What are the real keys to success for European lighting and sound manufacturers who want to penetrate the huge United States market?
For Marcel Fairbairn, executive vice president of Tracoman, one big factor is point of view, and he sees an excellent example at the end of a simple power cord on a system one (unnamed) European firm tried to market in the US a few years ago.
"American users want to have a standard molded plug on the end of the cord, not just bare wires," Fairbairn explains. Bare wires, though, were what the company provided. "They saw that as flexibility--you could connect it any way you wanted," Fairbairn says. "But US users just want to be able to plug it in."
It seems simple enough to say: To sell anywhere, you have to understand the market. But the experiences of a number of leading European firms in building their American market share bears out that it isn't always so simple to do.
Tracoman, which for several years was the US distributor for the Denmark-based Martin Group, has represented the Italian firm Coemar since October 1999. "Coemar has a long history in this country," Fairbairn notes, "but they don't have any history of good distribution. They're just getting their roots under them now."
Fairbairn adds that when European companies approach American customers, there are often "misgivings on both ends." The Americans fear post-sale service and support will be lacking, while the Europeans fear they'll have to change everything they do to succeed here.
Still, many European companies report good, and improving, results in the United States, and that's a change from the recent past. "There was definitely a time in the United States when imported items, generally speaking, were frowned upon," says Nick Anderson, the London-based international sales and marketing director for Nexo, a French speaker manufacturer. For a long time, he adds, Nexo hesitated about committing to the US market because "other European products were having difficulties, and it just made no business sense."
Instead, Nexo concentrated on building market share in Europe and Asia, Anderson says, and in the mid-1990s finally decided to tackle the world's largest marketplace. "Our attack on the US market at that time wasn't successful," he recalls, largely because the company aligned itself with a distributor whose knowledge of Nexo products and niche markets wasn't strong enough.
When, in 1999, Nexo decided to go after US customers again, it was through a company-owned subsidiary, Nexo-USA, dedicated exclusively to marketing Nexo products. "Breaking a new product, and especially a foreign new product, takes people who have a certain keenness to them, to use a British term," Anderson says. Moreover, "We found that all the really good distributors were already covering other high-end products."
Nexo's US company was headed up at first by former Apogee executive Jim Sides; he was recently joined by David Solari as chief operating officer. Solari's long tenure at Meyer Sound illustrates what Sides calls the "key feature, commitment to the market. The American market is very different from any other market on the planet," Sides adds. "There are so many different regional variations and market segments that you really can't treat the US as one market."
Broadening the company's name recognition has been a major priority. In the past, Sides explains, "If you were using Nexo, you knew about us, but not otherwise. We were satisfying a specialist market area for high-end products, producing all we could and selling all we could produce. "Since launching the US subsidiary at the beginning of 1999," Sides says, Nexo has gone from "no business to speak of" to "several million dollars." Recent projects include US tours of Days of the New, Slipknot, and the series of Metallica concerts with various US symphonies.
The French audio company InnovaSon was in a similar position, says Jeff Alexander of Sennheiser Electronic Corporation, which is now distributing InnovaSon consoles and other systems in the US. "Five years ago, when it came to loudspeakers, mixing consoles, and the like, you just didn't think of France," he says.
Since targeting the US market about two years ago, InnovaSon, whose Sensory console won an EDDY Award last year [see ED February 2000] has sold about 40 units--fairly expensive items at around $125,000. InnovaSon has its own sales force, selling direct to contractors as well as end users, and is also relying on Sennheiser for sales, marketing, and technical service support. "We've met virtually no resistance on a geographic basis," Alexander reports. "The most popular consoles in this country are all either Asian or European anyway," he adds, referring to Yamaha, Soundcraft, and Cadac, among others, so buying such products from foreign sources was hardly a new experience.
Being known for high quality ought to be an unmixed plus, but European firms have often found this positive image was just one side of the coin. "The perception is that European products are a little better, but getting technical support is going to be harder," says Reggie Roark of New Century Lighting, US distributor for Italian moving light manufacturer SGM. "Nowadays that's not true. We stock everything here." Some customers, though, still prefer to buy "local," Roark adds.
