Advertising and promotional products (those with a corporate logo—a branded baseball cap or tote bag, for example) continue to be cost-effective means for companies worldwide to increase public awareness of themselves. The statistics behind such products are convincing—80 percent of consumers own at least one, and the advertiser featured on the product is twice as likely to be remembered as one on television. With over $20 billion per year in gross sales, it’s no wonder the sector is highly competitive.
According to research by BIC, no single supplier of promotional products accounts for more than an estimated 6.5 percent of the total market. On the distribution side, no individual distributor comprises more than approximately 2 percent of the market. As a result, this fragmented field is wrought with competition, and vendors battle it out over price, product assortment, and promotional tactics.
Changing Competitive Landscape
In the midst of this competitive environment, two forces are disrupting the traditional model of distribution in the industry: direct suppliers and online sales. Innovative suppliers such as DiscountMugs, 4Imprint, eGrandstand, and Bargain Mugs have leveraged new on-demand business models selling directly to end users. They bypass traditional distributors altogether. Through this model, they can sell at reduced margins and be the most competitive on price given their cost-efficient supply chain. However, this presents its own set of challenges. Namely, it allows these suppliers to be the price leader in their respective categories, but they can only offer limited assortment to customers. As a result, these suppliers tend to gravitate to niche industries carrying specialist merchandise. In turn, this hampers their ability to respond to new product trends and to broaden their respective assortments.
In addition, online is becoming the preferred mode for many buyers. According to a recent Forrester Research study, 93 percent of business-to-business buyers prefer to purchase online when they’ve decided what to buy. This will have dramatic implications for the promotional products industry, given its long history of consultative selling.
Staying competitive on price is absolutely essential in an industry with razor-thin margins. Pricing strategies are different for every organization, but visibility into competitive offerings is critical. Without the ability to stay competitive on price, distributors risk losing business to their competitors or aggravating their trusted customer bases. While price is just one part of their competitive strategy, it’s an important one. With the changing nature of the competition, firms need to keep pace.
Our basket analysis technology seeks to simplify and automate this process entirely. Firms can select any number of products across a broad range of categories to facilitate price comparisons, which can provide unparalleled insight into competitive pricing strategies. Armed with this data, firms can spend more time making informed pricing decisions and less time worrying about competitive threats.
Developing the ability to respond to new product trends is a significant differentiator for competitive distributors. Confronting new business models emphasizes the importance of offering broad assortments to customers. While four major product categories account for 50 percent of total promotional product sales (wearables, writing instruments, drinkware, and bags), there are close to 20 more categories that all hold no more than 5 percent of the total pie (as found from an industry survey). This broad category assortment offers plenty of opportunities for distributors to be competitive with their own assortment offerings.
In order to capitalize on these opportunities, distributors need to be able to gauge competitive movements and identify the whitespace. While competitive assortments are key to staying relevant, gathering intelligence for the promotional products market is very difficult. Manually pulling assortment data from thousands of distributors is simply beyond the capability of any single person. In order to stay competitive, firms can leverage new technologies that offer automated data extraction and analytics that make them aware of dynamic assortment opportunities. This enables companies to monitor the assortments of their key competitors, paving the way for more strategic assortments.
The emergence of the Internet as a new distribution outlet for promotional products changes the nature of demand generation. More firms are starting to leverage online promotions to connect with new customers, to dramatic effect. Monitoring this endless slew of promotions is a must, yet traditional technologies fall far short in delivering painless ways to do so.
As part of our broader platform, we have invested substantial resources into automated promotion capture across hundreds of merchants. Our extraction system pulls promotional offers from a variety of sources, including homepages, social media, and clearance pages. This allows sophisticated analytics across a broad range of questions. Access to the data helps firms to stay abreast of competitive offerings and position themselves accordingly.
Our Mission and Value-Add
Wiser provides a cutting-edge analytics platform designed to deliver transformative insights to the retail industry across the spectrum of pricing, assortment, and promotions. The platform aggregates and normalizes millions of data points from the web, freeing companies from laborious manual processing efforts. This data is then enriched with a powerful analytics layer, delivering unprecedented insights on the fly.
Contributing Writer: Michael Gilson