Light At The End Of The Tunnel

Even though the first estimate of the year’s first-quarter gross domestic product (GDP) shows overall economic growth contracting 6.1 percent, the latest BEA report contained good news for economic prospects later this year.

Businesses dumped $104 billion in inventories, compared to reductions of less than $30 billion in each of the previous two quarters. That means companies will need to stop laying off workers and start producing goods again in order to meet even a modest uptick in demand.

Most economists expect gross domestic product to contract 1.4 percent at a seasonally adjusted annualized pace in the second quarter of 2009, compared with the 6.1 percent drop recorded in the first quarter. Slow, but positive, growth is expected to return by the third quarter, with the economy expanding more than 2 percent in the first half of 2010.

One bright spot in today’s economy is consumers seem to be spending again. Consumer spending rose a respectable 2.2 percent in the first quarter after respectively dropping 3.8 and 4.3 percent in the third and fourth quarters of 2008. Sales of other entertainment luxury goods (e.g. books, music, restaurants) have been increasing this spring, which bodes well for the sale of floricultural products, as well.

The Housing Market

There are also some glimmers of hope in the housing market although sales, starts and prices will still likely be down this year. Low mortgage rates and falling prices are luring more buyers. Sales of foreclosed homes are brisk in many parts of the country, indicating buyers are willing to make a deal for a good value. All indications still point to home sales bottoming out around mid-2009. However, surging job losses in certain regions of the country will keep many potential home buyers on the sidelines and result in more foreclosures, keeping downward pressure on builders. Housing starts likely won’t hit a bottom until the end of this year.

On the home improvement side, the economic pressures on consumers remain intense and bigger-ticket projects continue to be postponed as wary home improvement consumers watch the economic climate and housing market dynamics very closely. As spring arrived, we saw relative strength in smaller-sized, outdoor projects, meaning more bedding plants were purchased.

The best indicator that things may be coming around is the consumer confidence index. It has been said before that all economic crises are crises of confidence. With those indicators improving as they have in recent weeks, it adds credence to a late-2009 turnaround. But bear in mind economic recovery coming out of this downturn will be much slower and more restrained than in previous cycles. Therefore, growers should plan on a recovery that is not as strong as past recoveries. Yes, we will rebound (and we will return to normal growth rates), but it will take a while to get back to where we would have been absent the recession.

Marketing Value

After my last column (“Value Never Needs A Stimulus”), I received quite a few e-mails from folks asking how to create a compelling value proposition that would accentuate a grower’s competitive strategy in the face of this economic downturn. To answer that, let me preface my remarks with an observation: Too many companies enter the marketplace today without having fully defined their customer value proposition. Instead, growers tend to market a nice list of “powerful” benefits (which ironically, their competitors most likely state they have, too).

Let me start by saying the underlying purpose of a value proposition is to identify and satisfy an unmet need that your target market possesses. An effective value proposition describes what you do in terms of tangible business results for the customer. However, it’s more than a statement of offer or a buy-line. It’s a commitment to deliver a specific combination of resulting experiences, at a particular price, to a group of specifically-targeted customers, more profitably and better than the competition.

For a customer value proposition to be uniquely persuasive, it must be distinctive, measurable, defendable and sustainable. It is critical to define and support the value proposition in such a way that your customers will pay more for your product/service offerings than the competitions’ services, or substantially more customers will desire your products/services over those of your competitors. Developing a value proposition is the most difficult and time-consuming of all marketing activities. That’s probably why so many companies go to market without one clearly articulated.

Basically, your job in defining your value proposition is to uncover the value your company offers (and which your customers and prospects will want to buy). Your job is not to develop a long list of benefits. Why not? Because, again, your competitors will more than likely have the same list!

So, the question becomes very clear. How do you differentiate in a way that encourages more customers to buy from you or are willing to pay more based on your value proposition? Answer this, and I assure you that your firm will be one of the ones that will not only survive the downturn, but remains profitable while doing so.

Leave a Reply

More From Finance/Operations...

April 11, 2017

Jerry Halamuda of Color Spot Nurseries Retires

The co-founder of Color Spot Nurseries has retired, effective immediately, and has named a replacement.

Read More
Socius Webinar

March 30, 2017

Webinar to Offer Tips on Properly Managing Your Business for Growth

“How to Survive and Thrive: New Revenue Building Tools for Growers,” presented by Socius, takes place on April 6.

Read More

March 21, 2017

How Greenhouse Vegetable Growers Can Prepare for a Product Recall

The United Fresh Produce Association is holding a Recall Ready Workshop in April that is designed to help growers properly manage a recall, from liability to communications.

Read More
Latest Stories

April 11, 2017

Jerry Halamuda of Color Spot Nurseries Retires

The co-founder of Color Spot Nurseries has retired, effective immediately, and has named a replacement.

Read More
Socius Webinar

March 30, 2017

Webinar to Offer Tips on Properly Managing Your Busines…

“How to Survive and Thrive: New Revenue Building Tools for Growers,” presented by Socius, takes place on April 6.

Read More

March 21, 2017

How Greenhouse Vegetable Growers Can Prepare for a Prod…

The United Fresh Produce Association is holding a Recall Ready Workshop in April that is designed to help growers properly manage a recall, from liability to communications.

Read More

March 14, 2017

Expanded Customer Footprint, E-Commerce, Succession Key…

Costa Farms' acquisition of indoor foliage producer Delray Plants rocked the industry, but the story behind Delray Plants' sale is the same as for many growers struggling with succession planning. For Costa Farms, the strategic purchase expands its customer footprint and also fast tracks its foray into e-commerce.

