Vigour Health: the ASC-Series launch in Canada

Abstract

This report is part of the authors’ bachelor degree in International Marketing and analyzes the Canadian vitamins and dietary supplements (VDS) industry. Based on this analysis, the authors will be proposing how Vigour can enter the market. Vigour Health was founded in 2006 by Omar Paulsen Bekheet and John Ivar Andre and the goal was to introduce a new lifestyle concept that should be inventive in its approach. Vigour utilizes raw materials from the northern parts of Norway, and produces prescription-free, unique dietary supplements from perhaps the cleanest environment in the world. The company wants to export its Arctic Seaweed Complex series (ASC) to Canada, which has the following products in its portfolio: Pure:DETOX, Daily:PROTECTION and Figure:BALANCE. However, Vigour is currently in the process of launching their products in Norway and has therefore a rather limited budget to support their market entry in Canada. The first section of the report describes the research problem, research objectives and methodology. It further outlines more about Vigour and the company’s strengths and weaknesses, before it describes the Canadian VDS industry with an emphasis on distribution channels. Based on the findings, the authors have identified different courses of action and make a recommendation at the end of the report. Methodology The report is based on both primary and secondary data. Secondary sources that were used consist of online articles, books, newspapers and reports. Due to a highly competitive industry and the number of the existing distribution channels, primary research was also conducted in order to outline the process behind getting new products into a retailer’s products portfolio. This was completed through interviews by phone and in person with different members of the industry. A focus group was also conducted to discover people’s opinions regarding consumer behaviour related to VDS, using Norway as a country of origin and market trends. Main findings from the analysis Total sales of VDS in Canada were estimated at $861 million in 2006, which represented a moderate growth compared with 2005. In recent years, many Canadians have become more health conscious and are changing their lifestyles in regards to exercise and nutrition. Canadians are attempting to stay healthy by adding vitamins and herbal remedies to their routines and 30% of Canadians take VDS products on a daily basis. 50% of the population in British Columbia (B.C.) use VDS products regularly and the province is considered to be the most health conscious in Canada.In Canada, vitamins and dietary supplements are sold through different retail channels, including supermarket chains, drugstores, speciality stores and online. After investigating a broad range of distribution channels, the most suitable are outlined in the report. These consist of the wholesalers/drugstores London Drugs and Katz Group; food/drugstores Capers and Pharmamart; speciality stores Nutrition House, GNC and Unique Nutrition; and two online retailers: Cureself and Nature’s Essence Health Products Inc. The Canadian VDS industry is a difficult business to operate in and is recognized by the industry’s competitive environment along with retailer’s high bargaining power. The main findings from the analysis have confirmed this claim and the choice of distribution channels seems to be the main issue when entering the Canadian market. By choosing traditional retail, there are many additional costs and Vigour would be left with little or no control over their products. Furthermore, big competitors such as Jamison and Greens occupy large sections of the shelves in these stores and it is difficult for a little company to stick out. Hence the importance of differentiation and to establishing a niche strategy will be crucial in order to succeed in Canada. Recommendation After analyzing the Canadian VDS industry and making the discovery that the choice of a distribution channel is critical, the authors have outlined three different courses of action in which to enter the market. The first option executes mass retail by entering through London Drugs and Katz Group, which will expose Vigour’s products to a big customer base, but will acquire financial investments and leave the company with no control. The second alternative, premium retail, is carried out by offering Vigour’s products at Capers and through two unconventional retailers; Lululemon and Helly Hansen. This strategy would be excellent in terms of reaching the target market and will give Vigour a more exclusive image. The last option consists of opening a fully owned store at one of Vancouver’s busiest shopping streets along with offering the products online. The store will, in addition to retail Vigour’s products, operate as an information centre and promotion tool in order to create buzz about the brand and positive word of mouth. To execute this strategy, Vigour should line up with a partner. Based on their exclusive image, Voss Water is recommended. By evaluating these ways of entering the Canadian market, the authors believe an exclusive retail and online store is the most profitable option. This recommendation is not only based on financial calculations, but also on the fact that this strategy will give Vigour full control over distribution. Furthermore, by executing this niche strategy, Vigour will be able to build an exclusive brand and operate as an “all embracing lifestyle company”.