THE PROMOTIONAL PRODUCT CORPORATION

Statistics According to the National Association of Purchasing Managers, print procurement is the second biggest opportunity for corporations to reduce cost and increase shareholder value. The centre for Advanced Purchasing Studies recently reported that corporations (like yours) will find savings from 10% to 30% when they begin to outsource supplier research and production to "best-in-field" specialists. Today, outsourcing print production is now seen as a strategy for empowerment.

Global 2000 companies spend close to 3% of revenues on printing," says Ray Roper, President and CEO of Printing Industries of America (PIA). That adds up to over $275 billion. While printing is a large expense for every large company, it is not typically a core-competency, and therefore a prime candidate for outsourcing. Many leading U.S. corporations are already reducing search costs, contracting costs and coordination.

Our Industry

Facts and Figures

18 BILLION DOLLARS ARE SPENT ON PROMOTIONAL COMPANIES THAT DO NOT MANUFACTURE THE FINISHED PRODUCT !

Based on two independent studies the promotional product industry is worth $17,854,482,234 in the U.S. This survey was done by the Promotional Product Association International (PPAI) in Irving, Texas. The average profit margin for these promotional companies is 30% to 60%. The new age of communication and information will destroy these companies that are feeding off the uninformed purchasers. The face of the promo agencies will change dramatically over the next decade.

In recent years these distributors have sprung up everywhere. Usually a former employee of a large firm and has all the contacts. In the year 2000 there was a 63.9% increase in business for the smaller distributors according to the PPAI. In fact they formed 56% of the market in 2001 reported by Promotional Products Business July 2002.

Distributors often know very little about the manufacturing process and will want to add 50% on average to the cost of the product for their services. It is to your advantage to know more information than the distributor provides you from their supplier. Here, our experience and diverse background in the manufacturing processes is essential to your current purchases. Companies like the PPC will emerge to teach the purchasers how to buy these products.

The promotional agencies business will diminish by 80% of it’s current size as companies that are actually using the product will buy direct from the manufacturer. This has happened to other industries (ie: automotive, packaging etc…) and it will happen to this one. There will be two ways for this to happen. E-portals will emerge to become the most widely used form of promotional product purchasing. There will be a new industry born to consult on these negotiations with these firms. Second there will be digital networks formed between large end users and the manufacturer. There will have to be companies that have a complete solution in this specific area to complete these transactions.

The promotional agencies will then consolidate and those that survive by acting quickly will take a much smaller profit due to the customers increased knowledge. Then they will have to provide a value added service with best of practices to standardize the process to lower costs due to competition. At PPC we have seen this coming. We have set the standard and raise the bar every year for every promotional product transaction.

The promotional companies will become obsolete over the next 5 to 10 years. Replaced with lean and mean e-portals that just charge a brokering fee. These companies will have online catalogues that can display any company logo on any item. A complete digital transaction. Negotiating the contract will become all that is necessary for the new, better way of doing business.

What’s Ahead?

Now that information is so accessible the industry in its many parts, now has the unique characteristic that all products can be dealt with in the same manner. There are over 150,000 people profiting from promotional products that do not produce any product. Over 90% of these people have never seen how any of this is even done! A lot of people currently in the industry will not take kindly to the events that will unfold at first. They will have to adapt and become inside sales staff for the manufactures they once dealt with as a middleman. This will be advantageous to all in the end because they will know their product. Having only to specialize in the products that their company actually manufactures means knowing exactly how the product is produced or printed. Now that’s the way it should be done and will be.

Bill Gates writes “The Internet will extend the electronic marketplace and become the ultimate go-between. The universal middleman. Often the only humans involved in a transaction will be the actual buyer and seller. All the goods for sale in the world will be available for you to examine, compare, and often customize.”