"From Lackluster to Lavish ... With Luxury Products"

By Cynthia Ironson
Advantages: 2005JUN

When your client wants to impress, high-end, brand-name items make powerful promotional products. Distributors have access to more luxury products than ever before. Here's how some in the industry are putting them into promotions.

Dina Heidger's largest client, a division of a Fortune 500 company in the mobile technology arena, will only consider brand-name gifts for its high-level, executive meetings. Lucky for them, Heidger of Brand Central Promotions LLC (asi/145001), is no stranger to luxury brands. Once upon a time she was a brand manager and design director for Body Glove. She has created many licensed products and has freelanced in the field.

'They vie for sales business among partnered carriers, so they need impressive gifts," Heidger says about her client. 'Typically they want something like a Cutter & Buck keyfob, or a Waterman pen … not always the most expensive model available, but it has to have the recognition of a high-end brand and its perceived value. Their buyer has excellent taste and has raised the bar for the entire company."

Distributors can create fabulous promotions using products from many highly recognizable brands like Brookstone, Coach, Sharper Image, Tourneau, Weber, Maui Jim, Fossil, Ralph Lauren, Canon and Godiva, just to name some. Several luxury product retailers have become members of ASI and PPAI and exhibit at industry shows. They have caught on to what distributors always knew, that the promotional products market holds great potential.

New Luxury
Many trends detected in the promotional products industry are spawned by larger
consumer trends, and the growth of the luxury category is certainly among them. It isn't only very affluent people that enjoy luxury products these days. According to research conducted by The Boston Consulting Group (BCG), 96% of American consumers say they often pay a premium for what the organization calls 'new luxury" goods - premium-quality goods that cost up to 20% to 200% more than average goods.

BCG, an international strategy and management consulting firm that helps corporations stay competitive, reports that new luxury companies continued to be the performance leaders in the consumer economy in 2004. It examined a representative set of 15 companies that fit the bill; among them PF Chang, Starbucks, Coach, JetBlue, Restoration Hardware, Callaway Golf and BMW. The goods these companies sell 'win devotees among middle-market consumers because of their technical benefits and emotional resonance," BCG explains. These new luxury companies saw an average sales growth of 21% during 2004, up from 19% in 2003.

In fact, recent research from BCG shows that the 'new luxury" phenomenon represented $525 billion in sales in 2004. That sales figure could rise to $1 trillion by 2010. (For in-depth information about the 'new luxury" phenomenon, distributors may want to read the BCG book Trading Up: Why Consumers Want New Luxury Goods - and How Companies Create Them (Portfolio), which was released in January 2005. The book was co-written by the company's senior vice president, Michael J. Silverstein, and Bath and Body Works CEO Neil Fiske.)

So as luxury became attainable and desired by all, it made a grand entrance into the promotional products industry. The luxury, brand-name products available to distributors are varied - from picture frames to clocks, from crystal vases to digital cameras to hot tubs. Presenting your client with a luxury product for a promotion may take a little more time and effort, but those who do it regularly say it's worth it. Simply put, brand names can elevate you in your client's eyes. They can set you apart from your competition and earn you more of your client's business. And selling luxury goods just may raise the bar for all future sales to your client.

Lifestyle Awards
Those who watch the promotional products industry have noticed that the luxury category continues to expand with more brands and high-ticket items available than ever before. Retail companies with high-price point products are looking for distributors to expand their base of corporate clients seeking promotional products. Retailer Brookstone Inc. (asi/42175) is a good example.

With an objective of 'providing the premium brand," Brookstone began selling to the promotional products industry three years ago. According to Craig Grayson, the company's corporate sales manager, the company realizes the promotional products market holds huge potential and wants to occupy a niche by offering a core assortment of premium branded gifts for purchase by distributors.
Luxury products, like those sold by Brookstone, do double duty - functioning as both incentives and promotional products. High-end incentives like spas, gas grills, leather bags, writing instruments, watches and more have been called 'lifestyle awards" by the Incentive Marketing Association (IMA). They can mean the difference between a bland and a blockbuster incentive program.

Marc Richman, CEO of For Any Occasion Inc. (asi/195783), says approximately 20% of his business is sales of luxury gifts like pool tables, grandfather clocks and plasma-screen TVs. He sells brands like Canon, RCA, Panasonic, Sony, Rolex and others. 'Typically these products are used for employee incentives or sales goals," he says. For one promotion, For Any Occasion provided 100 60-inch big-screen TVs to a financial services company that wanted to reward top-selling salespeople who reached a sales goal.

Luxury products are unquestionably excellent 'carrots" in incentive programs, having a much bigger impact emotionally than cash awards - money doesn't last. Despite the 'new luxury" trend, owning something as grand as a pool table or as sumptuous as a Coach leather duffle may be out of reach for some participants. Your client's program could make it happen, and that gesture wouldn't be soon spent and forgotten.

Brand-name electronic and digital products are particularly hot right now, and the field is exploding with new and enhanced product offerings. According to Tara Dunion, director of communications for
the Consumer Electronics Association (CEA) and Consumer Electronics Show (CES) , about 50,000 new products are introduced at its annual show in Las Vegas. Anything digital, especially digital televisions and cameras, are especially hot right now. 'These have been extremely successful products in 2004 and onwards into 2005," she says.

In fact, a significant percentage of your average Joe or Jane America could be in the market for a digital television. According to a recent national survey conducted among 2,630 U.S. adults by Harris Interactive, 27% of adults say they are likely to buy a high-definition television set within the next year.

Electronics and digital products should be a top category to consider for enticing rewards. 'We have used them to drive new customers to a product or brand," says Richman. 'For example, the first 200 people to sign up win a free portable DVD player." If you need to find out what some of the hottest electronic and digital products are, don't bother prowling the aisles of your local Best Buy store. No one knows better than online retailer Amazon.com. Molly Ingle, senior PR manager for Amazon suggests people visit www.amazon.com/electronics and view the 'Top Seller" list along the right side of the page for up-to-the-hour information about what is selling most in the electronics store. Also, Amazon tracks electronic products that have a large spike in interest over 24-hour periods, she says. Go to www.amazon.com/movers-and-shakers and click on the Electronics section.

Another source for finding out about what electronics and digital products consumers (and, by extension, your client's recipient or program participant) are drooling over is www.CNET.com. CNET started out as the leading publisher of information and news on the technology field, and now its Web site is a treasure trove of product information and reviews. CNET has a 'Top 10 Must Haves" gadget list that is updated regularly. At the end of April, the list featured the Sony PSP gaming console, the Apple iPod Mini, the Motorola Razr V3 cell phone, the Canon Digital Rebel XT digital camera, and the Apple Mac Mini computer, among other products.

Promotional Clout
High-end, brand-name products do more than motivate - they can make a deep impression on a recipient in many ways. Luxury products are gratifying gifts that can help your client retain and acknowledge their clients or employees. They can enhance sales meetings, corporate outings and other company events. They can celebrate a company milestone or achievement, or introduce a new product or service. They can also thank a consumer for a making a big purchase like a luxury car, a yacht or a vacation home.

Keep in mind that if your client's program is aimed at executives and celebrities, they will expect high-end, brand-name goods. 'For a corporate outing at Hilton Head, we did Nike Golf apparel and bags, and the next week after the executives were back, we had a group photo placed into a Coach picture frame and sent it as a thank-you to remember the event," Heidger says. When the same client sponsored Fashion Week in New York City, she included logoed London Fog umbrellas in VIP gift bags. 'As it turned out, it did rain and our client's logo was all over the streets keeping celebrities dry," she says.

Heidger is currently working with a television production company that is producing a celebrity game show and is trying to woo celebrity players to participate. One of the incentives is an extravagant gift package. 'We are looking at typical items such as branded polo shirts and bags, but also items like a foosball game, digital electronic games by Excalibur and even a brand-name pool table," she says.

Distributors and clients can build an assortment of programs around luxury brands. Luxe items can be tucked into a gift basket to enhance its impact and enhance the promotion's 'memorability" factor. When a client of Alison Wilsco, of Style Gifts Ltd. (asi/338451), wanted her to create gift baskets to thank its team for a job well done, she proposed a leather Coach (asi/45518) travel toiletry case and other non-food items in addition to the food gifts. 'They ended up choosing the Coach piece," she notes.

Another Style Gifts client wanted to do something it routinely does at its annual national sales meeting: leave a gift in the attendees' rooms. In past years, they picked products like Waterford clocks and other high-end desk items. Nice, but ho-hum. This time, Wilsco and her client kicked it up a notch with a Maui Jim sunglasses program.

Approximately 250 attendees received sunglasses, not to mention a personalized experience. 'A notecard was left in the recipients' rooms letting them know that they were receiving a pair of Maui Jim sunglasses, and to come to the hospitality suite between 9 a.m. and 5 p.m. the next day to be fitted and make their selection," Wilsco explains. When attendees had a break after a meeting, they arrived at the suite and a Maui Jim rep helped them select from eight styles. The rep also fitted the sunglasses for the recipients. The styles were pre-selected in the client's budget range.

'I can't even begin to tell you how much of a success this program was," Wilsco says. 'The Maui Jim program allowed each recipient to make their own choice and get a gift that was perfect for them. Our client is already looking at doing this program for future events."

Upgrade and Upsell
Wilsco's examples show the power of upselling - suggesting products that are a cut above what the clients think they want. Style Gifts started placing a special emphasis on brand-name, higher-end gifts and incentives some years ago when clients began to request specific brands. 'As time has gone on, we suggest higher-end and brand-name items on a regular basis, even when the client hasn't asked for it or it appears to be in their budget," she says.

The strategy even works with some thrifty clients. Wilsco offers the putter gift set from Callaway as an example of a high-ticket item that has won over some of her clients that don't usually buy high-end products. 'It's an impressive gift, packaged in a large, see-through gift box with six Callaway golf balls and the putter, all with the logo," she says. She has introduced the gift to a few of her clients who use them as a thank-you, holiday gift and at meetings that have a golf event.

One particular client, who does plenty of business on the golf course, but usually gives away inexpensive products, was impressed. 'When they saw the putter gift sets, they found the budget and sent them to their clients." The client now calls on her to top that gift each year, she says, in addition to the inexpensive giveaways they still buy from her.

'Whether it's the top 200 sales qualifiers going on a Caribbean incentive trip, and one of their gifts is an engraved Movado watch at $400 a piece, or a company has an Alaskan incentive trip and gives a great Leatherman tool to the recipients, we find that by offering and proactively suggesting higher-end and brand-name merchandise, it's a win-win situation," Wilsco says. 'The end-user and recipient are extremely impressed with their gift and can't stop raving. And we increase the original budget, our bottom line, and get referrals."

Tips for Distributors
It may be brand image or high retail value. It may be a brand's reputation as a leader in its field. It may be enhanced product capabilities or sleek design. It could be any number of things that will turn your client from budget-fussy to luxury-hungry when it comes to buying promotional products. The fact is, you never know unless you try. Even if the budget is not there, it can't hurt to introduce your client to some of the best brand-name and luxurious products the industry has to offer.

Richman sums it up: 'Make sure you are familiar with the products you're selling," he says. 'Come up with creative ideas to show your clients how to create promotional campaigns." The extra effort and the creativity pay off.

A national manufacturer's rep to the premium and incentive market also suggests that distributor salespeople learn which brand-name products hold their value at retail. 'That's important," says Marsha Brooks, director of marketing for Incentive Concepts (asi/62536). 'When we sell a Bose Wave Music System to a distributor, they can assure their customer this product is valued at $499 retail - never less. Their customer and the award-winner know they are getting a product that's valuable. It's the perceived value of the gift that will motivate and excite participants into reaching the goal set by the sponsoring company."

Incentive Concepts began exhibiting at ASI and PPAI shows approximately six years ago to reach distributors and market to their buyer audience. The company's highest priced product that it represents is the Victory Motorcycle - a $20,000 product at retail.

Distributors, Brooks says, have become very savvy about selling brand-name, high-end merchandise. 'We have been educating distributors that their customers, who are buying promotional items from them, are also buying brand-name merchandise - just through someone else," she says. '[Distributors] can get these products at less than retail and earn all of their customers' business."

When Incentive Concepts began exhibiting at industry shows, most distributors' reaction was, 'I didn't know I could get this." Nowadays, Brooks says, 'When we see the same distributors show after show, they want to know, "What's new?'"

She also points out that many of the factories her company represents have introduced new products at lower price points. 'They are excellent, brand-name products, just with price points that are easier to fit into more promotional budgets," she says. Be aware that in some cases, brand-name retailers that sell to distributors may not make their entire line available to the promotional market.

Wilsco warns that some clients may call the brand-name company directly and try to order through its corporate sales division, assuming they can get a better price. She tells clients that by ordering through Style Gifts, they get to experience her company's 'amazing customer service and program management," which takes all of the work out of their hands.

You don't need to run a big operation to sell luxury products. You just need to play up your strengths and do what you do best - be creative.

Luxury Products in Action

Yes, luxury items do make great sales incentives. But you can use them in oh-so-many more ways. Clients can use them:

As gifts of all kinds, to celebrate a holiday or say 'thank you" for your business
To recognize special clients, dedicated employees, executives, board members and donors
At corporate outings, annual meetings and special events
As prizes for contests or sweepstakes
In trade show promotions, to lure in the hottest prospects or stimulate sales on the show floor
To enhance gift baskets
In gift-with-purchase promotions
To celebrate a company or organization's milestones
To unveil a new product or introduce a new service
As travel incentives when booking trips or tours

Retailer Spotlight: Brookstone

The challenge for Brookstone Inc. (asi/42175), says corporate sales manager Craig Grayson, has been adapting to the existing channel of distribution in the promotional products industry and educating distributors about why Brookstone is involved and where the company thinks there's opportunity for selling its branded gifts.

'We're not looking to compete with the general scope of suppliers out there," Grayson says. 'I think distributors that we've been successful with recognize the value of what we have to offer. They can source us when they need that type of product."

Sometimes distributors contact Brookstone with their hearts set on products for their clients, and those products aren't in the core assortment available to the promotional products industry, Grayson says. 'Fortunately, we update and evolve our merchandise selection to such an extent that often we can recommend a new product with better design and higher cachet than what the distributor originally wanted," he says.

Grayson recommends that distributors check the company's Web site regularly, because it does frequently change its product assortment and make changes to products. Distributors who focus client programs on branding have the most success working with Brookstone, he says. He also recommends that distributors be open to product suggestions, with a program concept and with a budget in mind. 'The program may be about the outdoors, and the meeting is going to be at a campsite, and they want something in that genre," he offers as an example. 'That's when it gets fun for us, because we can really pinpoint what products are going to work to meet their price and program objectives."

Cynthia Ironson is a freelance writer based in New York.

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