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  • Feb 3, 2017

 

Posted on November 4,, 2016

I work for a small business, by all definitions it’s small.  Having grown in up in this same small business, I have an appreciation for what goes into running a small business, the hours, the money and often time, the aggravation.  Having this experience I find myself in conversation with friends, relatives, neighbors (and heck for those who know me well, the person in line behind me at the grocery store!) about why I think buying everything I can as close to my house as possible actually costs less in the long run.  Maybe it is me identifying what the business owner goes through to keep the lights on that brings me to shop at the local hardware store in lieu of the big box retail.  Could I really be blinded by the plight of the local business that I completely disregard the cost of a nut, bolt or bag of fertilizer?  Though I never thought I would be writing something like this, it is actually my understanding of larger scale economics.  It’s the knowledge that the guy down the block at the hardware store pays $45,000 in property taxes and that a portion of his sales tax goes to fund my city services.  That said, I also feel good walking in and saying hi to a friendly face, greeting them by name and asking “How’s Business?”  Likely a bit of all of those things but no matter what, when I have an opportunity to buy locally from an independent operation, I do.

This past weekend, I went with my brother on a quest for a new fire pit for the house.  We ran across a nice looking model from a local company called Weber Stephen (Palatine, IL).  We both  have had great success with their products in the past so we thought, if his wife liked it too, we would go to the local Ace Hardware and pick one up.  While leaving the driveway, told me he wanted to try the local grill/fireplace store about 4 blocks from his house.  We went in and they had one in stock.  How convenient was that?  I must also mention that it was $10 less expensive that Ace?  That’s right, the little local guy was LESS EXPENSIVE (on the front end)!  Needless to say, I was very excited that I found vindication for all of my previous naysayers, the local guy was both more convenient and less expensive!

Though I live by the buy local (and smaller if I can)philosophy, I often have a hard time convincing others to do so,  While looking around for some backup to my hart warming story about why I think buying local is important, I found this (10 Reasons to buy local first link).  It shows a very nice graphic representation of my argument.  If you don’t shop local, you can’t complain about property taxes or the lack of a good local restaurants.  Do yourself a favor, stop in your local mower shop, plumbing supply, hardware store or the like and find out what you have been missing.  You might even save a buck or two!

 

PPAI Study on Effectiveness of Promotional Products

While looking around for some information on ROI of promotional products, I cam across this article on a Promotional Product Association International’s study of Effectiveness of promotional products.  For those of you who are looking for the Cliff’s Notes version, it is below, along with the link for more information.  I think that the question is not “WHY Promotional Products but rather, WHY NOT!

The first part of the study, titled “Effectiveness Of Promotional Products As An Advertising Medium,” focused solely on promotional products and evaluated the action, reaction and relationship of products and their recipients. The study found that:

  • 94 percent could recall a promotional product they had received in the past two years
  • 89 percent could also recall the advertiser
  • 83 percent reported that they liked receiving promotional products
  • 48 percent would like to receive promotional products more often
  • 69 percent generally keep the promotional product

The study also looked at which promotional products are most popular and where popular items are kept. According to consumers, the top five items that would motivate them to take a particular action and/or lead them to have a more favorable impression of the advertiser were food baskets, MP3 players, clocks/watches, digital picture frames and luggage. Consumers also reported the kitchen and the office as the two most common places to display these items. To see more of study one, click HERE.

The second part of the study, titled “Promotional Products and Other Media” compared promotional products to mainstream media (television, print and online advertising) and evaluated their reach, as well as the consumer recall and reaction to each.

REACH
When compared to the extensive reach of television, there is an obvious disadvantage in this area for print, online and promotional products advertising. However, promotional products were the only media, despite this disadvantage, that showed staggering results in recall and reaction, areas that are often dependent on reach for success.

Nearly half of those surveyed reported receiving more than three promotional products within the past 12 months, while 56 percent reported seeing 11 or more television commercials, 50 percent reported seeing three or more print advertisements and 53 percent reported seeing one online advertisement all within a two-week timeframe.

RECALL
Promotional products—compared to TV, print and online advertising—consistently delivered on higher recall rates of the company/brand, the product/service or both.

