Trudy Willis, Director of Reinvention Results conducts a Q & A with William Kestin the CEO of APPA on the promotional product industry in 2005:
Q: What is the current size of the promotional product industry?
A: $1.56 Billion in Australia (an increase of 35% in the last 3 years) and $213 million in New Zealand (an increase of 30% in the last 3 years).
Q: What are the major market segments using promotional products and why, when the marketing mix is represented in the media, many times I dont see promotional products included as a category?
A: Most large corporations , direct marketing agencies, Ad agencies, Media and marketing companies all use promotional products. Many times when the marketing mix is being dissected, the category is left out of the statistics because each established marketing segment incorporates their use.
Q: What do you see as the reasons that the promotional product industry has experienced steady growth?
A: Many sociological and corporate trends have contributed to growing importance of the promotional product industry in the marketing mix. We have become a society where shopping for new, interesting and amusing products has integrated into our social lives. We like our gadgets and we shop for fun.
Corporations, retailers and manufacturers want to ad value to that experience. Also building a successful brand in any market is about coverage. Promotional products provide coverage for an extended period of time. Longer than your above the line media, for less money.
The competition has grown fierce to win corporate loyalty and increase sales. Strategic marketers are finding by adding product based incentive programs they are winning quicker brand loyalty and increasing sales almost immediately after a campaign's launch.
Corporately, as traditional advertising costs have inflated, marketing budgets have been tightened. Its prompted many marketers to find creative ways to get the best value out of their marketing dollars. Well devised promotional product campaigns provide maximum coverage and for a fraction of the cost to mount a standard above the line campaign.
Q: Can you give a broad promotional campaign category where this is especially effective for marketers?
A: Many, but for the sake of your question, I would say Gift With Purchase programs have steadily performed in increasing sales for retailers and brand managers.
These programs in many cases become self liquidating (when increased sales results cover more than the promotional products cost and the campaigns implantation).
The key is finding the companies who understand the technical side of building a successful promotional campaign and can recommend the right products. Rely on your promotional product professionals experiences. The current trends in promotional products are rapidly changing. The industry has had to bridge the gap between retail perception and promotional products while diversifying the types of programs and services they offer.
Q: Promotional products for years seemed to be about caps, pens and mugs. So, what has changed? Are promotional products really seen as a part of todays marketer strategies?
A: We have had to battle against the "hats and pens" mentality mostly because some marketers simply dont utilise promotional products correctly. If you are simply throwing your money at promotional products without any thought to what response you want to illicit from your target market or how to track the results, you are wasting your money.
Inexperienced marketers think of promotional products as an after thought, a give-a-way without any value. The best way to utilise a promotional product professional is to work closely with them early in the marketing process and ask them to offer what we call the Product Perspective to the marketing mix. If correctly utilised, this perspective can save companies thousands of dollars.
The Product Perspectives and the creativity coming out of the leaders in our industry are now driving above-the-line campaigns and in many cases for a fraction of the cost of utilising the creativity of an ad agency.
In short, what has changed is promotional product professionals are providing more creative for less investment. Compare the value of promotional products to other forms of advertisement and consistently research shows your marketing dollars go further with promotional products.
Q: How are promotional products being used differently by marketers in 2005?
A: The current trends in promotional products are rapidly changing and include movements towards high perceived value items over the cheap and nasty.
Also, creativity, professionalism and relationships are taking the place of Dutch auctions for products.
Price used to drive the market but now marketers are tired of getting cheap product that fall apart or arrive late. Marketers are finally realising a professional promotional product provider can make their jobs easier, supply their company with additional creativity and help diversify their overall marketing coverage.
It is different because it isnt about the cheapest product but rather who can put together the best campaigns with the freshest ideas.
Q: Where do you see the most potential expansion in the promotional product industry?
A: Employee Incentive Programs & Service Anniversary Recognition Programs.
Experts agree that tenure recognition should be given early, since most turnovers are within the first five year. Companies often only get half the equation right. They create attractive employment packages but fail to invest in retaining these staff when the honeymoon is over.
There is ample evidence that motivated employees boost a companys productivity and revenue.
The other sector is On-Line Stores which consolidates purchasing across many locations and in turn saving clients substantially.
Q: Are there any industry awards for the promotional products sector?
A: We do have industry acknowledgement through our yearly APPA Pyramid Awards for Promotional Excellence. These prestigious awards occur every August and winners can be seen on www.appa.com.au (click on the link in the bottom right corner to see photos and case studies)
Q: How should marketers decide which specific promotional products provider to use?
A: First and foremost, marketers should ALWAYS use a company who is a member of APPA.
90% of the complaints we receive come from companies who have bought promotional products from a NON-APPA member. We are powerless to intervene on their behalf if marketers take that risk.
There are a lot of small, inexperienced and unethical promotional providers out there. Of the approximately 2,000 so called promotional product providers in Australia only 300 are legitimate APPA members.
APPA can only assist in dispute resolution if the company they deal with is an APPA member.
Q: What role is technology playing in the promotional products Industry and what other trends do you see as important?
A: The biggest emerging trend is the high involvement of the promotional companies in all aspects of the promotions creativity, logistical fulfilment and success tracking data collection.
Technology is playing a huge part in this and in our industry. Many of the leading promotional products companies are running on-line focus groups and product surveys that can provide clients with a consumer driven campaigns and important marketing data.
Also, web based merchandise programs and on-line stores are very prevalent. Marketers can consolidate wasteful spending while outsourcing logistics and warehousing costs to their promotional product companies.
Stock levels are strategically managed on line and buying in bulk can save money, allow for immediate order placement and faster deliveries.
On line stores are also now working in tandem with procurement departments with innovations like corporate purchasing cards (a special kind of credit card) with purchase limits to control costs and auto-email notification on audits and transactions. Yes, all this from the pen and cap company!
Q: What does the future hold for promotional products?
A: I believe the future is bright for the promotional product industry for many reasons. But, like all markets in the Western world, we too have been affected by China's looming presence.
Promotional product companies, in order to survive, will continue to morph into creative agencies and not just providers of branded products. They will also need to utilise technology to assist their clients with the selection, purchase, stock management and fulfilment of promotional products.
I think the days of constantly cross quoting to get the cheapest price is on its way out. You can always get cheaper product, but will it last? Or will it run out of ink or shrink in the first washing, leaving a negative impression of your brand or company with the recipient.
If corporations did serious cost analysis as to the time and money they spend trying save twenty cents from a reliable supplier or the time wasted trying to import some of these promotions themselves, I think they would see that it costs far more than it saves.
Marketers need to ask themselves if promotional products are their core business. Or is it better to leave things to a professional who has spent years asking the right questions when choosing products and has the technical knowledge of printing, embroidery and engraving. For those marketers who choose not to, it is costing them far more than they think.
If you have any questions relating to promotional products, please don't hesitate in contacting us. JEM Promotional Products
Phone: (02) 8205 1334
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