Canpotex sales to China a model of marketing

In 1983, Canpotex, the marketing arm for Saskatchewan’s potash producers, targeted China as its single most important growth market. To achieve a real breakthrough in that market, however, Canpotex knew that packing off a salesman to hustle peasant farmers simply wouldn’t work.

Instead, the assault was carefully planned by a market development committee, which recognized that the required first step would be a market survey. A Hong Kong advertising agency was enlisted. The agency sent representatives into the Chinese countryside to talk to farmers.

From the survey, Canpotex learned that less than half its potential potash buyers could read, that few had heard of potash and that radio was practically the sole source of entertainment and information. From this, Canpotex developed a marketing plan that included an information booklet about potash printed in Chinese and distributed to provincial retail fertilizer outlets in a small target market where potash deficiencies were most pronounced.

Concurrently, the Potash & Phosphate Institute educated Chinese agricultural technicians on the need for potash. Radio spots also introduced “progressive farmer Lee” whose use of potash in farming boosted his yields. And demonstration plots were planted so that farmers could see the very real benefits for themselves.

All told it was an expensive marketing effort, but it worked. In 1984, when the program began, Canpotex sold about 700,000 tonnes of potash to China. There was a lull in sales the following couple of years but, last year, 1.25 million tonnes were sold.

“What is clear to us is that we have helped to accelerate the increase in potash demand through our market development program,” Ekedahl said.

It was appropriate that Ekedahl delivered his speech at this year’s conference, the theme of which was “Expanding Horizons.” The main focus of the gathering, sponsored jointly by Energy, Mines and Resources Canada and The Mining Association of Canada, was on marketing opportunities in Asian countries.

While Ekedahl zeroed in on a specific company’s experiences across the Pacific, Charles Johnson of the East-West Centre in Honolulu, Hawaii, offered a prognosis for growth in Asia in the coming decades. Without a doubt, the Asia- Pacific region, which includes Japan, will be the fastest growing market for mineral producers to 2000, he said. According to Johnson, 41% of the increased value of consumption of aluminum, copper, nickel, lead and zinc will come from that region.

“In constant 1988 U.S. dollars, the Asia-Pacific region is expected to account for about $6 billion, followed by industrial countries (excluding Japan) at about $4 billion,” Johnson told the gathering. He also suggested that mining companies can’t rest on their laurels.

“Trends in the 1990s suggest that companies will benefit more from flexible operations, a strong technological edge, and the ability to maintain traditional markets and expand successfully into the rapidly growing Asian market.”

This same theme was taken up by Dr. Peter Richardson, a professor at The School of Business, Queen’s University.

“To compete effectively for global markets for materials, the Canadian mineral industry has to become market and technology driven, a change which will require major changes to corporate strategy and spending patterns,” Richardson said. More spending on product and process technology, on exploration and on related product (other resource businesses or materials) development and a new orientation towards global strategies (such as strategic alliances, joint ventures and global partnerships) are required.

He also maintains that the Canadian mining industry must draw on a “new breed of executive,” not necessarily from the mining sector but one with much broader perspectives. Executives in the industry now could broaden their outlook by visiting non-mining firms.

Other speakers at the conference included Keith Hendrick, president of Noranda Minerals; Peter Steen, president and chief executive officer of Corona Corp.; Yukio Kasahara, president of Nippon Mining Co.; and Marjorie Deane, Assistant Editor of The Economist.

Norman B. Keevil, Jr., who was re-elected chairman of the Mining Association of Canada at its annual meeting preceding Mineral Outlook ’89, and Jake Epp, Minister of Energy, Mines and Resources, opened the conference.

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