Qualification is not a gut feeling or assumption; it is based on facts and the application of logic. Your dedication to understanding your American marketplace is critical.

Whether you are in London or Los Angeles, Kalamazoo or Katmandu, consumers buy based on the same set of values:
Price point – Design – Functionality- Quality – Brand perception – Brand positioning
Your focus will be to persuade your target retailers that your brand has enough of these elements to get you an opening order.

Your brand is new, so your focal point will be price point, design, function and quality. Brand perception and positioning is relevant to existing products and brands in the market, and that is your competitions advantage. Do not underestimate this.

Target customers

Price point has direct correlation to brand positioning. Do you envisage selling to independent retail stores or big box retailers like Walmart, target or Bed Bath and beyond?

I would recommend that whatever your product, your focal point is independent or regionally focused retail customers in your first 2 years of business. Big Box retailers are simply too risky for a multitude of reasons:
• Slim margins
• Complex set up and operating procedures including EDI
• Significant penalties for mistakes or missed deadlines
• Demanding
• 60 days net terms
• Heavy stock and scalability requirements

Pricing your products

Pricing your products correctly cannot be emphasized enough. Research into this needs to be detailed and you must become honestly knowledgeable about what the market is willing to pay. Otherwise less than 40% of your potential market will be interested in buying from you.
It is a top down, bottom up process. Top down refers to the market and what the market determines the price points of your products to be within the independent retail sector.
Bottom up is figuring out the landed cost of your product and establishing if your costs + transportation + duty is cost effective enough for you to sell your products with enough profit margin to create a sustainable and most importantly profitable business.

Landed cost of your product – Bottom up

Landed cost pricing

• You already know the F.O.B. cost of your products
• Contact your freight forwarder and ask them to provide you with pricing for
• 7 pallets of product, a 20 foot and 40 foot container
• If you are shipping from Europe choose Los Angeles as your delivery point. If you are shipping from Asia, use New York (always plan on furthest point)
• Key element is not just transportation costs but duty rates also
• F.O.B. cost of products + 7 pallet transport cost to furthest geographical point + duty = landed cost. Work this out as a percentage.
• Shipment f.o.b. 5,000 items @ cost $10,000, transport & duty $ 2,000
• Transport and duty = 20%. Landed cost per item = $ 2.40
Retail, whole sale costs – Top down
Establishing your prospective customer base will enable you to determine price points at retail.
Your research begins with Google:
• Find out what products are available in the U.S. at your prospective customers. Compare like product (or as “like” as you can find” and its retail pricing)
• If the retail price point is $ 50, the retailer needs to purchase it from a U.S. location for a maximum of $ 25.
• Your landed cost needs to be $ 10
• Choose your best selling items and determine if these calculations work for you

This is the first step in qualifying your price point. You are commencing a process that will determine if you have a potentially profitable and sustainable business in the U.S.
Accomplishing your research and answering the following questions will enable you to determine if your plan of commercial action in the U.S.A. is prudent:

• Are your products unique to the U.S. market?
• Do you have competition? Make a list and bullet point everything about them
• What are advantages of your product compared to theirs? Make a list
• Can you compete with current market pricing?
• Between pricing and unique selling propositions of your products, do you have enough to persuade retailers that they should buy your brand?
• Create a bullet pointed list of why U.S. customers should buy?

Remember, it’s the market that determines your company’s viability in the U.S.A. – NO ONE ELSE.

Please note this post by Michael Murray was originially published on “100 days of design”.

Great design does not need explanation; it requires no discussion or debate. It’s a mood changer, it can make you want to burst into song, skip and dance around like a 2 year old in a candy store.

But……“if great design is not profitable, then it is simply art!”

Design cannot pay the mortgage; it cannot buy a car or send your kids to college. If great design was simply the qualification for creating and sustaining a profitable business in the biggest consumer marketplace in the world, then some of my friends would not be on a steady diet of “Mac and Cheese!”

Whether you are a budding U.S. designer or an established European brand, bringing your offerings to the shores of New York and Los Angeles requires more than you think. Yes, even you need to change.

Within 5 seconds, Americans decide to move forward and pick-up your product off the shelf or move on. So, is it really about great design or great packaging design?

Even successful overseas brands perish in the first 18 months of business in the U.S.A. because they made decisions on poor planning and assumption. Three European product design winning companies from 2010 are no longer in business in the U.S.A. Casualties of their decisions and not the market.

If you want people to buy your design, then you are now in business. And business implies identifying and understanding the people you are selling to. Yes, you are now a sales person in the business of persuasion.

“If you wish to persuade me you must feel my feelings, think my thoughts and speak my words”
– Cicero

Opportunity continues to be ripe in the U.S.A. but you have to be a student of culture and the market first. Moving from Manchester, England, when I was 21 to work in New York, I made a multitude of incorrect assumptions (How different can it be, we speak the same language?). Now, many years later, I continue to see overseas companies make poor decisions based on assuming that the U.S. cannot be that different from other markets that have offered them success.

Devote your time to market research: What competition do I have? Do I set up business? Am I here to find a distributor? Can I set up my business and outsource? What pricing can the market bare at retail? What are the pricing expectations and needs of my customers? Can I create a profitable and, most importantly, a sustainable business?

Diligence to your homework will provide you with facts, not assumptions. Those facts will determine if there is a probability of success. Creating a business plan on possibility is an express train to frustration and disappointment.

People and Companies that seek to understand America before they ask America to understand their design, win every time.

Michael Murray, CEO of Janus, speaks about launching your brand in America at the Chicago Housewares show. Check out the video: