How Penetrate de US Market


How to Penetrate the US Market

How to Identify and Select the Right Target Market for Your Business -  Think Expand Ltd.

Accounting for almost 30% of world GDP, the United States is the world’s largest and most demanding market for almost everything from oil to microprocessors to premium coffee. Companies around the world aspire to do business in the US, or at least with US companies in their home markets. By doing so, they learn much about the latest management practices, they can be closer to the cutting edge of innovation, and they can boost their reputations by supplying well-known US firms.

The market size of the US makes is an important target but, in addition, foreign companies often feel they have to crack the US market in order to gain respect. No CEO can lead a global company if that company does not have a strong presence in the USA.

So how do you penetrate the US market? The annals of business are littered with foreign companies that have never quite succeeded in the USA. But here are four companies that have managed to crack the US market. Each carries a special lesson.

1. Royal Bank of Scotland. This company built up a strong retail market share in the US, not under the RBS brand, but through a series of acquisitions of regional (not national) banks. RBS is adding value for its shareholders by letting these banks retain their individual brand identities, by focusing on improving back-office efficiencies, and by having the highly respected CEO of one of the acquired entities lead the combined US organization. Meanwhile, RBS is building its B2B brand with institutional clients on Wall Street.

2. IKEA. IKEA offers a furniture retailing value proposition and experience unparalleled in the US market. IKEA’s location selection expertise and their established global supply chains enable them to offer exceptional category-killer prices that are further keys to success.

3. ING. The Dutch bank converted its weakness (no retail branches in the US) into a strength. Following a successful Canadian market test, ING gave its entrepreneurial general manager the green light to offer retail banking services to US consumers but exclusively on an online basis. Taking advantage of its low no-bricks-and-mortar cost structure, ING was able to offer generous rates on certificates of deposit. Just four years on, ING is the third-largest holder of consumer CD investments in the US.

4. Dyson. The British home appliance maker earned a break when it managed to get a Best Buy buyer to take one of its vacuum cleaners home to test. The buyer was impressed. Fortunately for Dyson, Best Buy became the first US retailer to stock Dyson vacuum cleaners–other US retailers invariably follow Best Buy’s lead. Electronics retailing in the US is concentrated (10 chains control 60% of the market) and tough to penetrate. But Dyson could not have succeeded had its products not been superior to other vacuum cleaners already in US stores.

A current case, well worth watching, is the effort of Tesco, the British retailer, to enter the US market with the new Fresh & Easy chain of discount grocery stores. Avoiding geographies where Wal-Mart is entrenched, Tesco has so far opened 50 stores in the growth markets of California, Nevada and Arizona. The question is whether Tesco’s assortment and value proposition will be appreciated by enough consumers fast enough for weekly store sales to reach profitable levels. 

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