An evaluation was conducted to see how many respondents could remember both the advertiser/company and the product/service/message advertised and in the case of promotional products, the product received, as well. The study found that:

  • 83 percent could recall the brand/company advertised
  • 75 percent remembered the product/service
  • 80 percent clearly identified the type of promotional product
  • 74 percent could recall the company/brand and the product/service/message advertised
  • 69 percent could remember all three aspects

REACTION
This section asked consumers which particular action they took after viewing and/or receiving the advertisement. The study found that:

  • Consumers made a purchase after receiving a promotional product (20.9 percent) more often than after viewing a print ad (13.4 percent), TV commercial (7.1 percent) or online ad (4.6 percent).
  • More than half of promotional products recipients had a favorable impression of the advertiser, as opposed to 33.2 percent who had seen a print advertisement, 27.7 percent who had watched a TV commercial and 11.9 percent who had seen an online advertisement.
  • Nearly 60 percent of consumers reported using the promotional product several times, while 7.6 percent let someone else use the item and 4.4 percent passed the product on to someone else.
  • 14.7 percent of participants reported contacting the promotional products advertiser—a reaction rate nearly three times greater than other media, which generated a 3-5 percent response.
  • When respondents were asked if they had or had not taken action after seeing the advertisement, TV viewers topped the “had not” list with nearly half (46.4 percent) saying they were not moved to action, followed closely by 41.1 percent for print media and 33.2 percent for online advertisements. Only 23.1 percent of promotional products recipients reported not taking any action.

To see more of study two, go to www.ppai.org/NR/rdonlyres/BA94A823-E0A8-4E32-A2BC-6D3912D4D45A/0/09EffectProProAsAdMed_PowerTool.pdf.

Brands Create Feelings, remember that!

GAP, the brand mistake.

It has been a while since I had a rant.  I am sorry but life has been getting in the way of my soapbox standing and today is one of those days where I thought I would share my opinion with you, for whatever that is worth.

This morning I read a news article that said GAP clothing store will be closing US stores and while I understand that the reduction in real estate and closing stores that are under performing, their reasoning for the sales slump is where I question them.  They state that they lost the fashion battle to other retailers and I argue that they turned away their staple buyer.  I say this because for the better part of my adult life, I was a loyal GAP brand buyer.  For two decades, I shopped for all of my business casual and denim products at GAP stores; that is until something changed.  GAP, like many others opened an outlet store which was fine, others like JCrew, Nike and more did the same thing in order to clear the shelves for new merchandise and attempt to sell off the last season styles that did not sell at retail on discount.  The difference for me was when GAP began manufacturing clothing of a lesser quality specifically for the outlet.  Their brand changed.  They went from a manufacturer of quality goods to a discount retailer.  GAP was no longer GAP, it was someone else.

Some fifteen years later, I have watched GAP’s styles, quality and details erode into something that was not the “dry goods” store it was.  Similar to Abercrombie & Fitch, who began as a men’s dry goods store, their merchandise went from middle tier cost quality basics to cheap fashion forward stuff that no longer represented, in my opinion anyway, what the brand meant to me.  A brand is what people associate with a name, design or product.  The impression of brands like Orvis, All-clad, Viking or Lexus is high end quality goods while the impression of JCPenny, T-FAL, Whirlpool and Kia are the polar opposite.  The first example of brands for some may be a list of over priced or unattainable cost items and the later list is a more cost driven affordable brand.  These brands mean something.  What is Lexus made a $15,000 car?  Or Orvis started selling $7.99 t-shirts? Would your impression of brand be changed?  It would for me.

My point here is that brand is important.  Brands who are successful know who they are and stick to it.  The develop a market of followers who know they can go to their preferred brands and get what they want.  Do brands who take that market research and use it to create opening price point items just to gain market share and grow sales while watering down their products actually do themselves any good?  I would say no.  Like GAP who turned their back on the staple buyer buy lowering quality and getting aware from basics leave their loyal buyer behind the same way Cadillac changed the impression of the American luxury car brand buy introducing the Cimarron (http://www.time.com/time/specials/2007/article/0,28804,1658545_1658533_1658526,00.html).

In the end, my thought is this: Build a brand and take care of it.  When you are looking for new sales opportunities, don’t become someone you aren’t just to get NEW Sales as you may be pushing existing customers away.

The Grateful Dead offer many lessons on successfully merchandising with promotional products.

So I recently thought it would be a great idea for me to start blogging.  Thanks to my friend Lisa, who pushed the idea to me.  To start my blog life, I thought I would re-print a story I wrote for PPB Magazine.  I hope you find it interesting.

The Grateful Dead offer many lessons on successfully merchandising with promotional products. (PPB Magazine July 2010)

I find that inspiration often comes from places you would never guess. The March issue of The Atlantic magazine (www.theatlantic.com) featured the article “Management Secrets of the Grateful Dead,” which detailed the cutting-edge management techniques the band used to create decades of success. Ironically, there is much business acumen to be learned.

Since I am 35, there is no possible way for me to have experienced “The Dead” as they grew up in the music business. However, I do know three things about them:
1. They toured nonstop from 1965 to 1995 (when Jerry Garcia died).
2. They recorded 26 albums.
3. Their merchandise is everywhere.

These three things alone make this band a lesson in organizational evolution.

Me And The Dead
My formal introduction to the Dead was in 1987 when they released “Touch of Grey,” a song that turned out to be their largest single ever and the only one to enter the Top 10 on the music charts (www.warr.org). At age 13, I knew there was more than Top 40 music, but it is mostly what I heard. This is when I began my journey, now 20-plus years in the making, as a Deadhead.

