QUALIFYING YOUR BRAND

Qualification is not based on gut feelings or assumptions; it relies on facts and logical reasoning. Understanding your American marketplace is crucial for your success.

Regardless of whether you are in London or Los Angeles, Kalamazoo or Katmandu, consumers make purchasing decisions based on the same set of values: price point, design, functionality, quality, brand perception, and brand positioning. Your task is to convince your target retailers that your brand possesses these elements in sufficient measure to secure an initial order.

Since your brand is new, your primary focus should be on price point, design, function, and quality. Brand perception and positioning are more relevant to existing products and brands in the market, giving your competition an advantage. It's important not to underestimate this.

Target customers:

The price point directly correlates with brand positioning. Do you plan to sell to independent retail stores or big box retailers like Walmart, Target, or Bed Bath & Beyond?

I recommend that, regardless of your product, you initially target independent or regionally focused retail customers in the first two years of your business. Big box retailers pose numerous risks, including slim margins, complex setup and operating procedures (including EDI), significant penalties for mistakes or missed deadlines, demanding requirements, 60 days net terms, and heavy stock and scalability requirements.

Pricing your products:

The importance of pricing your products correctly cannot be overstated. Detailed research is necessary to gain honest knowledge about what the market is willing to pay. Otherwise, less than 40% of your potential market will be interested in purchasing from you.

Pricing is a top-down, bottom-up process. Top-down refers to the market and the price points that the market determines for products in the independent retail sector. Bottom-up involves calculating the landed cost of your product and determining if your costs, transportation expenses, and duties allow for selling with a sufficient 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 request pricing for 7 pallets of product, a 20-foot container, and a 40-foot container.

If shipping from Europe, choose Los Angeles as the delivery point. If shipping from Asia, use New York (always plan for the furthest point).

Transportation costs and duty rates are crucial factors.

Calculate the landed cost as follows: F.O.B. cost of products + 7 pallet transport cost to the furthest geographical point + duty. Express this as a percentage.

For example: Shipment F.O.B. 5,000 items with a cost of $10,000, transport & duty of $2,000. Transportation and duty account for 20%. Landed cost per item is $2.40.

Retail and wholesale costs - Top-down:

Determining your prospective customer base will allow you to establish price points at retail.

Begin your research with Google:

Find out what products are available in the U.S. at your prospective customers' locations. Compare similar products (or the closest matches you can find) and their retail pricing.

If the retail price point is $50, retailers should purchase it from a U.S. location for a maximum of $25.

Your landed cost should be $10.

Select your best-selling items and evaluate if these calculations work for you.

This is the initial step in determining your price point. You are embarking on a process that will determine if you have a potentially profitable and sustainable business in the U.S.

Completing your research and addressing the following questions will help you assess the prudence of your commercial action plan in the U.S.:

Are your products unique to the U.S. market?

Do you have competition? Make a list and bullet point everything about them.

What advantages does your product have compared to theirs? Make a list.

Can you compete with the current market pricing?

Between pricing and the unique selling propositions of your products, do you have enough to persuade retailers to buy your brand?

Create a bullet-pointed list of reasons why U.S. customers should buy from you.

Remember, it is the market that determines the viability of your company in the U.S. – no one else.

By thoroughly conducting your research and answering these questions, you will gain valuable insights into the potential success of your business venture in the U.S. It is crucial to rely on facts rather than assumptions. Creating a business plan based on solid information is the key to avoiding frustration and disappointment.

Those individuals and companies that take the time to understand the American market before expecting America to understand their design will consistently come out on top.