I have just listened to an interview between Michelle Bell, Senior Editor of the top industry publication, Counselor
Magazine, and industry guru, David Blaise (dated May 20, 2008) about price increases our industry is now facing,
the first such inflationary pressure in years.
In response, I have listed a few key points from the interview, along with my views about how we deal with this
challenge.
Our production partners (a.k.a. suppliers) have been dealing with and, for the most part, been absorbing cost
increases from their suppliers, but are now at the breaking point. Due to a “perfect storm” of factors (e.g. rising
raw material and labor costs in China, stronger Chinese RMP, removal of Chinese export tax subsidy, product
safety testing requirements, etc.) we will be facing price increases from 5-20% beginning in mid 2008.
Whereas catalog prices have traditionally held for a full year, we will now see new “mid year” catalogues with
revised prices. Beyond this, some anticipate a shift toward web catalogs with prices updated without notice similar
to purchasing airline tickets. This entire process represents a fundamental shift in how this industry will actually
work.
So, what does this mean, & how should we cope???
- First & foremost, I believe the triangular partnership between the end-user (you), distributor (me), & our key
production partners (suppliers) takes on added importance. We are all in this together, and what really
matters is that we collaborate thoughtfully to ensure the right product with the right message is delivered in
the right way. In my particular case, I will most assuredly be leveraging the specific relationships that I’ve
developed within the supplier network to make sure we are getting the biggest bang for the buck!
- Everyone is facing the same inflationary pressures. So, beware of those touting surprisingly low prices.
Product quality, service quality, delivery assurance will be sacrificed – and you may pay the price -- if you
deal with those who are focused only on individual orders. The cultivation of the relationships I’ve
mentioned above is the single most important component in delivering successful projects in a consistent
fashion.
- I do forecast several positive trends in this business environment. For one, buyers will be concentrating
more than ever on making sure that their purchases create the desired results. Therefore, more thought
will be placed into the message being delivered. This, in turn, should lead to an emphasis on creativity in
both logo presentation, as well as effective packaging and delivery options. In short, our collective focus will
shift towards the actual promotion as opposed to just products. It’s not about slapping a logo on an item, but
rather it’s about creating an effective message that is noticed and remembered – and supports your brand’s
promise. In fact, it is more important than ever to consider your audience and the precise message you’re
trying to send. Those who have been working with me for awhile know I’ve been harping on this thought for
quite some time.
- The virtually unlimited variety of available products, which is another strength of our industry, should also
come to the forefront. For instance, if you’ve been paying $ 5.00 for a bag, but this particular item increases
beyond your targeted budget, I will be able to show you several substitute bags or alternative products that
are available in the $ 5.00 range. The key, once again, is working with you in our promotional partnership.
I will coach you through ideas and options. We truly have the best relationships with industry production
partners of any firm in the industry. We’ll find the right product that delivers your message at a price that fits
your budget.
- Keep in mind, now is the time to stay in front of your customers and increase your visibility while your
competitors are becoming more tentative and less visible. I have found that my business actually does quite
well (thankfully!) in a struggling economy. I believe the reason is we deliver value. Compared to other
advertising mediums, our products are relatively inexpensive, have longevity & staying power, and effectively
target your specific target audience. We are able to effectively use the five senses to make an emotional
and lasting connection with the recipient.
My philosophy is that 10% of life is what happens to you, the other 90% on how you react to it. We all have been
dealing in our personal lives with painful increases in food, fuel, and commodities. Certainly, the promotional
industry isn't immune. But, we can and will adjust-and if we are thoughtful we can be even more effective in
connecting with our target audience.
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