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Global Perspective

Next Stop: Canada

1 Oct, 2008 By: Doug McPherson Response

Experts weigh in on how American companies can best enter Canadian markets, plus plenty of other good tidbits you should know about what's happening in DRTV with our neighbor to the north.

Crain: It really depends on the U.S. company. If they are buying and managing U.S. media, then we believe that they'll keep more of their profits by buying Canada the same way they do the U.S. — through a competent and responsive DRTV media buying agency based in Canada. Most U.S. telemarketers offer a Canadian service, there are a number of competent DRTV fulfillment services in Canada, and merchant accounts are easy to set up.

Stacey: In any foreign market, companies have to look at the various strategies of entry. You can hire an agency to buy time for a commission, you can work with a local distributor, or you can even open up your own head office. Most products today require a multi-channel approach that requires a distributor to warehouse and distribute the goods through all channels of distribution, such as TV, shopping channels, print, Internet and retail. It's more cost effective, more efficient and it avoids having to increase your fixed costs. It also gives you better access to media, saving you time and resources for other purposes. Using a distributor can improve your speed-to-market, which reduces competitive entry. Most important, working with a local rep can be more customer friendly, both to retail customers and retail stores from a logistics and customer service perspective. There are always agencies that can buy time for you, but they make money whether you make money or not. A distributor only makes money when the show actually works. Best of all, you're setting the wholesale price, so if you believe you're giving money away, then just raise it. For these reasons, examine your numbers very carefully regardless of which marketing approach you decide to take. Canada is a good market as a first step in an international marketing campaign. However, it is a foreign country and many companies run into problems when they begin to encounter differences in regulations, cost overruns, logistics problems or failure to maximize sales because they overlooked this small but important detail.

Woodrooffe: Finding profitable niches is one way to survive. Canada's French-speaking population is the largest, but Chinese and South Asians have their communities and are served by TV stations in their own languages. For example, you will note Chinese characters on some of our products, and we have translated Web pages for the products we are offering on these stations. Infomercial time on the most relevant TV stations is let on an annual basis. To move volume and create consumer awareness to drive sales through other channels of distribution, you need access to this time. It's mostly held by four or five companies. Also, we have both a provincial (state) tax and a federal tax that's added to all purchases. Some provinces have opted to show this as a single amount, while others show them as two separate amounts. You would need to have the systems in place to correctly administer this. And some infomercials need clearance from Advertising Standards Canada before receiving approval from Telecaster, a body run by the broadcasting industry to ensure infomercials meet regulations. It reviews infomercials for graphic content and the written and spoken word. If the product makes any health claims or contains any substances that may be drug related (for example, SPF for sunscreen), then the product would also require clearance from Health Canada.

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