Read More

March 10, 2017

Costa Farms Expands With Purchase of Indoor Houseplant …

Costa Farms annnounced March 10 that it has acquired Delray Plants, one of the leaders in the indoor houseplant industry. The two operations are committed to the same values, principles, and goals to grow the industry, and will fit well together to accomplish this, say Randy Gilde, CEO of Delray Plants, and Joche Smith, CEO of Costa Farms.

Read More
Ken and Deena Altman

March 7, 2017

Altman Plants in Escrow to Purchase EuroAmerican Propag…

Ken Altman, a co-owner of Altman Plants based in Vista, CA, has confirmed that the operation is currently in escrow to purchase EuroAmerican Propagators, the Bonsall, CA-based young plant and finished plant grower that filed Chapter 7 Bankruptcy on Jan. 23, 2017. Ken and Deena Altman are co-owners of Altman Plants and The Plug Connection, along with their son Matthew, who has recently bought into the family business. The 55 acres of land and all of the facilities on it, which were previously owned by Jerry Church, a partner in EuroAmerican Propagators, are part of the purchase agreement currently in escrow, Altman says. However, it would not be absorbed by Altman Plants, which in 2016 was number 3 on Greenhouse Grower’s Top 100 Growers list with more than 11 million square feet of environmentally controlled greenhouse production, 62 acres of shade production, and 400 acres of outdoor field production. Altman Plants’ property […]

Read More
EuroAmerican Propagators Greenhouses

February 14, 2017

Suppliers Comment on Plant Genetics’ Fate After EuroAme…

Since the operation’s bankruptcy filing on January 23, 2017, suppliers associated with EuroAmerican Propagators have updated Greenhouse Grower on what the operation’s bankruptcy means for them – and how it will impact grower customers.

Read More
Stephanie Whitehouse

January 17, 2017

Stephanie Whitehouse Takes Her Passion for Plants to Di…

Stephanie Whitehouse, who has spent the last seven years as the Sales and Marketing Director for Peace Tree Farm in Kintnersville, PA, recently joined Dickman Farms Greenhouse and Garden Center in Auburn, NY, as the company’s new Retail General Manager.

Read More
Laura Drotleff

December 6, 2016

Are You Driving Young Growers Away? [Opinion]

In a time when the industry is facing a critical shortage of both labor and skilled, educated growers, it's important that grower operations don't unwittingly turn candidates off to a career at their business or in the industry in general. Take a closer look at your hiring practices to ensure you are being inclusive and not breaking any laws.

Read More
Trays move on an overhead conveyor to the end of the production line, where workers carefully pack the cleaned, sized, graded, counted and sorted Calla tubers

November 29, 2016

Texas Judge Halts Overtime Rule; Here’s What It Means F…

According to Craig Regelbrugge at AmericanHort, the injunction against the overtime rule is welcome news for horticulture.

Read More
Craig Regelbrugge, senior vice president of AmericanHort - Feature image

October 25, 2016

Contribute To HRI To Help Honor Industry Advocate Craig…

In honor of Craig Regelbrugge's extraordinary contributions to the horticultural industry, AmericanHort and the Horticultural Research Initiative created a special HRI endowment fund in his name: "The Craig Regelbrugge - Advocates for Horticulture Fund."

Read More
Lucas Greenhouses Shipping

October 6, 2016

Greenhouse Shipping Costs Down, But Concerns Remain

Lower gas prices have led to lower shipping costs for some growers, but many continue to seek out ways to become more efficient.

Read More
Pansy ‘Cool Wave Blue Skies’ (Wave)

September 20, 2016

PanAmerican Seed Settles Alleged Trade Sanction Violati…

PanAmerican Seed, a division of Ball Horticultural Co., has been charged with violating trade sanctions to Iran over a number of years. According to a release from the U.S. Treasury department, PanAmerican Seed made 48 indirect sales of seeds to two Iranian distributors. The company shipped the seed to consignees based in countries in Europe and the Middle East. PanAmerican Seed’s customers then arranged for the re-exportation of the seeds to Iran. The release states that the Office of Foreign Assets Control (OFAC) determined PanAmerican Seed did not voluntarily self-disclose the alleged violations to OFAC, constituting an egregious case. “We believe that the settlement was extreme; however the alternative was to litigate with the U.S. government, which would take months, if not years,” says Todd Billings, Chief Financial Officer for Ball Horticultural Co. When asked what Ball Horticultural Co. has done to ensure that violations to trade sanctions do not […]

Read More
young-plants

September 20, 2016

The Top Young Plant Growers, And Four Critical Challeng…

In Greenhouse Grower’s 2016 Top Young Plant Growers Survey, growers discuss the latest challenges and opportunities in fulfillment, shipping, labor, and crop protection.

Read More
Cavicchio Greenhouses

September 6, 2016

Cavicchio Greenhouses Wins Inaugural Sustainability Awa…

The Sudbury, MA, growing operation sustains more than 250 acres of annuals, perennials, and nursery stock, with a number of practices to mitigate its impact on the environment.

Read More
Charlie Hall Feature Image

September 6, 2016

10 Insights From Charlie Hall’s Green Industry Economic…

With the uncertain current economic climate, Texas A&M economist Charlie Hall says now may be the perfect time to invest — as long as you do it smartly.

Read More
Penn State Plant Bud

August 23, 2016

AmericanHort Is Helping Plant Importers Adjust To New R…

A report from Craig Regelbrugge at AmericanHort says the government is implementing a streamlined system for imports, in which all required data will be submitted electronically through a single window.

Read More
Plug Connection Assortment

August 9, 2016

AmericanHort’s Plug And Cutting Conference Will Feature…

This year’s conference, which takes place Sept. 19-21 in Carlsbad, CA, features discussions on water, pest and disease control, and production inputs, as well as a biocontrols workshop and tour of local cuttings facilities.

Read More