Follow the Money to the Top Promotional Products Buyers

A new study shows which sectors are hot and which are not in the promotional products market.
April 8, 2008

By Richard Lebovitz

The prologue to the Promotional Products Association Intl.'s (PPAI) recently published three-year report on the leading customer groups for promotional products poses a pivotal question: "Which is the better course — pursuing prospects in industries known to be heavy users of promotional products or focusing on light users because…few competitors are concentrating on them?"

"That call…is for distributors and their salespeople to make," say Richard Alan Nelson and Rick Ebel, authors of this important study.

Though we can't disagree with this conclusion, we would like to propose another answer, which is "both." There are several reasons for taking this position.

First, we don't believe a promotional consultant should ignore any potential market, big or small. Selling is about relationships, and in the case of the promotional products industry, those relationships are founded on customer solutions. Those relationships can spill over into other relationships — and business opportunities — within the same company or organization or result in business with a new company or organization when your contact moves, which is more common than not in today's business environment.

Second, markets change. Some expand and contract like clockwork during economic cycles; others undergo irreversible structural change; some disappear altogether; and some, like the Energizer bunny, just seem to keep on going, going, going. Unfortunately, I've yet to see a forecast that could reliably pinpoint what industry will change or when or by how much. Have you?

The rankings in the PPAI study underscore this point. While 11 of the 12 top ranking customer industries for 2007 were carryovers from the previous 2003 ranking, there also were noticeable changes. For example, the percentage gap between the top two ranking categories, Education and Financial widened. The Restaurants and Bars category leapfrogged from 17th place to 10th.  And two categories each dropped a couple of notches, Government from 6th to 8th and Automotive from 9th to 11th.

Will the trend for Government reverse itself in this election year? Will the Automotive industry continue to consolidate? Will the current turmoil in the banking sector set the Financial category back on its heels? Will the economic downturn slow the trend to dine out and negatively impact the Restaurants and Bars category? Will the Construction industry right itself? As the table below shows, it's probably best not to put all your eggs into one basket.



Third, while an overall industry may appear to be growing or shrinking, it may also have subsectors that are trending in the opposite direction. Construction, which ranked 5th in both the 2007 and 2003 studies, has been slowing during the past 12 months, but the employment reports tell us that the slowdown has mainly occurred in the residential sector. Meanwhile, the non-residential sector has remained relatively robust, providing opportunity for the sales of promotional products even while sales in residential have been drying up. The lesson here is that where there's a current, there's often a counter current that may represent the real sales prospect.

Finally, with certain exceptions, namely large corporate identity accounts, your promotional business opportunities may depend more on regional or local rather than national economic conditions. Though the PPAI study doesn't break out the data along these lines, the 2007 Impressions Decorated Apparel Universe Study does. The full-time promotional products distributors responding to our questionnaire indicated that the top three customer groups driving their business growth in 2006 were local businesses, national corporate identity accounts and education.



Impressions'  2008 Universe Study, which is now underway and invites your participation, includes some forecast questions that should shed further light on these prospective customer groups, as well many of those included in the PPAI study, published in the current issue of the association's PPB magazine. We expect to publish the preliminary results from our study in the next issue of Promotional Impressions.

Meanwhile, you may want to refer to our December 2007 Commentary: "The Year in Review: Top 10 Promotional Products Markets," for links to additional information that could help you tap into these prospective markets.

To comment on this editorial or other promotional products issues, e-mail rlebovitz@impressionsmag.com.

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