Different Is Not Always Better

The U.S. economy has been weathering recession-like conditions for a while now, including job losses, home foreclosures, declining consumer confidence, lower business spending and inflationary pressures on some of our key production inputs.
Due to the cumulative impacts of these stressful economic conditions, we find several of our friends and colleagues are no longer working in the industry. Of those remaining, several I have interacted with have indicated their business activity is way down, but others say they have either been “holding their own” or “doing OK.” There has, however, been another (yet smaller) subset of growers that has indicated its “sales are up” or business has been “expanding” this year.

Surviving & Thriving

So naturally, this has prompted me to ponder how this can be. What is it that separates the folks who are just doing “OK” from those who are doing well? As usual, there is no easy answer, but I think there are a couple of major underlying reasons.
First, the severity of the economic downturn is not equal in all areas of the country. Some regions are experiencing more of an economic downturn than others. Therefore, growers who happen to operate and market in regions that are faring better economically find themselves in a more favorable market position. Also, for growers who also retail, they have perhaps benefited from the increased interest in “buying local” that has stemmed from the rise in fuel prices.

More importantly, I think the growers who are doing better in today’s economic climate have been proactive in shaving costs out of their value chain (either lean flow analyses or adopting technology/mechanization) and successful in differentiating themselves in the marketplace.

In marketing lingo, differentiation exists when customers [under conditions of competitive supply and faced with a range of choices]: (a) perceive product offerings that do not have the same value and (b) are prepared to dispose of unequal levels of resource (usually money) in acquiring as many of the available offerings as they wish. In plain English, different is not always better, but better is always different.

Creating Demand

It is a proven fact that customers use five different attributes in making a decision about what products and services to buy and from whom to buy them from – quality, price, service, convenience and selection. Value represents the tradeoff between the benefits derived from this varying mix of attributes relative to the sacrifices (dollars) made in getting them. So the key for growers is to provide greater value to customers. The interesting thing is that the difference in value customers perceive (when comparing your firm to competitors) can either be real or perceived (through various signals) you relay through your marketing efforts.

We economists characterize demand by a concept called the “price elasticity of demand,” which measures the nature and degree of the relationship between changes in the quantity demanded of a good/service and changes in its price.
An important relationship to understand is the one between elasticity and total revenue. The demand for a good or service is considered relatively inelastic when the quantity demanded does not change much with the price change. Therefore, when the price is raised, the total revenue of the firm increases. Likewise, when prices are lowered, revenue decreases. What this effectively means is growers can actually raise their prices, and though they might sell fewer units, total revenue for the company still goes up.

So, the obvious question is this: How do we go about making local demand more inelastic? By distinguishing your company somehow in terms of perceived value (e.g. the mix of quality, price, service, convenience and selection attributes). That is why your marketing efforts are so important. They are the key to successful differentiation.

I do want to point out the only way this makes sense economically is if the company successfully differentiates itself in the mind of the customer in terms of the types of products or services offered and the segments of customers it targets.

Raising Prices

So, obviously, differentiated growers should consider raising their prices incrementally over the next 12 to 18 months. I can hear the objections already: “If I raise my prices, my customers are going to defect and buy from my competitors.” Let me provide my own testimonial regarding this common objection to raising prices. Over the last few years, all of the green industry firms I have convinced (after much prompting and counseling) to actually try this have experienced an increase in total company revenue. Notice I did not say many or most. I said all.

Interestingly, some even found that per-unit sales actually increased when they raised their prices, which tells me they were pricing their products way too low to begin with. Low prices tend to result in a low-quality perception in the mind of the customer, and when you raise your prices, you can sometimes influence the price-quality connotation positively.

And another thing: stay the course with your marketing efforts. Growers actually need to consider increasing their marketing efforts during times of economic contraction. Yes, you read that correctly: I am encouraging growers to increase their spending on marketing right now.

