By Bill McNutt, III
Published in DM News"If you don't know where you are going, any road will take you there." This slogan could apply to many U. S. catalog and DM firms who want to sell abroad, but don't have the foggiest idea
which market entry path to take.
Throughout the years I have identified nine primary market entry paths. Space does not allow me to discuss them all, so let's consider these four; Multinational, Partnership
with a foreign DM firm, Solo using local service providers, and Acquiring a local service provider.
Offers in English language, priced in dollars with responses coming back to the United States has been a
powerful engine of growth for companies like LL Bean, Talbots and a variety of b to b companies. It is normally the lowest cost option and provides a quick and uncomplicated exit strategy if failure occurs.
However, the universe of multinational names is not expanding rapidly, and many of the lists have been mailed too frequently, driving down responsiveness.
Finding a local DM partner holds many advantages for both the
"new to market" America firm and the local catalog company or publisher. The local partner provides logistics expertise, a local service supplier network and access to a proven mail order buyer file of customer
names. The U. S. firm provides a reduction of risk by bring a DM formula and strategy that has proven successful in the most competitive market the world has ever known, the United States of America!
Both parties save time, and financial resources can be concentrated on marketing, not bricks and computers.
This strategy yields hidden advantages as well. There are very few
good DM firms in most foreign markets. Therefore, if you pick the right partner you create a barrier to entry to competitors that enter the market after you! The difficulties with this path are that the revenue stream must be divided and it is difficult to exit if success is not achieved.
A solo entry path using local service providers is a proven strategy for many firms such as Collin Street Bakery. It provides the ability to start small and grow. You can learn a great deal from local
service suppliers and the cost is much less than purchasing facilities abroad. However, it is difficult to select good service suppliers outside the United States and there is normally no in-house customer file to
test.
Our final strategy is innovative and timely. It is to acquire a local service provider such as a mailing list brokerage house, or telemarketing firm. American catalog companies gain an immediate
local office, expertise, and "in country" executives to help develop the international test plan.
Regardless if you are looking to Europe, Asia, or South of the Rio Grand for expansion opportunities, the
demand for teleservices, data processing, fulfillment and other DM expertise is growing at a rapid rate. These businesses are good investments today in places like Mexico, Ireland, Argentina, and Australia.
U.S corporation bring more than money to the table, they bring a smart money from inside the DM industry, and a new account (their own) that can quickly grow to flagship proportions.
The hard part of
implementing this strategy is finding a business broker or consultant from the direct marketing industry to research and identify good potential partners. And, the time required to launch is generally greater than
with other entry paths.
For some timid executives, the selection of a market entry path is simply too great and nothing but talk ever occurs. It reminds me of another well worn phrase of truth "Everybody wants
to go to heaven, but nobody wants to die."
