Changes in Latitudes and Changes in Totes
New Years Eve has come and gone and the first of the resolutions are already being broken. All over the country gym memberships will begin to lapse in the coming weeks as eager members slowly slump back towards their couches. Soon enough the days will be noticeably longer and another sure sign the next season is upon us is the introduction of new totes from the major promotional products suppliers.
A category that had fallen into disrepair prior to the last economic bust is finally getting needed attention once again. Up through last year suppliers were most focused on providing customers in this hemisphere with goods in a higher price range. That's all ended now as price points are being driven through the floor and with cinch bags having run their course attention goes back to totes. They tend to be more rugged being made from polycanvas and more puncture resistant. Leading the pack is the Hemisphere Meeting Tote from Leed's which was introduced today at the PPAI show in Las Vegas. The tote is made from 600 denier materials making it durable and resistant to punctures from pens and other objects while maintaining light weight and some breath-ability. Like so many other promotional products it is available in a wide variety of colors and Leed's typically releases more colors during the year. In total they now have about 80 totes in the line of which 40 were released after July 2011.
Gemline has followed suit and has released and revamped their entire line over the winter. A quick check of the numbers shows that about 40% of the line has been refreshed. In some cases colors have been the only change but there are over 150 clearance items on their site in addition to about 150 new products. This is a clear indication that the industry had a good year in 2011 and put money into development with a passive acknowledgement to the slowing conditions in 2012. What do we expect to see? Mergers and acquisition activity pick up on the distributor side as a year of haves and have nots bears fruit. Expect a middle of the year price increase from most suppliers with the excuse being higher supply costs and the introduction of new colors and some new products.
The past year has been a good one for many distributors and suppliers but the year sputtered to a close. Honest suppliers are reporting sharp sales drops in the October to December period versus 2010 and the same is expected in 2012. Tighten up the budget and sharpen the pencil because it is going to be a bumpy ride this year.
Great Expectations: Defining and Reaching Your Marketing Objectives
We have all seen these types of grandiose plans play. A new manager comes in with all of the best ideas and thinks that everything can be change dto meet their new expectation. Rarely do those managers end up succeeding but before we get to that let's take a look at the scenarios that are most often seen.
Scenario #1: We want no less than one
billion new customers, a revenue increase of $3 gazillian bajillion dollars and
media hits on the front page of the New York Times, the Washington Post and the
Wall Street Journal. A major industry player has done it with the Aura Ceramic Mug which although it looks great with the earth tone on tone look will never fully succeed because it is already doomed to low stock. This same company has run into this a bunch of times with other items and they don't seem to ever learn.
Scenario #2: We only have a $100/month
budget for advertising and marketing.
Scenario #3: It's been three months and
we haven't seen any results. What are you doing wrong?
These are three scenarios that marketers frequently experience under the umbrella of one client: visions of too much grandeur with too little budget and an unrealistic timeline. And this can all be avoided.
AdAge.com's recent article, "Your Ad Agency's First Task: Educate Your Clients" urges agencies to approach new clients and their projects with honesty - especially when it comes to what can be done within a set budget and, feasibly, what the results should be. I would like to expand this suggestion beyond the agency, though. Not every business uses an agency for it's marketing needs. Not every business uses a freelancer, even. What every business does do, though, is market itself, and whether you use an agency, a freelancer or your own internal team of specialists, you should be aware of a few things:
1. Set great - yet realistic! -
expectations. If you use an agency, they should be honest about whether or not they can reach the goals you have set, or at least educate you as to what they believe they will be able to achieve. A freelancer should do the same.
If you are managing your own marketing activities, do some research. By how much should website traffic increase with a pay-per-click campaign? With a search engine optimized foundation of titles, meta-tags and keywords? What is the typical return on a direct mail piece? Or a mass email broadcast? While every industry generates a different return on
different media channels, at least you'll have a ballpark figure of what you'd like to accomplish.
You will also want to talk to other business owners or marketing directors in your industry to see what trends they have identified in their own results.
2. You gotta spend money to make money. You don't gotta spend A LOT of money, per se, but you do gotta spend some. And you gotta spend it right.
The-bigger-the-budget-the-bigger-the-return is often true...but not always true. It's more like the-smarter-the-budget-the-bigger-the-return. Maybe you have a big budget that you want to pour into print advertising. But is print advertising the right channel for your brand and its message? What can a print ad accomplish anyway? Is is what you are hoping to accomplish? Aligning your budget and media spend with your objectives is key to generating a positive financial return.
Understand your media channels and what they are best used for. Understand your target audience and where they are physically located (i.e. online, outside, etc.). Your ad agency or freelancer will (or at least should!) do this for you. It is a complicated component of setting up a marketing plan - but an important component that the success of your marketing plan hinges on.