As others make cutbacks (and marketing is usually the first thing to go during hard times), an increase in marketing efforts can lead to increased customer “mindshare.” While you should spend 3-5 percent of gross sales on marketing normally, consider increasing this to 5-8 percent. Speak when others are quiet, and even a whisper can be heard. Imagine if you shout!
Lastly, let me offer this bit of encouragement. The current economic downturn, though severe, is a normal part of business cycles. We have had 11 recessions since 1948.

What is my point? This is not the first downturn we have experienced, nor will it be the last. So take heart, tighten your belts and put your best differentiation foot forward to position yourself for the remainder of this downturn.

Leave a Reply

More From Marketing...
GrowIt! Logo

February 9, 2016

GrowIt! And MasterTag Partner To Enhance Plant Care Information On The GrowIt! App

The partnership allows MasterTag to provide plant care instructions to the wide catalog of plants available on GrowIt!, which helps consumers find plants in their area.

Read More

January 27, 2016

Costa Farms’ Season Premier Provides Sneak Peek At New Varieties For 2017

Costa Farms presented the 2016 Season Premier at its 2-acre Trial Gardens in Miami, FL, in the third week of January. The event showcases varieties from breeders of all sizes to growers and major retail buyers, providing a look at what genetics are coming to the market and how they’ll perform in retail settings and in the landscape, when consumers bring them home. The mild winter climate in South Florida allows Costa Farms’ Research and Development Department to simulate the spring growing conditions of various regions in the country. Because each group of visitors to Costa Farms’ Trial Gardens wants to see what the new plants look like in the environments that matter to them, Season Premier offers several areas within the Trial Gardens that highlight different ways to look at the wealth of new varieties. The New Product Showcase offers a way for retailers to see how plants will […]

Read More

January 26, 2016

Beekenkamp And Danziger Partner To Distribute Poinsettias In North America

Danziger is continuing to expand its portfolio of products to the U.S. market with the addition of poinsettia cuttings of Beekenkamp’s varieties.

Read More
Latest Stories
GrowIt! Logo

February 9, 2016

GrowIt! And MasterTag Partner To Enhance Plant Care Inf…

The partnership allows MasterTag to provide plant care instructions to the wide catalog of plants available on GrowIt!, which helps consumers find plants in their area.

Read More

January 27, 2016

Costa Farms’ Season Premier Provides Sneak Peek A…

Costa Farms presented the 2016 Season Premier at its 2-acre Trial Gardens in Miami, FL, in the third week of January. The event showcases varieties from breeders of all sizes to growers and major retail buyers, providing a look at what genetics are coming to the market and how they’ll perform in retail settings and in the landscape, when consumers bring them home. The mild winter climate in South Florida allows Costa Farms’ Research and Development Department to simulate the spring growing conditions of various regions in the country. Because each group of visitors to Costa Farms’ Trial Gardens wants to see what the new plants look like in the environments that matter to them, Season Premier offers several areas within the Trial Gardens that highlight different ways to look at the wealth of new varieties. The New Product Showcase offers a way for retailers to see how plants will […]

Read More

January 26, 2016

Beekenkamp And Danziger Partner To Distribute Poinsetti…

Danziger is continuing to expand its portfolio of products to the U.S. market with the addition of poinsettia cuttings of Beekenkamp’s varieties.

Read More
Houseplant Featured Image

January 21, 2016

How To Improve Consumer Interest In Indoor Foliage Plan…

Researchers discover why there is decreasing consumer demand for indoor foliage plants and suggest ways to overcome hurdles to purchasing.

Read More
Bee On Flower

December 29, 2015

Scotts Miracle-Gro To Fund 50 Pollinator Gardens In 201…

In an effort to help combat the loss of pollinator habitats in recent years, the Scotts Miracle-Gro Co. announced plans in mid-December for a year-long effort to improve consumer education about pollinators and promote the creation of backyard and urban habitats where they can thrive. The “Pollinator Promise” will fund the establishment of at least 50 pollinator gardens throughout the U.S. in 2016, as part of the company’s GRO1000 community gardening initiative. The GRO1000 initiative, now in its sixth year, partners with the U.S. Conference of Mayors, the Pollinator Stewardship Council, The Franklin Park Conservatory, and others, to promote the availability of additional grants for gardens and green spaces throughout the country. “The importance of pollinators is unquestionable and it is easier than most people think to create a habitat where they can thrive,” says Jim King, Senior Vice President of Corporate Affairs at Scotts Miracle-Gro. “The Pollinator Promise is […]

