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The Nonprofit Toolkit series of CyberEssays.

When pennies count, dimes rule. When dimes rule, quality is sacrificed to price.

 

We share this reality:

The tight relationship between quality and price creates latitude for vendors and factories. That means buyers face certain risks. We’ll help you understand this reality. Then you can identify and evaluate the risks you face.

 

The cause is structural:

Want to join the promotional products industry? Barriers to entry are really modest. Commission salespeople need a bit of training, but no investment or prior experience. To open a distributorship will take a bit of capitalization and some experience – but not much of either. Becoming a manufacturer or importer or imprint house is a bit more complicated, but start-up or acquisition investment can still be modest – and fixed assets are easily financed.

 

Your risk is hidden:

The promotional products industry is easy to enter...so it attracts an interesting mix of players. The industry’s structure means the client can be dealing with a deeply rooted, highly competent, enormously experienced and exceptionally ethical distributor – or a fly-by-night operation. On the surface, they can look the same and promise the same. Truth is – most are competent, creative and ethical. But this is an unregulated industry whose players can indulge in a variety of business practices without risk.

So plenty of outfits – both factories and distributors – under pressure of deadline or payroll or bank loans or price competition, or just the opportunity to take advantage of customer inexperience, will cut corners to save some time here and some money there. They know how to do it so the consequences are not immediately apparent.

 

Here’s how it works:

You may not realize this, but even though the imprinting processes are fairly simple, they do involve a large number of steps. Each step affects the outcome. That means there are plenty of potential shortcuts and compromises, too. Let’s pause here to draw your attention to an essential and awkward issue for nonprofits – then we’ll give some examples:

 

NOTE: When dealing with imprinted products, prudent budget management can inadvertently jeopardize assets of greater value. Decisions that make sense financially can actually end up causing a deficit in assets that are far more valuable. This phenomenon is explained in a Cyber-Essay written for the nonprofit marketer and titled Nonprofit Vulnerability. Spend a couple minutes reading it. Those couple minutes may help you avoid costly mistakes.

 

Here are examples of common money-saving shortcuts:

• Ever see a T-shirt with an image that faded? Or a tote-bag with logo that flaked or cracked? Or a sweatshirt imprinted with a logo whose open spaces had filled in? These imprint failures may not appear until after the product has been used. They are caused by shortcuts like the following: When putting your logo on a dark fabric, screen-printers can save a little money by skipping a neutral colored underlayment – but eventually the dark color will bleed through. Under pressure of time or cost, they can use a screen that hasn’t been completely cleaned after the last job or one that’s immediately available, even though its mesh is a bit too fine or too large for your graphic. Trying to move your order quickly to meet a cut-rate price, they can cut a few seconds off the flash-cure time. They might not spend enough time adjusting your art in the pre-production process.

 

• Here’s how a factory compromise eroded the quality of a great long-term product in a manner that could not be seen. A high-performance FM radio, about the size of a BIC lighter, was one of the first miniature electronics imported from Hong Kong at a promotional price. This exquisite radio, which we dubbed the Tom Thumb, became a major contributor to the success of public broadcasting fundraising in the 1980s.

 

After it had been available about three years, two things happened: First, new miniature radios had been introduced to a market once dominated by our Tom Thumb, and naturally the price dropped to us and our clients. Second, even though the units coming down the pipeline looked just as they always had, our Tom Thumbs could no longer receive distant stations. Comparing one of the older models with a current one under a magnifying glass, we discovered that the United Kingdom registration numbers on the electronic chips were different! To compete, the factory in Hong Kong chose to save a few cents on each unit by downgrading the chip – a hidden way to sacrifice quality to cost.

 

A more ethical approach would have been to retain the original chip and quality of the original model while introducing a new product with different appearance and chip at a lower price point. A more simple and equally ethical approach would have been for the factory to tell us that it was now making the product at a lower performance standard.

 

• Here’s another example of how quality levels can be hidden – at first. Consider two 8-ounce cotton pique polo shirts and two tote bags made of 600 denier polyester. Cut from the same patterns and imprinted with the same logos, each pair of products looks identical. Remember, though – it costs a bit extra to overstitch and bind stress-point reinforcement into shoulder seams, zippers, the bottom of plackets, the corners of pockets and similar places. Taking the shortcut by eliminating those unseen production steps makes eventual failure of the garment much more likely. Factories and promotional products distributors face stiff price competition – and know they can shave a few cents off the price because the average person won’t notice that stress points aren’t properly reinforced.

 

BOTTOM LINE: Every production step has a cost. Most steps have an optional shortcut. Each shortcut saves a bit. When pennies count, dimes rule. When dimes rule, quality is sacrificed to price. This is the nature of the promotional products industry.

 

The client or end-user may not notice at first, but quality deficits will show up as an item is used. Thus, that righteous cost decision can affect product satisfaction and ultimately - constituent affinity. This is especially important for nonprofits. We explain how this can have devastating results in our Cyber-Essay Nonprofit Vulnerability.

© 2008 by VisABILITY - PO Box 1659 - Lyons, Co 80540