Business and Marketing Practices of U.S. Green Industry

Transcription

1 Business and Marketing Practices of U.S. Green Industry Ariana Torres, Ph.D. Assistant Professor Marketing Specialist Purdue University January 17, 2018

2 Business Category Type of Business Crop production Greenhouse, nursery, and floriculture Lawn and garden equipment manufacturing Lawn and garden equipment manufacturing Landscape services Landscape and horticultural services Landscape and architectural services Wholesale trade Farm and garden equipment merchant wholesalers Nursery and florist merchant wholesalers Retail trade Lawn and garden equipment and supplies stores Florists Food and beverage stores with floral, lawn and garden sales Gasoline store with floral, lawn and garden sales General merchandise stores with floral, lawn and garden sales Non-store retailers with floral, lawn and garden sales (online and mail orders) Golf courses are included in the Other Amusement and Recreation Services by the US Census Bureau

3 Indiana Green Industry Facts 6 th ranked agricultural commodity in the state Output in $ billions 4 th ranked state in the Midwest in job and added value creation $3.524 billion in total sales impact 39,260 full-time and part-time jobs $2.113 billion in value added impact direct sales indirect sales IMPLAN model and data from the Green Industry Research Consortium

4 Indiana Green Industry Facts 6 th ranked agricultural commodity in the state Number of Jobs 4 th ranked state in the Midwest in job and added value creation 7,463 $3.524 billion in total output impact 39,260 full-time and part-time jobs 31,798 $2.113 billion in value added impact direct indirect 2013 IMPLAN model and data from the Green Industry Research Consortium

5 Indiana Green Industry Facts 6 th ranked agricultural commodity in the state 4 th ranked state in the Midwest in job and added value creation $3.524 billion in total output impact Impact in $ billions ,260 full-time and part-time jobs $2.113 billion in value added impact Labor income Tax on production and imports Other property 2013 IMPLAN model and data from the Green Industry Research Consortium

6 Not all businesses are equal

7 1,800 1,600 Sales 592 1,400 1, $ M 1, Crop Production Lawn and garden equipment manufacturing 1, Landscape services Wholesale Trade Retail Trade

8 $2.542 billion in direct sales Landscape services, retail trade, and wholesale trade generated most of the sales (90%) The other 10% was generated by other types of businesses

9 25,000 20,000 Jobs in Industry Jobs outside industry 4,456 Number of jobs 15,000 10,000 16,688 1,771 5, Crop Production 86 1, Lawn and garden equipment manufacturing 12, ,447 Landscape services Wholesale Trade Retail Trade

10 31,978 direct jobs Landscape services and retail trade generated most of the direct jobs (92%) The other 8% was generated by other types of businesses

11 1,200 1, Labor Income Impact Other property Impact Tax on Production and Imports Impact $ M Crop Production Lawn and garden equipment manufacturing Landscape services Wholesale Trade Retail Trade

12 $2.113 billion in value added contribution to the GDP (value of sales intermediate purchases of goods and services from other sectors) Landscape services, retail trade, and wholesale trade generated most of the value added contribution (92%) The other 8% was generated by other types of businesses

13 What are landscape businesses doing to achieve this impact?

14 2014 Trade Flows and Marketing Survey List of over 104,000 growers and plant dealers in the US Target 32,000 firms Online and mail 120 businesses that generated at least $10,000 in yearly sales Landscape only businesses Landscape and retail Landscape, retail, and grower Number of businesses in the Green Industry Lanscape Landscape, retail Landscape, retail, grower

15 Landscape only Full Sample Landscape and Landscape, retailer, retailer and grower Indiana Florida Washington Wisconsin Georgia Nebraska Oregon South Carolina Kentucky Tennessee New York Mississippi Oklahoma Rhode Island Utah Vermont

16 By business integration Landscape only Landscape and retailer Landscape, retailer, and grower

17 Full sample Responses [no. (%)] Landscape only Responses [no. (%)] Landscape and retailer Responses [no. (%)] Landscape, retailer, and grower Responses [no. (%)] Large firms 34 (28%) 12 (21%) 13 (39%) 9 (41%) Medium firms 63 (53%) 35 (59%) 19 (49%) 9 (41%) Small firms 23 (19%) 12 (20%) 7 (18%) 4 (18%) Total Small = $10,000 to $124,99 Medium = $125,000 to $749,999 Large = $750,000

18 Most landscape only and landscape/retail businesses are medium size Most grower, landscape, retailer are either large or medium Most landscape businesses in the sample are from Indiana and Florida

19 Product sold (%) Full sample Landscape Only Landscape and retailer Landscape, Retailer, and Grower Herbaceous perennials Deciduous shade and flowering trees Deciduous shrubs Bedding plants and flowering annuals Broad leafed-evergreen shrubs Evergreen trees Vegetable, fruit, and herb bedding plants Narrow-leaved evergreen shrubs

20 Product sold (%) Full sample Landscape Only Landscape retailer Landscape, Retailer, Grower Roses Flowering potted plants Other plant types Sod Vines Azaleas (Rhododendron sp.) Fruit trees Tropical foliage Propagated material (liners, cuttings, plugs) Christmas trees

21 Top 4 sales across all firm types Herbaceous perennials Shade and flowering trees Deciduous shrubs Flowering bedding plants Landscape only top 50% of sales Herbaceous perennials Bedding flowers Deciduous shrubs Shade and flowering trees Landscape, retail top 50% of sales Herbaceous perennials Bedding flowers Deciduous shrubs Bedding plants (fruit, veg, herbs) Shade and flowering trees Landscape, retail, grower top 50% of sales Herbaceous perennials Shade and flowering trees Deciduous shrubs Roses or evergreen trees