3. You must give it time! Three-months, six-months, sometimes even a year is not enough time to start generating the results you want. It takes time for your outreach to gain traction, and even longer for it to make magic.
Yes, individual activities will generate immediate results. An email broadcast, for example, will always be opened by a percentage of its recipients. A smaller percentage of those recipients will click-through the email to your website or landing page. And an even smaller percentage will act based on the email, whether "acting" is making a purchase or signing up for a free consultation or downloading a White Paper.
But the way these rates grow and change over the course of three-, six or 12 months is what's really important. No one outreach effort will have results indicative of the overall results of your entire integrated marketing plan.
Statistics on each of your marketing activities are valuable if you know how to see the forest from the trees, for lack of a better cliche. Use them to "tweak" your marketing plan as needed. Don't be discouraged if, in the first few months, you're not seeing impressive results. Be discouraged if you're not seeing them after a year or longer.
When your business is educated about what expectations are realistic within its budget and how long it should take to achieve them, you'll be more satisfied with your agency, freelancer, or in-house team.
Grasshopper Puts Problems in the Bag
About a month ago we wrote about the problems Grasshopper had with customer service after a major outage. At the time the company had experienced a total outage that prevented customers from being able to access voice-mails or even use their phones. The solution took almost two days to implement and in the meantime customers lost thousands of dollars in business. These types of stories occur in every industry almost every day but few understand how to properly capture the opportunity these bad times present.
After a flood that was caused by a leaking underground pipe one marketing agency came up with the idea of giving their customers a gift. For about four days their business was totally offline. Power was cut as were the phone lines when heavy construction cranes were brought in to fix the problem. How did the company handle it? They decided to send out the Cabo Water Bag with Carabiner which had just been released by Bullet Line. They also sent along a pre-printed card that explained what happened in clear and concise terms. They also played on words while highlighting the features in the bag by saying things like "collapses just like our business" and "holds a flood of water." Customers appreciated the information and confidence was restored.
Whenever these issues crop up it is always interesting to see how similar situations are handled in other countries. In Australia there have been a series of major blunders in the last 24 months some larger than others. Their version of Smartcompany magazine discusses the largest Australian marketing blunders in recent years. What is often interesting to look at is the fact that many of these issues are actually the result of the inability to appropriately translate meaning. What may fly in one country may well not work in another. Grasshopper luckily didn't have to go through any of these issues as their client base was mostly in the United States.
Responding to a PR Disaster – Lessons from Grasshopper
Last week one of the first and one of the largest providers of both virtual and hard line PBX services experienced a massive outage. In this instance thousands of users lost all ability to receive calls on any lines or to receive messages. Worse any callers received the equivalent of no dial tone. Some even reported a disconnection notice which instantly makes me people think your company has closed down for good.
The founders of Grasshopper have come forward and are discussing the issues in a blog post on their site. The worst part of the situation reported by customers was the lack of information. In their discussion Grasshopper has admitted to some serious failings and discusses the problems in detail. Most importantly in a future outage or service disruption Grasshopper has indicated they will provide a lot more information as needed. But will they be able to get their customers to forgive them? Chances are they have already lost a good deal of customers that no longer trust the service. Others are probably trying out similar services before making a possible change and still more are probably running dual systems just in case. But what can they do to keep existing customers aside of giving them many free months? One suggestion is to give them something for their trouble, perhaps a promotional gift that says thank you for sticking with us during out trouble.
They would have to monitor costs in that type of situation as choosing the wrong gift may end up costing just as much as giving multiple free months. How you might ask? Shipping costs have gone through the roof so choosing an inexpensive but large item will break the bank in shipping. A promotional tote or something like the Yogi Drawstring Backpack can be rolled up into a tiny package that would cost less than a few dollars to ship. They could put their logo on the bag along with a cute message telling their customers they are sorry. Give them something they will use for a summer and then hand off to their kids and the $10 spent would go a long way. Giving a partial credit for a few days of lost service will do nothing to compensate people for what could be tens of thousands of lost dollars.
The amazing part of all of this is that even a simple problem can mushroom into something much worse both technically and from a public relations standpoint. A relatively minor technical problem at Grasshopper became a PR nightmare as the hours ticked by with the company unable to locate the problem. It still may become a financial nightmare as there may not be any way of recovering. The news on the economy is pretty terrible and that isn't going to help cheer people up any time soon. To read more about the grasshopper outage you can check out the article written as it unfolded last week.