Read More
Viraj Puri (left) and Eric Hadley (right) of Gotham Greens with Martha Stewart (middle)

December 17, 2015

Congratulations To The 2015 Martha Stewart American Mad…

Each year, Martha Stewart and the editors of Martha Stewart Living honor American entrepreneurs and small business owners for their dedication to producing innovative, high-quality products. This year, three companies from the green industry made the list.

Read More
Laura Drotleff

December 8, 2015

Develop New Habits To Change Your Greenhouse Business

Grower Homework: Don’t let your product mix become habit. Opportunities abound for the horticulture industry to evolve its reach beyond traditional plants. People have an inherent need to be in and around nature, and they’re looking for new ways to use plants, even if they don’t know it yet. Let’s study trends and habits to get ahead of the curve and create some new demand. Share your ideas by writing to me at ldrotleff@meistermedia.com or tweet @Laura_GG_TGC. Over the past few years since I came back to work full time, I’ve been studying habits, and admittedly trying to change my own. As a full-time, working, married mother, I’m still getting used to the challenges of “having it all,” and I’ve reluctantly realized that changing my habits is an absolute must to maintain a sustainable level of sanity and success. Thus, I’ve been consuming books about habit, and how it plays […]

Read More

November 23, 2015

Content Marketing: Buzzword Or Here To Stay?

A solid content marketing strategy provides valuable information that educates your consumers and builds trust.

Read More
Gotham Greens Chicago Rooftop Greenhouse

November 23, 2015

Gotham Greens Expands Into Chicago With New Rooftop Gre…

Touted as the world’s largest rooftop greenhouse, the company’s fourth facility is its first outside of New York and will produce nearly 10 million annual crops of local, premium-quality leafy greens and herbs.

Read More

October 21, 2015

Dümmen Orange Creates Fashion With Flowers At Fashion W…

As a feature sponsor for Fashion Week Columbus in Ohio, Dümmen Orange North America made a statement with its flower genetics in the spotlight. This was the first time Dümmen Orange partnered with Fashion Week Columbus in its 2015 events, held the week of October 3-10, 2015. Fashion Week Columbus is a non-profit organization showcasing local and emerging fashion designers while providing scholarships to fashion design students. Each year, Fashion Week Columbus hosts a week of fashion-related events to feature local talent in the Columbus, Ohio area. “A leader in the floriculture industry, Dümmen Orange is committed to breeding, distributing and promoting superior flower genetics,” says Dümmen Orange Operations Manager Kate Santos. “To do this, we strive to be in touch with contemporaries in the lifestyle industries. A large focus of this mission is to translate trends from fashion.” With more than 500 working fashion designers in the Columbus market, […]

Read More

October 4, 2015

ePlantSource Adds 5 New Partner Companies

ePlantSource has announced an additional five companies that have been added to its partner distribution list. Not only do the additional partners offer more supplier options to ePlantSource customers, but the website now also provides a more diverse product list with the addition of bulbs, clematis and many new varieties. New partners added for the 2015 – 2016 season: A.D.R. Bulbs Lennon Farm Greenhouses Micandy Gardens Pacific Growers Roseville Farms “We make it a priority to respond to our customers, and we have had many requests for additional options and a more diverse product line, so we are continually evaluating suppliers that work well with our non-traditional approach to the sale of live goods,” says Gary Falkenstein, President and CEO of ePlantSource. “We feel that it is good for our company, our customers and the industry as a whole to keep looking forward and seeing how we can improve and expand how […]

Read More

October 2, 2015

How To Make Your Website More Google-Friendly

During a presentation at Cultivate’15 this past July, Katie Dubow of the Garden Media Group offered several tips on how you can use search engine optimization (SEO) tactics and Google’s search features and updates to your advantage.

