Crossing the divide

Many US service providers have failed in the European market, due to over-confidence, unrealistic claims and a reluctance to adapt to the different cultures. Yet some US products are massive successes. It just takes patience, understanding and integrity, says Catherine Turner

cadillacGenworth Financial, the US insurance company, has appointed McCann Erickson London to handle its multi-million pound pan-European launch (MW last week). It says it is poised to "change" the insurance landscape in Europe, but detractors believe it faces an uphill struggle. Countless US giants have failed to make the grade on this side of the Atlantic.

The task is particularly tough in the UK, and especially in the finance sector, says one agency executive, who points to a different style of doing business and an already crowded market as two of the main reasons.

"Finance is tough for any foreign company to crack in the UK," says the source, pointing to Citi’s slow growth in the market – despite being "huge" almost everywhere else – and the need for Spanish giant Santander to buy Abbey, rather than set up shop separately. Indeed, Citi admitted as much after its recent purchase of internet bank Egg, which it says has real consumer presence and brand resonance.

Manchester United shirt-sponsor American International Group (AIG) was said to be planning a major assault on the UK after last year’s £56.5m four-year deal with the club. Twelve months on, however, it is difficult to see what – if anything – has changed.

As one rival insurer says/ "I don’t know what AIG’s goals were or what they were trying to achieve when signing that sponsorship, but so far you’d have to say it wasn’t a major UK push – China, perhaps?"

The source says AIG’s brand awareness has never been higher in the UK and Europe, but adds that what the brand stands for and what the company sells are more ambiguous.

The insurance company has spent intermittently on advertising, although commercials seem to be concentrated in and around televised football.

"It will be interesting to see what AIG does next," says the insurance expert, warning that AIG risks being nothing more than the football team’s US sponsor.

For some, it is indicative of the old myth about US companies being over-confident or even arrogant. Malcolm Wade, the former UK managing director of Cadillac and Corvette, launched a stinging attack on US companies in November last year for failing to understand the European market (MW November 30, 2006).

He said at the time: "The Americans didn’t realise the investment needed to launch a US brand in Europe and they don’t understand that we’re not the United States of Europe."

Wade, now group managing director of motorbike clothing company Lloyd Lifestyle, added: "They don’t understand, and don’t want to understand the European consumer."

Inexperienced
The intimation is that the giants of US commerce assume that if they have got enough cash they can roll over the competition. Another significant problem, claim observers, is that they are often run by people who have little experience in Europe.

Genworth international brand manager Javier Diez-Aguirre admits it is a mistake that many US companies make, but one that Genworth is keen to avoid.

He says: "The challenge we face is a challenge every single US company faces, which is acquiring an international mindset. This is a big challenge externally and internally.

"There is always the chance that you will be seen as a venturer coming to Europe to ‘colonise’. But that is not the case here. We have history and we employ people in the local market. We have to make sure that people shift from a US-centric way of doing things to a European one."

The brand will launch initially in five European markets, including the UK, and Diez-Aguirre says that by 2010 it predicts 50% of its earnings will come from outside the US.

Genworth formed in 2004 as a spin-off from General Electrics (GE), which it says gives it experience and the footprint of a "truly global" company.

The launch, says Diez-Aguirre, will be high profile and relevant with advertising expected to break in May. Campaigns will straddle TV, press, outdoor and online, and the company has signed a "significant" pan-European sponsorship deal with a "big" sports association.

"The UK is the number one insurance industry in the world, and we need to treat it a little bit differently," adds Diez-Aguirre. "We have to think that one size doesn’t fit all. All countries will have similar elements, but will vary according to the market."

Yet, despite a long list of recent failures – even Procter & Gamble admitted defeat with the Charmin toilet paper brand, saying last month that it would axe the brand in the UK – there are successes that show US brands can, and do, get it right.

coca%20cola%20logo%20120pxBritish Values
For every Cadillac and Charmin there is a McDonald’s, Microsoft, Coca-Cola and CapitalOne.

A Coca-Cola spokesman says its success is down to seeing – and selling – itself as a "British business". The brand first came to the UK in 1900 and from the 1920s was sold through soda fountain outlets, including Selfridges.

He says: "The success of Coca-Cola in the UK is about applying a British lens to the business. Obviously, the business of selling the world’s most loved soft drink is a compelling proposition. But in order to successfully meet the wide variety of needs of the British public, you have to be British in instinct and execution."

Citi hopes to use the Egg brand to help it become a "high end" high-street provider. It is a big player in continental Europe, although much of its size is down to an aggressive, and some say piecemeal, acquisition strategy.

The most successful US "invaders" used to adopt a slow-build approach, gradually eating into their rivals’ market share and taking years – even decades – to reach a tipping point before finishing off local competition.

John Butler, chief executive of Harrison Troughton Wunderman (HTW), says Americans too often forget – particularly in the UK, which shares the same language – diversity of culture.

Butler says many of the success stories are products, rather than services, which transfer across boundaries better.

"Services are different, because culture has a huge impact," he says. "Americans have to spend four or five years in the UK before they’re considered ‘not radioactive’."

Adds Butler: "A bunch of US executives pitching up over here, expecting a friendly welcome without adapting to the culture, are not going to meet with much success."

He believes that the US is a "frontier" nation, which expects other cultures to meet them more than half way, which can lead to companies underestimating the level of investment, adaptation and time needed. "Sometimes the US tends to operate out of ignorance – rather than stupidity or arrogance – of what the norms are."

But, as one UK-based US executive says, many do not have the strategy, financial clout or patience to see the job through. And, adds the source, times have changed: "It is important not to be seen as arrogant or as a company claiming to save the world or change people’s lives. That is not the position to launch on, and is something that many companies forget. You cannot go out on a thinly-veiled mission. People will know."

It is a warning that all companies launching into new markets, and perhaps a few homegrown players too, should heed.

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