Finding new opportunities in response to trade tensions

The list goes on.

In this uncertain operating environment, it’s up to you as the owner/entrepreneur/manager to think through these questions, understand the potential impact any tariffs will have on your business, and then establish plans that will enable the business to effectively pivot, as required, to maintain a stable and forward-looking enterprise.

In the immediate/short term, these plans must address any financial stresses the business may face—tied to sales, cash flow, margins, etc.

Being able to pivot, though, requires the you to think through options whose benefits may only be realized in the medium to long term.

Put another way, pivoting in business is all about taking a hard look at your current product and market mix—the what, the who and the where—and making decisions on what changes make sense to not only survive, but thrive. That is what resiliency in business is all about.

For Canadian exporters to the U.S., or for Canadian suppliers of exporters to the U.S., the threat of U.S. tariffs and of reciprocal duties from Canada on U.S. products highlights that it’s time to take a hard look at your product-market mix. Should it remain the same? If not, what changes do we want to make and/or can we make?

Finding new opportunities using the Ansoff Matrix

A useful strategic planning tool to help you think through this process is the Ansoff Matrix.

Created by Igor Ansoff, the Ansoff Matrix provides a framework to evaluate strategies for future business growth. It is simple to use and it helps decision makers understand the level of risk associated with different product-market strategies.

The rest of this blog will walk you through strategies you can use to respond to the threat of tariffs, using the Ansoff Matrix.

It is important to note, though, that the Ansoff Matrix should not be used as a standalone tool in crafting your product-market diversification or expansion plan. It should be part of a broader toolbox that also includes organizational, operational and financial solutions. In the context of our current and evolving trade relationships with the U.S., the goal is to determine what is a realistic and acceptable balance of opportunities and risks for the business and its stakeholders.

1. Strengthen relationships with existing customers

Get in touch with your most important clients. Do they have unmet needs? Is there a way you could better serve them? Try to find ways you could sell them more than what you already do. Consider using email marketing to keep customers informed about new products and offers. You may also be interested in creating events, webinars or workshops to engage with customers and build stronger relationships.

2. Increase marketing efforts

Invest in more targeted advertising campaigns to reach a larger audience. You can use platforms like Instagram, Facebook and LinkedIn to engage with customers and promote products.

3. Offer promotions and discounts

Introduce time-limited offers or discounts to encourage more purchases.

4. Improve customer service

Ensure customer service teams are well-trained to handle inquiries and provide excellent service. You can also think about implementing systems to gather customer feedback and make improvements based on their suggestions.

5. Enhance product availability

Make sure that popular products are always in stock to meet demand. You can also try to work with more retailers or online platforms to make products more accessible.

1. Explore new geographical markets

Exploring new cities, provinces or regions within Canada might be one of the fastest ways to replace lost revenue because of tariffs. You can also try to break into new countries where you products are not subject to the same tariffs. For example, Canada has free trade agreements with the European Union as well as several Asia Pacific countries.

Whether you choose Canadian or international markets, market research is key to a successful market entry strategy. You should look at several potential markets before narrowing the list to two or three for closer study. Try to look for markets that are attractive in terms of size, proximity and growth, but also places where you can be competitive as an organization.

For Canadian markets, Statistics Canada, chambers of commerce and economic development agencies are good sources of data. Export Development Canada and the Trade Commissioner Service have excellent resources for companies looking to export or expand abroad. Once you’ve narrowed down your choices, you may want to look more in-depth at your industry by purchasing reports from specialized research companies.

Keep in mind that markets have their own unique characteristics. What works in one place may not work in another. The E.U., for example, isn’t a single market but rather a collection of local markets with different laws, regulations, logistical challenges, business cultures and consumer tastes.

2. Target new customer segments

You can try to identify new customer segments that have not been previously targeted. This could include different age groups, income levels or customer lifestyle preferences.

Companies targeting the business segments could also consider expanding into different industries that may benefit from your products. For example, if you primarily serve the retail sector, consider targeting healthcare, education or technology sectors.

3. Focus on online sales

More and more customers are comfortable purchasing online. Making sure you have an updated, optimized e-commerce website that’s supported by effective digital marketing campaigns can be a good way to reach new customers at a lower cost.

4. Form strategic partnerships

Consider working with local distributors or commercial agents who have a strong understanding of a specific market. This can help you navigate regulatory requirements and establish a presence more quickly. 

1. Create new products 

Can you Develop products that use materials or components not subject to tariffs? This might involve redesigning existing products to use alternative materials or suppliers. 

Or, could you offer customizable products that are tailored to specific customer needs, making them more attractive despite potential price increases? 

2. Expand your product line 

Think about introducing new products that complement your existing offerings. This can help increase overall sales and reduce the impact of tariffs on any single product. Developing premium versions of your products that you can sell at higher prices is another strategy. 

3. Invest in research and development (R&D) 

Are there innovative products that differentiate your business that your could create? Maybe it’s something nobody else can do, or something that helps others save money.  

Another approach is to focus on developing eco-friendly or sustainable products—for which customers are willing to pay more. 

4. Collaborate with partners to jointly develop a new product 

Working with other companies to co-develop new products can help share the costs and risks associated with product development. For example, you can work with suppliers to develop new materials or components that are not subject to tariffs. 

1. Consider a business acquisition

Buying a company can quickly give you access to a new product or skilled employees. It can be a way to de-risk the R&D process, for example.

It can also be a way to boost your production capacity in a closed off market. Depending on your financial capacity, buying a business in a foreign market can be an interesting way to deal with tariffs.

2. Look into joint ventures

Would a partner be able to manufacture your products for you at a lower or similar but in a different jurisdiction? Creating a joint venture is a complex process, but it can be an interesting option to help maintain your revenues.

An opportunity to build more resilient businesses

These strategies by themselves will not solve all challenges caused by potential tariffs on Canada-U.S. trade. However, they can certainly serve as components of a broader strategy to navigate the complexities of the current context.

By diversifying your market approach and product offerings, you can build a more resilient business capable of withstanding economic fluctuations and geopolitical challenges. Diversification not only opens up new revenue streams but also spreads risk, ensuring that your business is not overly dependent on a single market or product line.

Companies that embrace diversification will be better positioned to capitalize on emerging opportunities and mitigate potential threats. The key is to remain adaptable. In doing so, you’ll not only safeguard your business against uncertainties but also lay the groundwork for sustainable growth and success in the years to come.

At BDC, we’ll continue to work with our partners to help give you the support you need, through good and bad times.

Don’t hesitate to contact us if you have any questions or think we might be able to help you as you face this period of uncertainty.