22 The product mix shifted slightly when retailer and/or grower functions were integrated into landscape firms Increase in the sales of deciduous shade and flowering trees for growers Decrease when businesses were only landscape or landscape/retailers Valuable space for products that turnover faster or have higher profit Decrease in sales of deciduous shrubs for growers Increase in sales of propagation material by growers Increase in sales of Christmas trees for retailers

23 Purchase of flowers/plants % households participating in gardening

24 Percentage of product form Full Sample Landscape Only Landscape and Retailer Landscape, Retailer, and Grower Container (P=0.937) Balled and burlapped (P=0.509) Pot-in-pot (P=0.185) Bare root (P=0.748) Field grow (P=0.379) Balled and potted (P=0.375) Other forms (P=0.204)

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26 Percent of advertising spent on 11 types of methods Full sample Advertising spent (%) Landscape only (%) Landscape and retailer (%) Landscape, retailer, and grower (%) Internet Other Yellow Pages Social media Newsletter Radio/TV Trade show Catalog (print/cd) Billboard Trade journal Gardening publications

27 Top advertising expenditures Internet (32% of sales) Other (27%) Yellow pages (11%) Newsletters (6%) Landscape only Internet 34% Other 3% Word-of-mouth reliability Landscape, retail Internet 28% Other 19% Newsletters 13% Yellow pages 12% Tv and radio 10% Landscape, retail, grower Internet 39% Other 26% Tv and radio 10% Yellow pages 9% Catalogs 7%

28 Advertising with social media

29 3 out of 4 Americans use social media Tell them about your business

30 Align your priorities Connect with existing customers Gain new customers Get public to know your business, name Consumers want to buy products that have a direct impact on their communities Using social media is not equal to using social media EFFECTIVELY Connect with the right people and the right message to benefit your business? Strengthen your social media with simple practices Create a brand for your social media pages Logos and imagery Company description Vision and mission

31 Every account starts with zero followers Look to accounts you adore for inspiration and mimic them Content, posting frequency, imagery, photo filters Inspiration Pick your crops First assignment: Facebook Begin on the oldie-but-goodie Fill your page Make pics look good Use their easy-to-understand analytics and ad tools

32 Diversify Expand to other platforms Test the waters with Instagram and Twitter Give it time and consistency Post at least once per day Respond promptly and politely to comments Keep it real Pose meaningful questions Share your observations and mistakes Ask for opinions Deliver expertise 140 characters Use #hashtags for keywords, buzzwords Share information, discuss ideas Tell your business/family story Photos, captions, and filters Tell your story

33 Hashtag: a hash or pound sign (#), used to identify a particular keyword or phrase in a social media posting (Oxford, 2010) Can give you 2x more engagements

34 1 1. Cover photo 2. Profile photo 2 3. Tabs 4. Page interactions 5. Call-to-action buttons 6. Community About 6 7

35 Percentage of businesses indicating the following factors are important for growth and development Full sample Landscape only) Landscape and retailer Landscape, retailer, and grower Market demand Own managerial expertise Weather uncertainty Labor Ability to hire competent hourly employees Competition/price undercutting Other government regulations Environmental regulations Water supply Ability to hire competent management Debt capital Equity capital Land

36 Top factors affecting business growth and development Market demand Own managerial expertise Weather uncertainty Labor Landscape only Market demand Managerial expertise Labor Landscape, retail Market demand Managerial expertise Labor Weather Landscape, retail, grower Market demand Managerial expertise Weather

37 Resorts, schools, retail centers, corporate campuses, and other spaces incorporating green areas Multifamily structures: apartment buildings incorporating landscape areas

38 Percentage of businesses indicating the following factors are important for price determination Full sample Responses (%) Landscape only (%) Landscape and retailer (%) Landscape, retailer, and grower (%) Plant grade Market demand Product uniqueness Cost of production Other growers prices Inventory levels Last year s prices Inflation Other

39 Top factors affecting prices Plant grade (size) Market demand Product uniqueness Production costs Landscape only Plant grade Market demand Product uniqueness Landscape, retail Plant grade Product uniqueness Market demand Landscape, retail, grower Production costs Plant grade Market demand

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41 By business size Small Medium Large

42 Large and medium firms had almost 2 time the sales of Evergreen trees Broad-leaved evergreens Sod Small firms sold 4 times Flowering potted plants Propagation material Those selling sod tend to be larger

43 100 Percentage of product form Full Sample Small Medium Large Container (P=0.062) Balled and burlapped (P=0.559) Pot-in-pot (P=0.004) Bare root (P=0.972) Field grow (P=0.377) Balled and potted (P=0.980) Other forms (P=0.825)

44 Plant material in containers accounted for most product sales for all sized firms Medium 3/4 Small 2/3 Small firms tend to sell more pot-in-pot But, 2 out of 38 firms grow exclusively, may have skewed the findings

45 Landscape businesses spent on average 6% of sales on advertising Larger firms spent 2 to 3 times more Small businesses do not spend any money on advertising via Billboard Catalogs Trade journals No main differences on advertising expenditures across size

46 The ability to hire hourly employees was more important for larger business Larger businesses were more concerned about labor impacting business growth Weather uncertainty was more important for large and medium firms than for smaller

47 Last year s prices are more important for Medium Small

48 Thank you very much for your attention