Exposure to the Dead opened the door to another music world—John Lee Hooker, Howlin Wolfe, Zeppelin, The Stones, Bowie, Neil Young, King Crimson and the Sex Pistols. From Peter Rowan and Leo Kottke to everyone in between, the Dead showed me the way (pardon the Frampton reference, if you will) to a life in music.

So while the band’s music led me to places I wouldn’t have known before, I never thought I would be reading about how their work could influence my career in business. In retrospect, this is yet another ignorance of my young life. If the Dead showed me how to grow my appreciation for music, why couldn’t they teach me how to further understand my workplace?

The Dead’s Product Development
In 2008, the Grateful Dead donated its entire library of documentation, music recordings, logs, journals, etc., to University of California Santa Cruz, where it will be on permanent display later this year. The exhibit illustrates how a rock-and-roll band that never seemed to have much commercial success managed their way to a career of more than 30 years.

The Grateful Dead had a product—music—and this is where the story gets a bit muddy by today’s standards. Popular bands of the 1960s, such as The Rolling Stones, were on a program of write, record, radio and tour for publicity to sell records. The Dead, however, had a different approach. They were a group of musicians who liked to play, so they created a new experience for popular music: a new show every night. Instead of playing the songs from a predetermined and consistent set list, The Dead played a random list of songs from their 100-plus catalog—whatever they felt worked on a particular night. The result was a 30-year touring career of more than 2,300 live shows.

As their popularity increased, news got out that last night’s show was nothing like the show three nights ago, nor would it be like tomorrow’s show. On any given night, what you got from a Dead show was just as much your guess as it was theirs. The word spread among the ranks of their fan base and as it did, deadheads began to realize that there was good reason to make multiple Dead shows in a row.

As their audiences grew from 1965 at the Philmore, the band started seeing greater success. They quickly incorporated, developed a board of directors with rotating CEO roles and began thinking of ways to market themselves. In short order, they embraced the word on the street and started using it to their advantage, the easiest way possible: fan to fan.

Realizing that giving fans what they wanted would only increase their exposure and public awareness, the Grateful Dead began allowing fans to record live shows to share with friends and family members. The buzz grew, and fast. Not only were fans talking about the live performances, but they also passing them on.

Think about this for a moment. Today, there are examples of sharing music via the internet where people have been charged with breaking copyright laws. But 30 years ago, a band willingly gives away its most valuable product and obvious revenue stream—music. How is that gonna work?

As it turns out, it was genius. The Dead’s seemingly strange decision to give away their music proved not to be counter productive but rather caused their success to flourish. Fans were attending multiple shows in their own towns to see what the experience would be like, and were also traveling to other towns to see them perform. The Dead had created their own subculture. Viral marketing was their best tool and they leveraged it.

Bootlegging became a subculture of a subculture, with fans wanting to see more shows in more places. The Grateful Dead stumbled onto the first rule of marketing: Know your audience. Bootlegging, which today is called “stealing work product from the artist,” was the way to The Dead’s success.

As time marched on, The Dead started catering more to bootlegging, seeing even more prolific results. Once their fan base became the marketing arm of the organization, the band turned to merchandising. In fact, promotional products professionals could learn from this.

Starting in the 1960s, the Grateful Dead branded and copyrighted logos and names and created a market for itself using merchandising, arguably the most successful company store ever created. Since 1960, the Grateful Dead have successfully sold everything from original artwork and window stickers to t-shirts and silk neckties in record stores (remember those?), retail shops and online company stores such as http://store.dead.net.

Thirty years later, this iconic brand can still be seen in places from the Rock and Roll Hall of Fame to a high school kid’s bedroom wall. The Dead’s evolution from folksy country bluegrass in the ’60s, to disco Dead in the ’70s, to the popcorny ’80s and to the unmistakable mosaic that is The Dead’s catalog today is proof that if you are willing to continually review, assess and revise your success will be great.

Creating the experience was the organic transformation for this group of musicians. It was a drug-induced ride of decades for them; today, it is a valuable lesson about understanding customers, catering to their needs and using viral marketing to help build the brands with which you are working. The promotional products industry is not unlike the Grateful Dead subculture—a group of creative, energetic people from all walks of life who are enthusiastic about the same things. The question is, are we going to be able to leverage our audience to the same level?

We are at an evolutionary point in our industry. With CPSIA, PhRMA, insurance and investment regulations and more to come, our industry must find a way to produce logo- branded merchandise that goes to work for our client base, provides real value and shows ROI.

Evaluate, revise and implement changes in order to satisfy our client. This is the basic formula used by the Greatful Dead for more than 30 years and the result for The Grateful Dead: No. 55 on Rolling Stone’s list of The Greatest Artists of all time.

 


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