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January 20, 2004

Written by Bob Meyer, Editor of BarterNews

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Part II...

"Brand Building" Through Corporate Barter

Corporate barter can, in addition to cleaning out non-profitable products that can put a drain on your company's cash flow, also help expand your marketing efforts.

Normally, one's ad budget has to focus on primary core consumers, but stretching to reach potential consumers is where corporate barter can be effective by serving as the basis for creating promotions that boost the brand beyond traditional advertising media.

It's accomplished by setting up a marketing insurance program between a manufacturer and a corporate barter company, with the objective of selling some product beyond what the company expects to sell.

With a proviso, that should conditions change and the additional product (sold to the corporate barter company) be needed, the manufacturer could buy it back at a favorable price. Such strategy is especially useful when launching new products or line extensions, because even million-dollar research studies can't guarantee consumer acceptance.

Another great way to foster brand identity, while maintaining the integrity of the core brand, is incentives. The company that gives incentives to its sales people is conferring value and gaining more brand exposure. And the corporation bartering the incentive merchandise gets valuable trade credits.

Corporations which don't do much advertising can benefit from a corporate barter vendor-trading program. It allows a company to utilize accrued trade credits to help pay trusted vendors for such things as packaging, raw materials and printing.

Extending exposure to geographic areas and market segments not currently penetrated, such as overseas distribution, is attainable through corporate barter without incurring the cost of additional staff and marketing support.

And, more and more, excess production capacity can be utilized to make private label products. Thus more income is derived to support the core brands, without causing image erosion.

Overall, corporate barter offers bottomline value while helping maintain brand image and worth—vital assets in the marketplace.

(This article was condensed from BarterNews Issue #54.)


U.S. Evolving Into A Free-Agent Nation

Last week in our "Here & There" section we noted that government employment statistics only survey big businesses, even though small business constitutes over 50% of the GNP in America.

We received an interesting letter from Michael Atler, President of Sure Payroll (www.surepayroll.com)...the fifth largest payroll outsourcer in the U.S. which includes small businesses.

He contends, and his data supports, that we are evolving into a free-agent nation where fewer and fewer of us are engaged in traditional employer-employee relationships. And more and more of us are offering our services to organizations as freelancing independent contractors.

Andrew Sum, the director of Northeastern University's Center for Labor Market Studies sees the same pattern. He believes that people are turning to informal contracting relationships, as an income source, more than ever before.

Atler says his small business clients indicate that their expanded use of independent contractors is based on their desire to manage their costs and enhance their organizational flexibility. Moreover, they indicate there is a better supply of talented freelancers available now than in previous years...and their fees are reasonable.

Editor's Note: Many independent contractors, offering valuable services, are available through the nation's trade exchanges. And there's no better way to utilize and pay for their services than at one's barter (variable) cost of doing business!


Peter Drucker Looks At Our Changing World

In the current issue of Fortune magazine, the 94-year-old guru Peter Drucker looks at today's changing world. Among his surprising comments are:

  • The U.S. imports two to three times as many jobs as we export. Those jobs are created by foreign companies establishing manufacturing facilities in the U.S. and employing American workers.
  • The U.S. remains the cheapest place in the world to produce for many of the more advanced industries, because employee benefits are much cheaper and American workers are more flexible than in Europe. In the future, direct labor costs will take a backseat to "invisible" costs such as pensions, benefits, health care, and "reporting costs" like complying with regulations, taxation, and labor relations.
  • Outsourcing will create greater efficiencies and productivity for today's companies employing knowledge workers.
  • Those who have concern about the higher-education system and lack of people studying technology in the U.S., forget that this is the only country with a very significant continuing-education system. Surprisingly, our most important educational system is in the employee's own organization.
  • We have not been in a recession, but rather a transition. For educated young people there is no recession, but for immigrants who are only qualified for yesterday's jobs there exists a mismatch of skills.
  • Manufacturing production in this country has doubled in the past ten years, even as factory employment has gone down. The improvement is due to more systemization that requires less unskilled labor.
  • Our biggest problem today is the nation's total dependence on foreign money to cover our government debt, which is unprecedented in economic history. We have no experience with what will happen when the U.S. owes so much debt that we'll be forced to devalue the dollar. But, sooner or later, we're going to find out.

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Here & There...

  • Greg Brown's wife, Christiane, has passed on after battling various ailments over four years. She was an integral part of Barter Trade Alliance in Kingston, Ontario, prior to her illnesses.
  • International Monetary Systems (OTCBB: INLM) reports barter revenue for November 2003 was up 40% over the same period a year ago, and client billings exceeded $375,000.
  • U.S. manufacturers activity surged in December with new orders and employment, the best gain in two decades. The uptick is consistent with an 8.6% annualized increase in gross domestic product, according to the report issued by the Institute for Supply Management.
  • Buddy Hooper's OrangeBee, located in Hudson (FL), has purchased the assets of nearby National Commerce Exchange of Clearwater, a barter company that dates back to 1982.
  • Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of this issue (right hand corner) and sign up!
  • If you've missed any of our weekly Tuesday Reports the past three years we have an archive of issues for you at the bottom of this week's letter...check it out!


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