Business and Marketing Practices of U.S. Green Industry · Business and Marketing Practices of U.S....

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Business and Marketing Practices of U.S. Green Industry

Ariana Torres, Ph.D.Assistant ProfessorMarketing SpecialistPurdue Universitytorres2@purdue.edu

January 17, 2018

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

Indiana Green Industry Facts

• 6th ranked agricultural commodity in the state

• 4th 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

2013 IMPLAN model and data from the Green Industry Research Consortium

Output in $ billions

direct sales indirect sales

• $3.524 billion in total output impact

31,798

Number of Jobs

direct indirect

• $3.524 billion in total output impact

Impact in $ billions

Labor incomeTax on production and importsOther property

Not all businesses are equal

127 118

Crop Production Lawn and gardenequipment

manufacturing

Landscape services Wholesale Trade Retail Trade

• $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

1,035 238

16,688

12,390

10,000

15,000

20,000

25,000

manufacturing

Jobs in Industry

Jobs outside industry

• 31,978 direct jobs

• Landscape services and retail trade generated most of the direct jobs (92%)

113 15 759 121

41524 13

manufacturing

Labor Income Impact

Other property Impact

Tax on Production and Imports Impact

• $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%)

What are landscape businesses doing to achieve this impact?

• 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

Full Sample Landscape only Landscape and retailer

Landscape, retailer, and grower

Indiana 27 20 5 2Florida 22 11 5 6Washington 13 8 5 0Wisconsin 12 4 5 3Georgia 11 5 4 2Nebraska 7 3 4 0Oregon 7 3 3 1South Carolina 5 0 2 3Kentucky 4 1 0 3Tennessee 4 2 1 1New York 3 1 1 1Mississippi 1 0 1 0Oklahoma 1 1 0 0Rhode Island 1 0 1 0Utah 1 0 1 0Vermont 1 0 1 0

By business integration Landscape only

Landscape and retailerLandscape, retailer, and grower

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 120 59 39 22

Small = $10,000 to $124,99Medium = $125,000 to $749,999Large = ≥$750,000

• 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

Product sold (%) Full sample Landscape Only Landscape and

retailer

Landscape, Retailer, and

Grower

Herbaceous perennials 17 15 16 23

Deciduous shade and flowering trees 12 12 8 17

Deciduous shrubs 11 13 11 7

Bedding plants and flowering annuals 11 13 12 4

Broad leafed-evergreen shrubs 7 8 7 5

Evergreen trees 7 7 7 6

Vegetable, fruit, and herb bedding plants 6 4 8 5

Narrow-leaved evergreen shrubs 5 5 6 3

Product sold (%) Full sample Landscape Only Landscape retailer Landscape, Retailer,

Grower

Roses 4 4 3 6

Flowering potted plants 4 3 5 4

Other plant types 4 3 4 5

Sod 3 5 3 0.5

Vines 3 3 4 3

Azaleas (Rhododendron sp.) 2 2 2 3

Fruit trees 2 3 2 1

Tropical foliage 2 1 2 3

Propagated material (liners, cuttings, plugs) 1 1 0.5 3

Christmas trees 0.5 0 1 0.3

• 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 perennialsBedding flowers

Deciduous shrubsShade and flowering trees

Landscape, retail top 50% of sales

Herbaceous perennialsBedding flowers

Deciduous shrubsBedding plants (fruit, veg, herbs)

Shade and flowering trees

Landscape, retail, grower top 50% of sales

Herbaceous perennialsShade and flowering trees

Deciduous shrubsRoses or evergreen trees

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

Purchase of flowers/plants % households participating in gardening

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)

Percent of advertising spent on 11 types of methods

Full sample Advertising spent (%) Landscape only (%) Landscape and retailer

Internet 32 34 28 38

Other 27 34 20 26

Yellow Pages 11 12 12 9

Social media 9 11 11 4

Newsletter 6 2 13 3

Radio/TV 6 1 10 10

Trade show 3 2 5 2

Catalog (print/cd) 3 2 2 6

Billboard 2 3 1 0

Trade journal 0 1 0 0

Gardening publications 0 0 0 1

• Top advertising expenditures• Internet (32% of sales)• Other (27%)• Yellow pages (11%)• Newsletters (6%)

Landscape onlyInternet 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%

Advertising with social media

3 out of 4 Americans use social

mediaTell them

about your business

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?

Create a brand for your social media pages

• Logos and imagery• Company description• Vision and mission

Strengthen your social media with simple

practices

Every account starts with zero followers• Look to accounts you adore for inspiration and mimic

them• Content, posting frequency, imagery, photo filters

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

Inspiration

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 charactersUse #hashtags for keywords, buzzwordsShare information, discuss ideas

Tell your business/family storyPhotos, captions, and filters

Tell your story

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

1. Cover photo

2. Profile photo

3. Tabs

4. Page interactions

5. Call-to-action buttons

6. Community

7. About

Percentage of businesses indicating the following factors are important for growth and development

Full sample Landscape only) Landscape and retailer

Market demand 88 83 89 100Own managerial expertise 80 76 85 81Weather uncertainty 77 69 80 91Labor 75 75 81 68

Ability to hire competenthourly employees 66 66 78 50

Competition/price undercutting 58 50 69 59

Other government regulations 56 59 50 57

Environmental regulations 54 61 46 48Water supply 51 50 50 55Ability to hire competent management 51 54 55 36

Debt capital 44 40 47 50Equity capital 44 37 49 52Land 41 29 44 64

• Top factors affecting business growth and development

• Market demand• Own managerial expertise• Weather uncertainty• Labor

Landscape onlyMarket demand

Managerial expertiseLabor

Landscape, retail Market demand

Managerial expertiseLabor

Weather

Landscape, retail, grower Market demand

Managerial expertiseWeather

Multifamily structures: apartment buildings incorporating landscape

Resorts, schools, retail centers, corporate campuses, and other spaces incorporating

green areas

Percentage of businesses indicating the following factors are important for price determination

Full sample Responses (%) Landscape only (%) Landscape and retailer

Plant grade 94 94 95 91

Market demand 81 78 83 86

Product uniqueness 80 73 92 77

Cost of production 77 70 76 96

Other growers prices 67 66 69 64

Inventory levels 55 55 51 59

Last year’s prices 54 56 56 48

Inflation 45 52 47 27

Other 35 36 50 0

• Top factors affecting prices• Plant grade (size)• Market demand• Product uniqueness• Production costs

Landscape onlyPlant grade

Market demandProduct uniqueness

Landscape, retail Plant grade

Product uniquenessMarket demand

Landscape, retail, grower Production costs

Plant gradeMarket demand

By business sizeSmall

MediumLarge

• 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

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)

• 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

• 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

• 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

• Last year’s prices are more important for• Medium• Small

Thank you very much for your attention

Business and Marketing Practices of U.S. Green Industry · Business and Marketing Practices of U.S....

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