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By Marjorie J. Cooper, Ph.D.

What a difference a year makes! So much has happened since our last State of the Industry report that it’s hard to know where to begin. We’ve had successes with new clients and the loss of some old faithfuls. We’ve had mergers, acquisitions and bankruptcies, along with successful new start-ups. As we watched our economy take a nosedive, some continued to prosper while others felt the wolves nipping at their heels.

We were threatened as a nation and lost some of our loved ones. So we took up the challenge and moved forward with courage and resourcefulness, as only Americans can. Clearly, 2001 was a year of rebirth for old-fashioned, red-white-and-blue patriotism. And it’s a year we will never forget.

We’re excited to bring you this year’s State of the Industry report to help assess where we’ve been, where we are and where we’re going. This year’s SOI issue features many of the standard reports you’ve come to know and trust. We looked at sales volume, profit margins, regional trends, product categories, client sectors and cost allocations. We asked for your assessment of the most important issues affecting the industry. And we added some new sections that we hope you’ll find useful and informative.

Economic Environment Evident

For example, what’s the biggest problem that clients want distributors to help them solve? And what’s the biggest problem distributors want suppliers to help them solve? We also thought you’d be particularly interested in finding out more about salespeople. That’s why – for the very first time – we’ve included an entire section devoted to the results from our special Salesperson survey.

Just a few of this year’s numerous findings: The slowdown we felt coming on in the latter half of 2000 hit with a vengeance in 2001 and was reflected in your assessment of the health of the industry (certainly not overly pessimistic, but definitely down from last year’s diagnosis). And suppliers were more pessimistic than distributors. Only a tiny percentage of respondents felt the recession was having no effect on the industry; we’d like to know where – and with whom – these people are doing business!

Those distributors whose sales volumes increased attributed the increases to factors that reflect competence, commitment and good business practices on their part. These factors include “increase in client base,” “expansion into new markets” and “preferred vendor relationships with clients” – all tactics that are largely under distributors’ control.

In contrast, those whose sales volume declined attributed those decreases first to the national economy/recession and secondly to competition. Both these factors – especially the economy – may be said to be beyond distributors’ control.

Similarly, suppliers were quick to take credit for their successes (sales volume increases), as they cited growing their distributor base, increasing their marketing/promotion/advertising, and changing their catalogs and developing new lines/products. However, they too disclaimed direct responsibility for sales volume decreases, citing in large measure the national economy, with competition from other suppliers running a close second.

Although the economy was tough for promotional products distributors and suppliers during 2001, many were able to hold their own. In fact, a considerable percentage of distributors and suppliers did more than hold their own. They increased revenues and profits, expanded their client base, cross-sold more promotional products programs to existing customers and found new and innovative ways to be more successful. 

Although most of us wouldn’t seek out the challenges we faced in 2001, these issues usually make us even stronger than we ever thought we could be. For those who simply remained stable, that alone was a significant achievement. And for those who saw their businesses shrink, we suspect you’ll regroup and come back stronger than ever in 2002.

Your Ready Reference

We encourage you to read through the State of the Industry report for 2001 and then go back and study it in greater detail. There’s so much information here that the report can be overwhelming at first. So our advice is don’t try to swallow it whole. Use it as a ready reference and a source of industry insight throughout the year as you plan various initiatives.

We also ask for your feedback. Many of the new features you find in this issue are the result of questions and comments offered to us by our readers. After all, this is your report, and we want it to meet your needs in every way possible. Let us know how we can help! E-mail Counselor editor-in-chief, Richard Kern, at: rkern@asicentral.com, or send a fax to: (888) 287-6298.

Thanks again to all those who contributed to this year’s SOI. And to the distributors and suppliers who use this data to run their businesses more efficiently and profitably, we appreciate your continued interest and support. 

Marjorie J. Cooper is a professor of marketing at Baylor University in Texas. She serves as a research project consultant and instructs within Promotional Products Association International, as well as acting as ASI data consultant on the State of the Industry and other surveys and publications.

Methodology

By Tonia Cook Kimbrough

Five questionnaires made up the 2002 State of the Industry survey, two distributor and two supplier versions, plus one survey for salespeople. The first distributor and supplier surveys mailed in January covering a range of operations and marketing/sales questions. The second mailed in late March, focusing on finances. These mailings were sent to 13,500 ASI-listed distributors who receive Briefings newsletter and to 3,100 ASI-listed suppliers. The salespeople survey e-mailed to a sampling of 4,600 Strategic Promotional Advantages subscribers in April.

Responses were sent to Dr. Marjorie Cooper, professor of marketing at Baylor University, who then input and analyzed the data using Apian Survey Pro software. The charts on this page provide some insight into the participating companies.

Of those who do sell through other channels: 61% do 50% or less of their business in promotional products.
39% do more than 50% of their business in promotional products.
 Average of total revenue done in promotional products: 65%

Distributors
In 2001, what percentage of your total revenue was done in promotional products?
40% did 100% of their volume in promotional products 
52% did more than 90% of their volume in promotional products
24% did 50% or less of their business in promotional products
Average of total revenue done in promotional products: 77%

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