There are two main reasons to use promotional products~ to advertise and generate goodwill.
All companies need some form of advertising. For companies who do not have 'deep pockets' promotional products are an ideal consideration as they are very cost effective. For companies at the very top of the company food chain more elaborate products can be used. Regardless of the size of company a promotional product also has the appeal of an extended life in comparison to other forms of advertising.
Promotional products when used as gifts create a lot of goodwill. They are one of the best ways to encourage both business and employee relationships. Given to customers a promotional product encourages them to continue doing busness with you and given to employees they can boost morale, also loyalty but importantly productivity.