Falling Gas Prices Match Falling Consumer Moods
After hovering at a level significantly above that of historic norms the RBOB to retail spread recently began to close once again. As a result prices at the pump are beginning to drop with gas in this area down almost 30 cents in the last two weeks. The decreases seem to take much longer than the increases and indeed it was one station that dropped prices 20 cents on Friday that forced the others to cave. Demand has been down for 8 straight weeks but is it too late for the US economy? Have speculators managed to take the life out of the economy and leave us with stagnant, less than useful growth rates? I think so and I believe the proof is already accumulating.
One of the first signs we see is a quick uptick in the search for "direct" importers of promotional products. These circumvent major suppliers like Leeds to instead bring products directly from the same factories. One problem that occurs is the middleman you are dealing with may or may not be legitimate. As www.alfredolavieri.com has found quite often the answer is clear after the fact. The pinch being created by dozens of these organizations is making it harder for distributors looking to compete. Legitimate importers provide great financial benefit as they eliminate up to 50% of the costs. Next up are the ever diminishing vacations. A recent Amex OPEN Survey found that 21% fewer business owners plan on taking a vacation this year versus just five years ago. Although that is favorable when compared to the year prior it does not represent any type of robust growth.
Charter fishing businesses are already suffering from reduced bookings and are now getting slammed by higher gas prices and the inability to raise prices. If they raise prices to match their costs they will leave even more customers behind. Bars and restaraunts are facing higher costs on all goods and services from food to booze but also cannot pass much of it on without alienating customers. For all the talk of job creation and income growth the only thing that would really get this economy going hard in the right direction would be a sharp and rapid drop in oil and gas prices. Gas back down around $2.99 a gallon would save the average driver going through a tank a week about $1,000 a year. That's a lot of money in the scheme of things.
Off track for a moment but one of the questions we get more than any other is "what are PMS colors." I came across a wonderful blog posting that discusses precisely what PMS colors are and how they are used in the promotional products industry. Pantone based colors are the backbone of the industry outside of basic printing. That article is a great little refresher on what Pantone col
When Shockwaves Make Marketing Impact
It has been a little too long since the last entry and we fully expect the pace to pick up this week. 2010 closed on a very favorable note for most promotional products suppliers and distributors and so far the new year has been strong. Companies are spending again but governments and educational institutions still are not spending at previous levels for promotional gifts. In time that will change but for now focusing on new products is the way to go.
When the economy was slow suppliers released very few good new products. Instead they added a few colors to existing lines. That has changed now that most see a rebound in the works. Leeds released over 400 new items though many are color changes. The Shockwave Messenger is part of a design focus that closely mirrors what is going on in the retail space. By adding features such as the bungee cord they have greatly increased versatility. Redundancy in design is also important which is why they use both velcro and zippers to secure the front pocket. Up until this year Leeds had always made a point to produce simple designs which in some lines like their coolers always hurt the look of the product. Now with a new design team their promotional Leeds backpacks have some flare, are well thought out and most of all functional.
The great question that remains for the remainder of this year is whether or not spending will ease from what are very robust early levels. Will sales continue to be as strong? ASI and PPAI have done multiple surveys that show most distributors seem to think sales will increase but not at a significant rate. Suppliers feel even more optimistic with many reporting double digit growth already this year. Oil prices that may be driven higher by unrest in the Middle East have the potential to put a serious crimp on strong growth. I expect to see steady but erratic growth as businesses only slowly rehire people for positions that have remained unfilled for a couple of years.
Will Holiday Buying Take Place in the Corporate Markets?
The great debate continues to rage on whether or not the promotional products industry will see the normal holiday buying. Last year was fairly robust with buying at levels not seen since the last good year of 2006. The traditional holiday bump would often equate to almost twenty percent of annual sales for many distributors. With growth what it was earlier in the year there were strong hopes that it would continue into the fall. Unfortunately it seems to be heading the other way with most suppliers reporting slowdowns beginning in October.
So what has happened? It is probably a culmination of things with first and foremost there being a major drop in economic activity. The stimulus has totally run the course now and that money has flowed through the economy. Second it is likely partly due to over worked staff not having the time for non-essential activities. Let's face it buying promotional items is not the first and most important task of a lot of these businesses. There are roughly eight million fewer workers out there now than a few years ago and that's a lot fewer workers to buy your products. About the best thing you can do is put new products in front of customers. A month ago we were handed a Latitudes Foldaway Shopper Tote when we were attending a show for business managers in New York City. The logo of the company was placed on the outside of the bag. There were two inner bags, each was stuffed with another item. In one was a blanket tote, in the other a box of chocolates. I know Gemline doesn't make food so this was obviously a well thought out promotion where they sourced from several different manufacturers. They brought 500 totes to the convention, they were gone in two hours. That is a pretty incredible return rate and one that was most impressive for this business climate.
