China holds price advantage

The Far East has long been a valuable source of cheap promotional items and, as economic conditions in Europe become harsher, this situation is unlikely to change. Jo-Anne Flack reports

In these environmentally friendly times, the sourcing of masses of cheap goods from the Far East has fallen under the spotlight. Among many of the products being sourced mainly from China would be merchandise destined as incentive products. For those in the sourcing business, and their clients, the choice has to be made. If it’s cheap, it has to be China. For products to be sourced locally, entire programmes have to be rethought.

Libby Christie, head of operations at incentives specialist Unmissable, says: “Companies must be seen to be proactively more socially and environmentally aware, and this is now filtering down into promotional and incentive campaigns.

“There is now an increasing pressure on agencies to adopt a Supplier Code of Conduct to help combat poor working conditions, low wages and child labour.

“There is also growing pressure on companies to be aware of their carbon footprint and the impact their operation has on the environment, for example, shipping in goods from all around the world. And UK consumer trends show that they are increasingly seeking quality over quantity.

“These factors are having an impact on the sourcing of mass, cheap promotional items. Running a promotional campaign that gives away huge quantities of cheap promotional items only works for certain brands. These campaigns serve a purpose, but they usually lack creativity and standout.

“As stricter budgets come into play, agencies need to be clever when planning a promotional campaign. Often less is more – cut down on quantity but increase quality of goods on offer.”

Everyone agrees that budgets are getting tighter, and no matter how environmentally friendly a company may want to be, economic realities will dictate what happens. But Graham Howarth, director of P&MM Source-e, doesn’t think going the Far East route necessarily means exploitation and ready-made goods destined for landfill sites.

“The quality of goods sourced in the Far East is increasing. As long as agencies keep to the normal checks, you can get the same quality merchandise at a reasonable price. It is also down to numbers. If you are not looking for big quantities, then you may as well source locally.”

But it does seem as if the tide of opinion is changing. Ironically, as times become more difficult, people seem to value quality more. Rachel Deacon, client partner at Carlson Marketing, maintains that the Far East is the only option if clients want cheap goods. “You can’t have good quality, locally sourced goods that are cheap. Consumers will need to learn that when it comes to promotional merchandise you really do get what you pay for.

Local economy
“The risk with cheaper goods is that they lose appeal or break and quickly end up in landfill. With the increased emphasis on recycling and reusing, quality items that have longevity carry a value far beyond their cost. Sourcing locally not only communicates good environmental credentials for your brand, but also helps the local economy – supporting the UK-based companies that will inevitably experience the effects of a slow-down in the global luxury manufacturing sector and a reluctance to travel far in the global tourism market.”

But more broadly, Deacon believes the downturn in the economy is having a wider impact on the way consumers decide what to buy. “With house prices deflating, people are not so interested in moving and are starting to put down roots – this is reflected in more colour being used in houses and more furnishings rather than just stark, basic furnishing. This focus on and pride in the home means people will put more premium on quality items than has been the case in the Ikea world of the past decade.

“This turning of attention to home and family also adds emphasis to the importance of local. Once-in-a-lifetime experiences carry less value when you’re worrying if you’ll still have a house when you get back. One of the impacts of hard financial times is a greater emphasis is put on family and guaranteed added value. So, UK-based experiences start to look increasingly appealing, giving a lot of perceived consumer ‘bang’ for not a lot of marketing ‘bucks’.”

But for some people, the motivation to go for quality rather than quantity is part of a wider philosophical attitude about how we should be leading our lives.

Mick Pacey is chief executive of Shell Magic of Motoring, an independent company that is the global licensee for Shell Oil. Given the history and heritage of Shell Oil, Magic of Motoring has a free hand to develop products and experiences linked with the company, for example branded clothing as well as the building of 25 Fifties and Sixties petrol stations across the world. Many of those will include restaurants and some of those will include celebrity chefs.

Pacey says the company has made a conscious decision not to source any products or services from the Far East and stick with the UK and Europe.

“We are fortunate that we have a unique offering and a fairly unusual target audience, who are aware that in the Thirties and Forties consumer goods weren’t produced in China. But I also think it is irresponsible to be involved in mass producing goods for a society that has more than it knows what to do with.

Mass produced goods
“Although we are lucky in that we don’t have to compete with companies that are using mass produced goods, I still think these brands need to be more responsible. Everyone is hell-bent on modern technology. The prices are being driven down and most of it only lasts six months before it is replaced,” he says.

Pacey cites a recent global campaign that Shell launched to prove that quality will always emerge the winner. The campaign, in partnership with Ferrari, gave drivers who bought a certain amount of Shell fuel a toy Ferrari. “In Austria and Switzerland, they tweaked the campaign so that drivers had to buy a lot more fuel but for a much better quality product. The product was quite unique and got a much higher response in that region than in others. It proves that we should be making stuff to keep and not stuff that finds its way to the dustbin.”

Exclusive brand experiences
These are fine sentiments, but unlikely to get a hearing outside the rarefied circles of highly-targeted, exclusive brand experiences like the one Shell’s Magic of Motoring is offering.

Howarth at P&MM Source-e confirms that the most obvious trend in the promotions and incentives market is the increased sourcing of gadget-related merchandise. “For very low cost you can get a USB stick that can be branded any way you like. This was not an option ten years ago. It is all because the price of gadgets has come down so much,” he says.

And Howarth also confirms that budgets are getting tighter and will continue to do so. As a result, the attraction of cheap, mass produced items for use in promotional campaigns is unlikely to end any time soon.

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