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Reading the results of the 1998 Season Sales Summary should interest people. The study is one of the longer-running sources of information on the bedding plant industry, established more than two decades ago. You might call it "improved" this year, since we added support of the Ohio Florists' Association to the solid commitment from both GMPRO and Bedding Plants International. OFA's support enabled us to take a big step by adding a larger sample of growers.

Even with the addition of OFA members the summary results were surprisingly similar to previous surveys. Our response rate was close to that of years past, approximately 20 percent. Is this representative of our industry? Yes, because it represents information from growers who feel it is important to collect and share statistics with their industry!

Is the summary without flaw or bias? No, because it is nearly impossible to get every grower to participate. It shows us the "big picture" in some greater detail, often confirms that our observations are consistent with others -- it makes sense. It also gives us a clearer picture of the nuances in the market, not just gross changes. We, as an industry, need to understand these subtle undercurrents of change to more accurately view the big picture.

In years past, we reported growth in the industry more from an increase in the number of plants grown than from price increases. Again, we noticed this trend among our respondents. However, we did see differences in price increases by size of firm. More larger and smaller firms increased prices than did medium-size firms, squeezing the middle even more. There may be more than meets the eye in this trend. How we price our products and why we price them are part of our overall marketing strategies. How does price affect your marketing strategy, and how easy is price to change?

Price is important

Of the four Ps of marketing (product, price, place and promotion), price is one of the most highly visible aspects of our business. Prices generate sales, but they also must generate profits or a company must leave the market. When you operate on especially thin margins, as most bedding plant producers do, understanding prices and costs are critical to long-term existence in the market. Coupons, discounts and rebates have a cost that affects profitability.

Prices affect purchases -- people are price conscious on most things. I think most people would agree that is true for bedding plants. Price changes stimulate interest in other products, competitive or complementary. Competitive products, like yard art, are likely to have increased sales when we increase our prices on bedding plants. Complementary products, like fertilizers, are likely to experience a decline in sales when we increase our prices of bedding plants.

Price reductions will stimulate buying and increase market share, but this is often a short-sighted strategy. People are likely to wait for those reductions next year or buy elsewhere. Price is an important communication tool (it can infer value). What would happen if Mercedes ran a sale for $20,000 off the list price of their cars? You might infer they are of inferior value at that low of a price (but, I'd buy one, too!).

What's your pricing strategy?

I think two of the reasons why both larger and smaller growers are able to increase prices are that they are differentiating their products and creating better value. It may be harder for the midsize growers to adopt this pricing strategy.

People are accustomed to buying some of their bedding plants in flats, the "traditional" unit of annuals. Growers quote prices on flats and often develop production plans and spacing strategies based on flats. Yet, there is more to the market than flats. There are different sizes of containers, larger plants in larger containers, that are successfully sold in the market by a variety of retailers. They are capitalizing on the value concept, which more consumers are focusing on rather than simply price.

Value and your products

Value can be defined as what you get/what you paid. Higher value would have a higher ratio and lower value would have a lower ratio. McDonald's and Ruth's Chris Steak House may both have good value in a meal, depending on the situation and individual customer, even though their prices are at extremes. This begs the question -- of what value is a flat? It can be a good value when we need or want a lot of plants. But remember, it is a big jump for the customer from buying the flat to having a lovely garden in full bloom. It may be a better value to buy larger sizes or container with combinations of plants ready to buy.

Think about value and what you want to accomplish with your pricing strategy. If you introduce a new product, you may want to get as much profit as possible by pricing high to skim the cream. This can be true for rather large or relatively unusual plants or containers. If you have some new products that you are interested in having a large number of customers try, consider adopting a lower-priced or introductory strategy. Trial sizes of new products are relatively common outside horticulture, but why can't this strategy be effective for us in some situations as well? It encourages our customers to try something new we think they will like. It lowers their risk of failure and gives them a sample of good things to come.

Changing prices

Changing prices is hard and consumers are aware of prices and changes. This trend will likely not change. There will always be a certain percentage of people who will buy on price and their loyalty is based on a few cents difference. Are these customers the basis of your business? Let's hope not, because you can only buy their loyalty and it may cost you a lot. Concentrate on value, and changing the price is easier. If you need to increase the "what you pay for," consider increasing the "what you get" as well. Customers focused on value have higher odds of becoming loyal customers if you give them what they want.

Examine your strategy, re-examine your pricing objectives, and let's see what 1999 brings to the bedding plant industry and your business.

© 1999 Branch-Smith Publishing