Addressing customer concerns about service and parts availability is vital, says Robert Gordon of AC Lighting, which is now the exclusive US distributor for MA Lighting, including the GrandMA console, another EDDY Sound Product of the Year winner last year. "We can troubleshoot down to the component level," Gordon explains. "If every time you had a problem it had to go to Europe for a solution, that just wouldn't fly. Customers in this country are used to fairly instant service. They don't want to call some guy who is nine hours out of phase with them. If you want technical support, you'd have to get up at midnight to make the call."
Fairbairn agrees that for Coemar, "We needed people to perceive us as an American company, regardless of where the product is made."
Serving the concert and live event market puts a special premium on support, Nexo's Anderson says. "Relationships are especially important in live events. The only thing money really can buy is service, and you don't have any second chance. You have to do things right from the get-go."
SGM has had good results, Roark says, in the concert and corporate fields. In fact, growth in the corporate market may be making up for certain lethargy in concerts. "In the past, if you wanted to sell albums, you'd better be touring," he says. "Now, the millions of dollars you'd spend on touring will buy you tons of exposure on the Internet." As a result, major concert tours aren't the big growth market they once were. But paralleling this trend in the concert segment, Roark goes on, "it's been exploding like crazy in the corporate area."
Nexo's first major successes have come in the concert arena, Sides said, but the company also sees fixed installations as "where the money is."
When AC Lighting began distributing MA products, Gordon said, he felt "the people who most understand the value of this kind of product would be the concert guys." With this in mind, Gordon felt important new opportunities might lie elsewhere. "We initially targeted some non-traditional markets," he says. "It made sense to go after the industrial show market."
SGM's strategy, Roark says, has been "to go for the designers, for the ones who want to do something a little different." Results have been good, he adds, not only for SGM, but for European companies in general. "European products have experienced good growth in the United States. Of the top five companies in intelligent lighting, three are in Italy. Coemar is on 70% to 80% of the large tours." Those tours range from Tom Petty to TLC.
The best results for InnovaSon, says Alexander, have come in theatres. "We have our feet in a lot of sound reinforcement markets," he adds, "such as Broadway theatres," and InnovaSon products have been part of some high-profile concert events, including the recent VH-1 Divas show at Madison Square Garden in New York. The live sound market, though, has been difficult for InnovaSon, Alexander admits, partly because the company is trying to sell something new and unfamiliar: a large-scale digital mixing console. "Live sound engineers aren't always as willing as some others to try new things," he comments.
Any new market entrant will have plenty to learn, and European light and sound companies in the US are no exception. Fairbairn, for instance, recalls Coemar's early shipping experiences. "Their first shipment of lights into New York just got destroyed," he says, "because New York UPS drivers don't have a lot of patience." The company has learned to package its shipments to resist rough handling en route, Fairbairn adds. Gordon of AC Lighting notes that MA, like other European firms, relies on its US distributor "to be their eyes and ears. We tell them what the market requires."
A good example of that is SMPTE timecoding capability on lighting and audio consoles. "If you made a list of 'musts,' things that would make or break a sale in the US, timecoding would be on that list," Gordon says. "The Europeans thought it was important, but maybe not that important." Gordon adds that having a video monitor on a lighting console, until recently, was a "very American thing" that wasn't as popular in Europe. "Europeans hardly ever think the same way Americans do," he says, "so there are issues arising from how products are presented, as well as some fundamental issues."
Electrical codes and testing are an illustration, according to Gordon. Europeans regard product certifications as a function of government, and often don't understand how the US can put so much of this function in the hands of a private organization like Underwriters Laboratory. Moreover, "In some instances, the Europeans just don't know what approvals they need" in order to sell in this country.
Tracoman is guiding Coemar through an extensive redesign of everything from packaging to users' manuals, while Gordon is striving for such basic values as correct language. "There's nothing worse than advertising in a US publication in bad English," he says.
Step by step, along their sometimes-different paths, these leading European companies are moving steadily toward a major presence in the United States. However difficult the process may be, they believe it's worth it. After all, as Fairbairn notes, "When 50% of your global market is in the United States, you'd better take this country seriously."