Griffin Greenhouse & Nursery Supplies, Inc. - The Griffin Gazette

Are You a Value Added or Commodity Marketer?

   My industry focus has shifted significantly during the past two years. More of my thoughts, articles, and presentations now deal with the business side of floriculture than at any time in my career. Gone are the days when I could enjoy the satisfying feeling of discussing crop culture with fellow growers. The current economic climate and state of our industry definitely call for a ‘survival of the fittest’ mentality.

   I rarely sit in on crop production seminars when attending conferences because I feel the need to hear speakers on subjects such as marketing, advertising, business management, profitability, and so on. If you ask me why I chose this field twenty years ago I’d tell you “because I love growing plants”. So much has changed in so little time.

   Some of the thoughts I develop today have appeared in previous articles and talks. Because the topic of greenhouse profitability is of such concern currently I hope you will read, digest, and react in a way that will help you and your business succeed in the current ultra competitive marketplace.

Think positively
   I’m not a ‘glass is half empty’ kind of guy so let’s adjust today’s theme before it gets out of hand. Sure, life in the greenhouse business has become more complicated lately. Certainly, growing quality flowers and plants is fun. Most of us continue to get satisfaction out of learning how to grow new and different crop species and cultivars. So many choices of what to grow and sell…it’s very exciting for the optimistic grower. We still get to feel the incredible passion of seeing a crop grow from start to finish.

   The change however, as I see it, is that years ago it was enough to simply grow the best flowers in one’s market area. Today, this very business strategy is not optional but a prerequisite to being in business. Instead of using crop quality as one’s business niche, today offering quality is assumed by our customers. Marketing, service, and the image you create for your business are now primary objectives. In other words, it’s about way more than just putting a nice plant on the bench.

Value added vs commodity marketing
   I’m learning a lot about our industry by paying more attention to the business section of my newspaper, the business reports on the nightly national news, and every agricultural economist I cross paths with. The focus of several of my recent articles has been the contrasting philosophies of value added vs commodity marketing strategies. Don’t let yourself utter the ‘heard it once, heard it a thousand times’ excuse, engaging in this debate puts your finger directly on the pulse of what’s happening in floriculture these days.

Raise your hand if you’ve been involved in a conversation about the profitability of poinsettias. How about garden mums? Have you or the person you were conversing with ever used the word commodity? What does the word commodity mean to you anyway? I’m afraid this word is not going to go away, we’re going to be using it for the foreseeable future.

   Agricultural economists are now warning the floriculture industry that if we’re not careful we could find our products following the apple and cranberry industries into dangerous territory defined by downward spirally prices accompanied by a knee jerk response to overproduce in order to keep pace with everyone else. This is a central theme in free market economies. Whenever a product brings good prices others choose to shift into similar production. All that’s left as this happens is for the basic law of supply and demand to kick in. As supply increases, demand will decrease sending prices down.

How to add value
   So, given that we need to do things to our products that add value and differentiate them from the rest of the competition…let’s talk about a few specifics. How many of us are offering, selling, or giving away slow release fertilizer products with a consumer’s purchase of a hanging basket or mixed container? Many are physically placing one or several preformed Osmocote tablets into the surface of the growing medium at the checkout counter. Wow, do you think that’s adding value in the customer’s eyes? How about all the other consumers waiting in the same checkout line, do you think they notice? Will they make sure they have a similar basket or container in anticipation of receiving the same attention? What about all the opportunities to answer questions and explain what slow release fertilizer products can offer them? This is what added value marketing is all about.

   The niche marketing thing comes into clearer focus when we debate commodity growers from value added growers. The commodity side of the marketplace almost requires growers to strip their crops of value and other production inputs in an effort to cut costs and maintain profit margins as the prices they’re offered fall. Small and independent marketers have a golden opportunity to practice value added marketing as a means of carving a unique, foolproof niche.

   If you sell patio tomato plants (large, mature plants with fruit showing) do you have them staked or caged as part of the package deal? The rather cheap $1.00 cost of a three ring tomato cage will easily return $2.00-3.00. How many times does a one to two hundred percent rate of return show up in your investment portfolio?

   At a future Griffin Open House it might be interesting to survey anyone interested in sharing their value added ideas and practices. It’s a sure bet that we could all leave such a discussion with new ideas for helping our customers feel good about their purchases.