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Elsewares Promotional Products & Packaging

Market Analysis Summary

By definition, the advertising specialties industry deals with the sale of promotional products. These products can be practical, informative, entertaining and/or decorative products most often imprinted with the sponsoring advertiser’s name, logo, slogan, or message, and almost always retained and appreciated by the end recipients who received them free of charge.

Sales in the advertising specialties industry have been growing at a rate of almost 7% per year since 1988 and reached over $7 billion in sales last year. Within that industry, the three suppliers that offer only velour and leatherette drawstring bags did a combined $2,500,000 in sales. Those three suppliers are located on the East Coast while some of largest advertising specialty distributors in the industry are Midwest and West Coast firms. We feel that by concentrating our efforts on marketing to the West Coast distributors, many of which already have had positive business relationships with our personnel, we will acquire a significant market share of the packaging niche over the next three years.

Concurrent with our campaign to market these packaging products, we will showcase our line of unique promotional products to the same distributors, thus giving ourselves three sales opportunities: the sale of the promotional product by itself; the sale of some packaging products that the distributor can use with promotional items that are purchased from other suppliers; and the sale of our promotional product coupled with our packaging.

4.1 Market Segmentation

Below are the major product segments of the advertising specialties market and their corresponding percentage of the total market as measured by large distributor dollar sales:

  • Wearables [i.e. T-shirts, jackets, & caps]: 22.2%
  • Writing Instruments [i.e. pens & pencils]: 13.1%
  • Glassware & Ceramics [i.e. mugs]: 9.9%
  • Recognition Awards [i.e. trophies, plaques, emblematic jewelry]: 9.8%
  • Desk & Office Accessories: 9.2%
  • Calendars: 7.8%
  • Sporting Goods and Leisure Products: 6.9%
  • Buttons, Badges, & Ribbons: 6.8%
  • Auto Accessories [i.e. key fobs, sun screens]: 4.2%

There are presently some 2,800 suppliers listed by ASI that are selling over 390,000 different promotional products to over 13,000 advertising specialty distributors. This ASI listed distributor network serves as a large sales force for the suppliers by actively selling promotional products to the public and then directing that business to ASI listed suppliers with whom they are familiar. The ASI listed distributors offer the suppliers’ products to a multi-segmented end-user market. Below are the major segments of this market listed in order of size as measured by dollars spent:

  • Clubs, Associations, & Civic Groups
  • Financial [i.e. banks, investor groups, financial professionals]
  • Schools and Colleges
  • Service Businesses
  • Insurance Agencies
  • Retail Stores
  • Industrial Products Companies
Promotional products maker business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Wearables 12% 12,000 13,440 15,053 16,859 18,882 12.00%
Writing Instruments 22% 21,000 25,620 31,256 38,132 46,521 22.00%
Recognition Awards 10% 10,000 11,000 12,100 13,310 14,641 10.00%
Desk/Office Accessories 9% 34,000 37,060 40,395 44,031 47,994 9.00%
Calendars 8% 18,000 19,440 20,995 22,675 24,489 8.00%
Sporting Goods 7% 45,000 48,150 51,521 55,127 58,986 7.00%
Button, Badge, Ribbon 7% 20,000 21,400 22,898 24,501 26,216 7.00%
Auto Accessories 4% 34,000 35,360 36,774 38,245 39,775 4.00%
Glassware & Ceramics 10% 23,000 25,300 27,830 30,613 33,674 10.00%
Other 0% 0 0 0 0 0 0.00%
Total 9.43% 217,000 236,770 258,822 283,493 311,178 9.43%

4.2 Industry Analysis

As you may expect, we will be entering a very mature industry that is crowded with suppliers and distributors. As with any product-oriented business, it is important to maintain a competitively priced product line. The safest way to increase overall margins will be to continuously introduce new products which will remain exclusive offerings for a period of time. When the competition has found a way to source similar products, the margins will adjust downward, driven by competitive market forces. It will be critical for Elsewares to keep one step ahead of the competition by having a new product ready for introduction when the margins slip. Thus, a new cycle of discovery will begin. We intend to be the originators and not the imitators.

Service and support may actually be more important to a majority of distributors than price points. After all, they are putting their reputations on the line when they afford our company the opportunity to fulfill their clients needs. On-time delivery of quality imprinted product will be crucial to our success.