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Program Complexity


Shawn Hamill

Aug 5, 2023

During my 30 years selling consumer packaged goods, primarily to home improvement retailers, I have encountered many challenges getting a product to market. I have seen many entrepreneurs or small businesses turn great ideas into exciting products, but they failed to recognize how much more work is still required. We’ve all seen that exciting invention that seems to fit a need but just never seems to get

traction in the market.

Reflecting on my college studies, I recall first hearing about the “5 P’s”, product, packaging, price, promotion, and distribution (a P turned 180 degrees, and as important as every other). The marketing world is full of case studies about companies that excelled in the first P “Product”, but failed to fully develop an effective business plan that addresses all of the P’s of marketing.

Let’s start with packaging. Having developed sales programs in both Canada, and the US, and having sold US made goods into Canada extensively, I’ve seen two common challenges. The first is packaging copy, and language.

US manufacturers often struggle to understand the importance of bilingual packaging… or more perhaps trilingual packaging. In the US, English/Spanish packaging is good practice, but not mandatory. In Canada, French language is not only mandatory, but the requirement states also that it must be the same size and prevalence as the English verbiage. The only exception to this is words that are

trademarked, such as branding.

When American manufacturers, or specifically marketing executives, consider that the limited space they have to tell their story needs to be divided equally between the 3 languages, they struggle to rationalize it. In a market of 330 million people, making space to appeal to 60 million Spanish speaking Americans makes economic sense. Once they divide the space a third way, for 7 million French speaking

Canadians, they often question if it still makes sense. It’s important to understand that it’s mandatory if they wish to sell to the whole of 36 million Canadians. Often, I’ve seen manufacturers question whether they can skirt the rules by featuring predominantly English language, or they stick with English only packaging, hoping they won’t get caught. The reality they soon encounter is that no major retailer in the Canadian marketplace will stock their shelves with a product who’s packaging isn’t compliant with Canadian Packaging laws.

For more information on Canadian and US packaging laws, here is a helpful link:

Once the packaging debate is settled, the manufacturer then needs to start considering pricing. For US made goods, the challenge again is the complexity of the Canadian market, and it’s additional costs of distribution. The first add on is the Canadian/US border. Even if a product is exempt from import duties, it’s still subject to customs brokerage charges. These are generally fixed charges per line item on an

invoice. In other words, if the line-item charge is $20, that is charged regardless of whether the customer is ordering 1 item with a cost of $1 each, or 1000 items with a cost of $1000 each. This creates a challenge in serving smaller customers, from the south side of the border. In some cases, the best solution is to find a Canadian based distributor, which adds cost to the selling price. Often manufacturers argue that they will focus their energy on selling only to larger, national retailers, who can order in large quantities. However, there are few of those in the Canadian home improvement industry, and they generally want the manufacturer to establish the product in the market before they’ll stock it in their warehouse.

At this point, one must ask themselves if they’re ready for the rebate discussion. If you wish to get a product listed with a national retailer, you will inevitably be asked about rebates. Rebates cover the cost of things like warehouse allowance, co-op advertising, growth rebates, and whatever the customer deems is a cost the manufacturer should help cover. Many manufacturers take their product to market

via direct to store, hoping to establish it at the store level, in hopes of being promoted to a national program. Sometimes they fail to consider the potential cost of rebates for a national program. As a result, they price the item at what they believe to be a fair price, based on cost. If/when a national retailer considers stocking that product nationwide, it’s common for them to ask for 10-20% in rebates,

either deducted off face of invoice, or paid out quarterly, or year’s end. Some manufacturers fail to consider this when they are structuring their pricing. Try telling your early customers that their pricing needs to increase by 15% because you’re going national. If manufacturers structured their goods from cost up, without factoring in the demands of a national program, that’s the dilemma they often face.

This highlights another challenge of selling foreign products into the Canadian market. The cost of distribution is higher, and riskier than selling in the US. Canada has 35 million people spread out over a larger geography than the US, where 330 million people are located. In fact, the greater Chicago market is almost as big as the Canadian market.

Selling into the Chicago market doesn’t involve duty, customs brokerage, or a fluctuating currency. All these things need to be factored into your pricing structure. Typically, Canadian divisions of US manufacturers are set up in a way similar to being a distributor. They are considered a separate profit centre, acquiring goods from the US division, and mark it up accordingly. This can cause complications,

when it comes to customers near the border, affected by cross border shopping. The last two P’s are less complicated but still very much worthy of consideration. Sales collateral, including brochures, point of purchase materials, websites, all must have French versions, to be used by major retailers. Home Depot purports to have an average of 1 million people per year passing by each display in their store. So, it’s obvious the benefit of telling your story is immense. So, this is a good investment.

Just like in the US, there are many good sales agencies that offer coverage regionally, and often nationally, on a commissioned basis. The challenge is they are ‘jack of all trades’ reps. It’s challenging for them to become experts in all product lines, so a National Manager, under the employment of the company, is good practice.

As far as distribution, it’s always wise to consider a strategy that offers a one step, and a 2-step solution. While the acceptance of 2 step distribution is common in the US, it is met with more reluctance in the Canadian market. So that needs to be considered.

Please feel free to reach out if you wish to discuss your program’s structure.

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