Some Packaged Goods manufacturers have considered expansion into Canada and taken a pass. There are good reasons to re-consider now. Here are just a couple for starters:
Scale: “Canada is the largest international market for most USA consumer packaged goods companies.”* Those U.S. brands with Canadian market presence have (sometimes significant) advantage over those without in terms of home market efficiency spurred by economy of scale. * Export Solutions
Ease of Entry: Canada may be culturally distinct from the US, but across many product categories Canadian purchase habits are remarkably similar. Also- consumer trends originating in the US often travel next to Canada. As well, Canada enjoys some inherent efficiency for U.S. exporters:
-60% of Canadians live within 60 minutes of the US border (and see/hear/read high levels of spill-over U.S. brand advertising)
-The leading Mass Merchandise and Club retailers in Canada are common to those in the U.S. (Wal-Mart, Costco, TARGET Canada)
Involve Retail Partners Early in the Process:
Some manufacturers consult retail partners early in the process. In those instances the success rate rises from 51% to 75% (where success equals meeting objectives). Here are just a few tips for starters;
Tip #1- Verify that your New Product offers a REAL and VALUED Point of Difference:
Some new products are differentiated and functionally superior, others aren’t. In the New Product Success study, those new products that demonstrated competitive superiority were successful in 86% of cases. The Nielsen Company echoes this finding:
“highly successful products were four times more likely to feature breakthrough technology than less successful products.”
Tip #2- Demonstrate Mutual Commitment:
Both partners must agree upon performance targets and invest similar energy and resources in meeting them. They must also agree upon critical timing checkpoints for achieving performance targets, a grace period prior to store brand activity and the length of time the manufacturer commits to investing consumer support. Consider this—listing allowances should be variable and tied to commitment and performance in both directions.
Tip #3- Invest In Knowing How Canadians Feel About Your Product:
A go to market strategy is not complete without conducting the appropriate consumer and product research. This research in the long run will help determine whether you have a product offering that Canadians are willing to pay for or whether you will have to go back to the drawing board. CB Powell can help with this research as this is one of our first steps in a go to market strategy.
Why a Canadian Management Presence?
There are many consumer brands in the Canadian market that originate elsewhere. For the exporter considering their go-to-market strategy the options are numerous: from running Canada from the home market to creating a Canadian division all the way to partnering. There are compelling reasons to acquire a strong Canadian in-market business partner. Here are but a few:
Canada is Different
“One in five product concepts deemed ‘successful’ in the US fails in Canada.”* * (The Nielsen Company: Pre-Bases)
Success in your home market is not assured elsewhere. The factors that contribute to your success in the home market- skilful managers deeply familiar with your respective category(ies), your competitive, consumer and customer communities must exist in export markets too in order to build and sustain strong and profitable brands. The connection you need to the Canadian market exists with firms already here and operating successfully.
Home Court Advantage
Though retailers are increasingly North American, Canadian retail operations continue to recognize the need to respond to the unique purchase behaviour of Canadians resulting from cultural and other differences.
As well, Support services in Canada (advertising, promotional, merchandising, research, information and technology) are resident here, and sourcing the right services from the best suppliers in the most efficient manner requires local market expertise, familiarity and (often) the influence that comes with critical mass (i.e. buying these services for multiple brands).
Getting (and Keeping) Retailer Attention
The Canadian food trade is highly concentrated and increasingly selective with their time and programs (i.e. investing in vendors representing significant business importance).
The first key to effectively achieving share-of-customer mind, and to leveraging this status for improved business performance lies in having established strong relationships, forged on trust and positive prior experience. The second key is to have sufficient business critical mass to be too important to ignoreand this occurs when you are a part of a core of market leading brands.
Diversification without Distraction
Export market success is only truly incremental IF it doesn’t come at the expense of your home market business. The lure of assigning ‘parts’ of home market resources to manage export markets is one sure way to take your eye off the ball. While the Canadian market can be lucrative it is no less complex than your own. All stops along the value-chain- administration, logistics, sales and marketing management must be managed across a wide variety of demanding customer organizations and a one-stop in-market solution often makes the difference between export sales that are incremental and those that dilute home market performance.
For more tips and information please feel free to contact us