Targeting America

Countless American brands have ventured across the border over the years, most to be greeted with open arms by Canadians. Ironically, despite the fact that our southern ally is home to 10 times our population, Canuck brands haven't always been as fortunate traveling stateside. Those that have retreated from U.S. expansion plans include such Canadian powerhouses as Canadian Tire, Second Cup and Shoppers Drug Mart.

Countless American brands have ventured across the border over the years, most to be greeted with open arms by Canadians. Ironically, despite the fact that our southern ally is home to 10 times our population, Canuck brands haven’t always been as fortunate traveling stateside. Those that have retreated from U.S. expansion plans include such Canadian powerhouses as Canadian Tire, Second Cup and Shoppers Drug Mart.

But if the Great White North can accept and adapt marketing strategies from the U.S., ostensibly due to our cultural similarities, then it stands to reason that our brands should easily fit into their marketplace.

In fact, almost half of 250 CEOs recently polled by Ipsos Reid in the ‘Annual Canada Most Respected Corporation Survey’ cited the U.S. as the most important country for growing their business in the next three years. However, if those who have gone before them were to offer any advice, it would be to cherry pick markets, locations and consumer segments.

John Torella, a senior partner and consultant at Toronto-based JC Williams Group, suggests that what is required is an in-depth understanding of what he calls a very

complex market.

He cautions that the U.S. is not a homogenous market, and that it requires ‘all kinds of segmentation’ due to the diverse ethnic groups, and geographic and lifestyle differences. After all, he points out, New York City is a far cry from San Francisco.

Plus, due to intense competition, it takes deep pockets to succeed south of the border; JC Williams estimates a price tag of $100 million over five years to build brand awareness in the U.S. ‘The home improvement category for Rona is going to be a daunting challenge – especially with Lowe’s and Home Depot in that market,’ he says. ‘You need a larger budget for marketing [in the U.S.], but also the question is are you prepared to make an investment for critical mass?’

One brand that runs smoothly stateside is Aldo. According to Torella, this is because the footwear retail chain adopted a ‘cluster’ approach, winning over markets one at a time, as opposed to spreading out across the country. ‘Whether it was Chicago or Boston, they [targeted specific] areas and gained critical mass.’

Susan Sanderson, EVP client and creative development at Toronto-based brand consultancy Watt International, also stresses that a finely honed market choice is crucial. ‘You’re in a different place and it’s 20 times more complex,’ says Sanderson, an American who has lived and worked in Canada for the past five years. ‘You can certainly fail if you fail to understand who your consumer is. Yet it can be overwhelming for Canadian companies to figure out whom to go after.

‘And it’s not just whom – it’s also, are you going to start out regionally or go for the whole enchilada?’

Mississauga, Ont.-based Manchu Wok Group has certainly grappled with that issue. President/CEO Kelvin Chen says the retail chain first entered the American landscape about five years ago, when it purchased 20 stores in California. It now has 120 outlets in the U.S., a favourable market where Chinese food makes up over 25% of eatery occasions when it comes to all ‘ethnic’ foods, according to the company. Thus, you can now find Manchu Wok banners in New York, Florida, Texas, Louisiana and D.C. (By comparison, the QSR operates 80 shops in Canada.) ‘We have been growing, but not exceptionally aggressively, because we’re careful with the locations we choose as well as the franchisees,’ says Chen.

Chen has been at the helm of the company for less than a year, and says that California, their original U.S. target, has proven to be a tough market. ‘My guess is that we have taken our eyes off the ball. In retrospect, with all other things being equal, why not concentrate on three states, near the Ontario border, as opposed to one 3,000 miles away?’

To make the long distance relationship work, Manchu Wok has been diligently getting to know its new consumers’ turn-ons and turn-offs, and altering dishes in order to accommodate regional tastes. For example, to appeal to the massive Hispanic population in the southern U.S., Manchu Wok serves up spicier dishes in those areas.

The decision to tinker with recipes was made at the Canadian HQ, and Chen says having an open-minded marketing team is an essential ingredient to establishing when change is necessary. When it comes to marketing strategy, Chen says the chain relies heavily on promotional tactics, which are typically easily transportable. For example, Manchu Wok recently wrapped a poker promo, where consumers were given scratch cards offering a chance to win up to $100,000, as well as secondary prizes.

‘That would attract the attention of people who otherwise might not be attracted to us, and we structured it in such a way that there would be some bounce-back effect – if you didn’t win some of the grand prizes, there was other prizing that would [encourage] consumers to come back.’

The key strategy for Chen, however, is to continue to be cautious when it comes to defining their optimal target market. For instance, instead of focusing exclusively on mall space, where competition is fierce, Manchu Wok has been targeting campus and turnpike sites. ‘We’re not closing down stores, but we will be more selective about where we want to grow going forward,’ he says, adding: ‘Once you have a cluster of stores, it’s easier to give them the support they deserve, from a logistical, marketing, even a management perspective.’

Similarly, targeting is the central factor in Toronto-based EnviroTower’s strategy for U.S. expansion. Its customers are large commercial property owners, such as office buildings and hotels, and according to VP marketing Shelley Cornforth, the B2B firm, which has a patented technology used for treating water in tower coolers without using harmful chemicals, took a ‘borderless view’ of North America when it launched two years ago.

‘We look for where there’s the greatest need and demand, and although we did start on our home turf here in Canada, we’re also in some key markets in the U.S. south and the U.S. west, where conditions tend to be strongest for our product,’ says Cornforth.

In fact, 20% of EnviroTower’s business already comes from the States, where it has installations in California, Florida, Texas and Minnesota. That’s a number it hopes to improve and the firm is currently working on a ‘multi-site opportunity’ with FelCor, a large real estate investment trust that owns a number of hotel brands including Sheraton and Hilton.

Explains Cornforth: ‘We’ve looked at regions that can benefit greatest – for example, where there are hotter climates, where there are stricter environmental regulations, where there are incentives, where the water tends to be harder. Those companies can benefit greatest, because [we offer] cost savings around saving energy, water, and the cost of chemicals, as well

as eliminating toxic

water discharge.’

EnviroTower’s marketing messages are tweaked depending on the region, explains Cornforth. ‘The priority of those benefits might change. So for example in California, there is a water scarcity issue. So the water savings benefit to our business resonates strongly. That’s not as big an issue here in Canada – some of the energy savings and chemical reductions would be where customers are looking to make changes. We’ll adjust our messaging; we’ll adjust what we’re stressing to our customers.’

Consumer understanding of the technology will also come into play. Cornforth points out that in California and Florida, they are further along in knowledge of the technology and, as a result, readiness to adopt it, so distributors play a bigger role in EnviroTower’s business in those states. In Canada, meanwhile, more education and market development are still required, and the firm relies more heavily on direct selling.

A fair bit of the B2B company’s marketing, such as web seminars, is conducted centrally through the Canadian HQ. To leverage and deepen market-specific insight, EnviroTower is currently looking for U.S.-based marketing partners who are familiar with its targeted geographic regions to help get its message out and further grow its business.

For her part, Sanderson says that it makes sense for both consumer-focused and B2B marketers to consider the U.S. But she also warns them to tread carefully, because along with the enormous population, which is not concentrated as it is north of the border, comes the difficult task of breaking through. ‘The proliferation of choice is probably tenfold what I see here. [Whatever your industry], you’re going to have to consider that.’