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elizabeth aqui-seto February 7, 2002 09:35 PM

any lessons on market penetration
 
Hi, I have a concern that perhaps someone could shed some light on. And I trust it's acceptable to post this kind of question here. If not, I know I'll be told. :-)

I recently found a manufacturer/supplier of exotic butters and oils. These products are mainly used by companies in the cosmetics, soapmaking, aromatherapy industries. The company is local (Canadian). Some of their biggest clients are in the US, Europe and Asia. They capture a VERY small segment of the Canadian market.

This is where the story becomes mind boggling. I was speaking with one of the partners, who has an engineering background. She was telling me that many Canadians actually buy her product from those same suppliers in the US that she sells to. My background is in business systems analysis for the life insurance industry so I know nothing about the retail and manufacturing sector. But I'm sure that I'll be learning a lot real fast.

This case is in no way an isolated one. I also recently met a colleague who imports essential oils from Egypt and pretty well told me a simiilar story. Her biggest client base is in the US. She has the hardest time cracking the Cdn. market.

So, I'm wondering, are we Canadians simply not a very patriotic lot when it comes to supporting our own industries. Why would a Canadian company buy the same product from a US one, then turn around and sell retail in Canada, when there are so many factors (in this instance) working against them - our dismal Cdn$ vs. the US$, to say nothing of the cost of shipping, and delays at customs to name a few.

So, my challenge is to try to capture part of this Canadian market. I don't know if I am up to the challenge. I think it might be easier to find suppliers in South America and the Caribbean!!

Any thoughts or comments would be greatly appreciated.

Regards,

Eliz.

Dien Rice February 8, 2002 06:22 PM

Here are some guesses, on the US market vs. the Canadian market....
 
Hi Elizabeth,

> I recently found a manufacturer/supplier of
> exotic butters and oils. These products are
> mainly used by companies in the cosmetics,
> soapmaking, aromatherapy industries. The
> company is local (Canadian). Some of their
> biggest clients are in the US, Europe and
> Asia. They capture a VERY small segment of
> the Canadian market.

> This is where the story becomes mind
> boggling. I was speaking with one of the
> partners, who has an engineering background.
> She was telling me that many Canadians
> actually buy her product from those same
> suppliers in the US that she sells to. My
> background is in business systems analysis
> for the life insurance industry so I know
> nothing about the retail and manufacturing
> sector. But I'm sure that I'll be learning a
> lot real fast.

Hmmm.... It does sound strange. Do the US companies put their own brand on the products? Maybe some Canadians assume a US-sourced product will be better quality than a Canadian product?

Or perhaps the US companies in this case simply have stronger (and better known) brands in that industry?

It's hard to know without a few more details, but there are a few possible guesses as to what might be happening.... I could be completely wrong too though....

> This case is in no way an isolated one. I
> also recently met a colleague who imports
> essential oils from Egypt and pretty well
> told me a simiilar story. Her biggest client
> base is in the US. She has the hardest time
> cracking the Cdn. market.

There are about 10 times as many Americans as there are Canadians, so the US market is clearly the bigger market. Maybe that's partly why her US client base is bigger than her Canadian one? I don't really know - just some more guesses as to what might be going on....

Another factor could be culture. US culture and Canadian culture are not identical, so there might be some differences in demand for different things due to this.... The economy might also be another factor too.

Anyhow, I don't know if I helped but at least there are a few possible guesses....

- Dien Rice

elizabeth February 9, 2002 02:14 PM

Re: Here are some guesses, on the US market vs. the Canadian market....
 
> Hi Elizabeth,

> Hmmm.... It does sound strange. Do the US
> companies put their own brand on the
> products?

Yes, the US companies do trade under their own brands. I think this is very commmon. And when I set up my own line, I too will have my own brand. And I'll have to come up with something real 'good' or else my product could risk being perceived as 2nd class!!

Maybe some Canadians assume a
> US-sourced product will be better quality
> than a Canadian product?

Unfortunately, you are right on this as well. We feel Canadian perception wins hands down.

> Or perhaps the US companies in this case
> simply have stronger (and better known)
> brands in that industry?

Don't know enough about the major/big players to comment on this.

> It's hard to know without a few more
> details, but there are a few possible
> guesses as to what might be happening.... I
> could be completely wrong too though....

> There are about 10 times as many Americans
> as there are Canadians, so the US market is
> clearly the bigger market. Maybe that's
> partly why her US client base is bigger than
> her Canadian one? I don't really know - just
> some more guesses as to what might be going
> on....

And you are right again re size of the US vs. Canada. A key factor worth considering.

> Another factor could be culture. US culture
> and Canadian culture are not identical, so
> there might be some differences in demand
> for different things due to this.... The
> economy might also be another factor too.

> Anyhow, I don't know if I helped but at
> least there are a few possible guesses....

> - Dien Rice

Dien you've touched on many key reasons. I've been doing a mini phone survey among those I know in the industry, mainly associations. It seems culture plays a big role here. Canadians, no matter what industry, always seem to have to prove their worth in the US before they will be accepted and recognized at home. This is very evident in the arts. Many of our now 'famous' artists, too many to mention here, had to gain recognition in the US before we recognized their talent at home. But it's also very interesting how many Canadians will still buy in the US, even with our weak Cdn$ when they could just as easily get the same product locally.

Many of us want to suppport our local industries and have that unique Canadian identity, but when we get down to really 'walking the talk' we don't practice it.

Many economists and experts are also telling us that it's no longer 'if' but 'when' will Canada and the US share the same currency, like many European countries now do with the Euro. Perhaps when this happpens, commerce between the two countries will become less of a challenge and Canadian goods and services will be perceived by Cdns. just as good as those from the US.

Thanks for your comments.

Eliz.


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