Why was the tote so popular? Gemline has a great brand name but that likely had little to do with it. Instead it was a gift that customers could appreciate it and one that they can use outside of their professional lives. A foldable and reusable tote is eco-friendly which is important and that also makes it much easier to store them when not in use. To this day promotional products totes remain one of the most popular categories and are still a big seller even around the holidays. Consider combining your tote purchase with another item such as a box of chocolates or even a wine opener. Just be certain that whatever you send is packaged properly so it does not get damaged.
Pack on Back A New Spin For Old Products
The first backpack made an appearance in the promotional products market about two decades ago. It was primitive by todays standards with weak straps, thin construction and bulky. That was the major trend for a decade as manufacturers focused on more popular niches like portfolios and clothing. It took the sports craze of the last decade to really get things flying in the right direction. Now backpacks and totes are a prominent part of almost any marketing effort.
We had a new focus arise as air travel became more difficult and that was airline safety. Last year there was a rush to airport safe bags but there was quickly a marketing problem. Just because the backpack is TSA friendly that does not mean you will fly through checkout. It is up to the person that works for the TSA. So we are seeing manufacturers change the classification of new bags. When the new High Sierra Outbound Deluxe Compu-Case hit the market last week the terminology is gone with regards to checkpoint status. There is no word yet that is conclusive but it seems this is because complaints were coming in when people were getting stuck in long lines. So what have they done with the new version? It is instead classified as conforming to the required standards while all the other features are thoroughly listed. The High Sierra quality is highlighted and the new features they have added like the cushion zone padded compartment which means a laptop can be dropped from a low height and still be okay.
The biggest problem this year with these backpacks wasn't issues at the airport. The problem facing distributors was lack of inventory. The factory that produces High Sierra bags was way behind and the shipping containers east from Asia were jammed. For months there were no product available even when the item had just been released. These new backpacks appear to have plenty of inventory but that could change quickly. All High Sierra Backpacks are produced in the same factory that ship to the corporate market. They are well built, rugged and puncture resistant. They all have durable padding on the shoulder straps and often on the regular carry straps. They all have the signature High Sierra branding on the bags. The only complaint we have ever heard is that the zippers could be heavier duty but that is likely not a problem with the zipper but instead too much weight being put inside the packs.
The promotional products industry is not seeing the normal holiday bumps. Most vendors report sales are flat when compared to previous months. Gone is the larger 5-15% sales increase that came with the holidays. Some feel it is just delayed, most believe it's not coming this year.
The Party Ends for Carnival Cruise Lines
You have to wonder how a cruise ship that just went into service two years ago can end up adrift in the middle of the ocean. But that was the nightmare scenario for a couple of thousand passengers as the ship became disabled off the southwest coast of California. A fire apparently in the engine room was able to knock power out to the ship and surprisingly the ship became entirely unable to function.
The Splendor was commissioned in early July of 2008. She is the second largest ship in the Carnival fleet and is truly massive in person having seen her berth last Summer. The Splendor was originally designed for another cruise line but they were unable to take delivery and Carnival snatched her up at a bargain. As it was designed for overseas travelers it incorporated a giant spa that takes up two forward decks. In fact it is the largest they have ever floated. The ship is able to hold just over 3,000 passengers depending on the configuration and almost 1,200 crew meaning it carries nearly the same number of people as an average aircraft carrier. Three days ago a crankcase apparently split on a generator causing a fire. Why the fire was unable to be contained to the generator section is unknown as it took several hours to put the fire out. The result was all generators were knocked out cutting power to the entire ship. Propulsion was also disabled and the ship was adrift. It is very fortunate that no tropical cyclones were coming through at the time. So what does Carnival do now?
Luckily almost every passenger has reported that the crew did an admirable job in terrible circumstances. Unlike the airline stewardesses that behaved terribly when planes were stuck on the tarmac the front line Carnival Cruise Lines crews helped to mitigate the damage. The company has already announced that passengers will get a full refund, be reimbursed for travel and get a free cruise. That's great for all of those involved, but it won't do much to repair the damage among the general public. Carnival will need to start on a major publicity campaign much like Toyota did last year as the recalls hit one by one. They will also need to find a plausible reason for what happened. Simply saying it was a fire won't get the job done as these ships are supposed to be almost fire proof at this point. They face many of the same consumer confidence issues that the new Boeing 787 and Airbus 380 are suffering from as both have had major issues. The last thing any transportation oriented company wants is concern over the safety of their vehicles.
That said the traveling public has a short memory. If Carnival sets out with an extensive media campaign designed to explain what happened, welcome people back and more importantly offer an incentive the business should build back. That is the hope, as right now it's all they have got to fall back on while the airwaves are filled with pictures of their ship being towed helplessly back to port.