same “old” formula
You can’t assume the same marketing and sales strategies that work in Europe and Asia will work here. In fact, U.S. consumers are so different that it almost always requires a completely new approach. Just look at Tesco.
In 2007, at a time when £1 in every seven was being spent in Tesco, they decided to tackle the U.S. However, failure to capture the market led to the closure of 200 stores a mere five years later, incurring a loss of 1.8 billion dollars.
No one wants this to happen, so it’s crucial that companies work closely with local experts who can help you navigate the best course.
2) Being outside the center
San Francisco and New York City are largely considered the go-to hubs for technology. These cities attract the best talent, support, and opportunities for collaboration. They also offer relatively easy and cost-effective ways to get started and expand.
For example, there are hundreds of fantastic NYC co-working spaces, which enable foreign-based companies to quickly and easily be in the center of the NYC tech community.
3) Targeting the wrong market
The U.S. is not a singular market, but rather, hundreds of market segments with unique attributes, needs, and requirements. Since there are so many options here, consumers will only purchase products and services that are great matches. Therefore, it is critical to carefully target the right market segment.
4) Inappropriate message and materials
Too frequently, foreign-based companies have tried to avoid costs by using the same marketing materials and sales presentations. Even if the English is correct, the message and content needs to address the U.S. market.
Again, it’s crucial to use in-market experts who are on the ground to craft the right marketing and sales materials.
5) Incorrect pricing
Most companies struggle to price their products and services to maximise profits and revenue. It is especially hard for foreign-based companies who are not attuned to the competition and market demands in America.
Often, this results in companies pricing products or services too low – unfortunately, it is never easy to raise prices once they’ve been introduced into the market. It’s crucial that organisations aren’t too hasty in this respect and carry out the necessary market research to find their sweet spot when it comes to pricing.
Despite these potential pitfalls, there is huge opportunity in the U.S., as it is a large and potentially lucrative market for European companies looking to grow.