Read More

September 28, 2015

Filmmakers Release “Field To Vase, The Documentar…

“The Field to Vase Dinner Tour is a series of meals set on flower farms across the country. Each dinner is curated by a local chef and floral designer, highlighting the region’s produce and flowers. This is the story of Santa Cruz, California.” These opening lines introduce “Field to Vase: Santa Cruz,” a new documentary filmed, written and produced by the Los Angeles-based husband-and-wife team, Hyunsoo Moon and Haejung Kim. This past June, Haejung and Moon traveled to Santa Cruz in pursuit of a visual narrative that had captured their creative imaginations. They were enamored with the storytelling potential of the Field to Vase Dinner Tour and wanted to document their observations on film. The result of their efforts is “Field to Vase: Santa Cruz,” a documentary about the American grown flower movement and the people involved in the floral renaissance that is taking place on farms and in flower […]

Read More
Gerbera Revolution Series (Kieft Seed)

September 23, 2015

Join SAF And Other Growers To #PetalItForward And Sprea…

Next month, the Society of American Florists (SAF) will tap into the popularity of random acts of kindness with its latest public relations campaign, "Petal It Forward." Find out how you can join SAF and other growers to take part in this campaign and spread happiness with the power of flowers.

Read More
Retailers declined a coupon deal for hanging baskets because of timing

September 19, 2015

Retailer To Grower: Why Aren’t Garden Stores Letting Gr…

Have you ever sat around at a family gathering and heard someone recount a story from your childhood, except knowing your own version of the story, it’s something that casts an entirely new light on everything you think you experienced? It seems like that dynamic happens a lot between growers and retailers. Both sides know the same story, but each version is so different, it’s like two unconnected stories. This came to mind when I was talking with a regional grower, Elmer Grosser, who owns Cincinnati-based Diefenbacher Greenhouses. The operation serves about 50 customers — an even mix of local garden stores and landscapers. Grosser first came to my attention last fall, when one of his customers, Chris McKeown of Bloomin’ Garden Centre, told me I needed to call Grosser, because he was a great example of a grower who cares about retail. When Grosser and I connected, he was […]

Read More
eMailMarketing feature image

July 23, 2015

Is eMail Dead?

Email as a marketing technique may seem outdated, but when done well, it is still an effective way to share content and market your brand.

Read More
HGTV HOME CAST 2015

July 22, 2015

Cultivate’15: Keynote Nancy Fire Says Use Passion…

In the second keynote presentation at Cultivate’15, Nancy Fire, founder and creative director of Design Works International, discussed how the horticulture industry can capitalize on the latest design and lifestyle trends. Fire works with companies to help bring their designs to the next level, and she has expertise with textiles and surface design, market analysis and corporate rebranding. She was appointed as design director for HGTV HOME in 2011. Fire says customers today are interested in companies that show passion for what they do. That, combined with following the general direction of trends and maintaining a brand, are what will keep horticulture businesses relevant to their customers. A trend isn’t just a passing fad, Fire says, but rather, it indicates that something is developing or changing in a certain direction. Plants are important to consumers today, and fit into current trends, both inside and outside the home, Fire says. “I don’t […]

Read More
LuxFlora logo feature image

July 21, 2015

Luxflora Launches With Cultivate Speaker Event, New Web…

A new organization for women in horticulture that aims to change the way consumers think about flowers, launched at Cultivate’15 by sponsoring Ketty Maisonrouge, a marketing expert, who presented “How To Create A Luxury Brand.” Luxflora recently launched its website, as well as a page on LinkedIn, to facilitate networking among women in horticulture. The organization is working on next steps, including setting up a board of directors and officers. Updates and information on future events will be available at the Luxflora website as they are scheduled. Read about Luxflora’s mission and what it hopes to accomplish in “Luxflora Wants To Create A Lifestyle Movement.” In the session during Cultivate, Ketty Maisonrouge, owner of KM & Company, adjunct professor of luxury strategy at the Columbia University Business School and the author of “The Luxury Alchemist,” presented her ideas and expertise on luxury strategy marketing, and how it applies to horticulture. […]

Read More
[gravityform id="35" title="false" description="false"]