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University of Kentucky, College of Agriculture
Marketing Your Nursery
By Jeremy Griffith
There have been many businesses over the years that have had great products that people would love to consume, yet those businesses failed miserably. Why? No marketing. To be successful in the nursery business isn’t just growing the plants, you must also let everyone know about the business and how your product is superior to the already available products in the trade. First and foremost, every business must have a plan to market the product. A marketing plan involves two simple questions:
What or who is your market?
There are many ways to approach these questions with essentially the same results. A common method in developing a marketing plan is to complete a market analysis. This analysis will help you identify your target market. You must ask yourself, “What is the potential of sales for your product (plants) in your area? Where are the customers located? Will you be selling your nursery stock locally, regionally, nationally?” Below is an example of identifying your target market.
Grower #1 has a large wholesale nursery business. He produces quality stock that is as good if not better than any producer in his area. Yet, every year he seems to have 25-40% of his stock left in inventory and less room for new plants the coming spring. This grower sells exclusively to retail nurseries in a large city outside his area, where in the past he has had no trouble selling his stock. Who is Grower #1’s target market and should he seek new customers? Answer: The target market for grower #1 is obviously retail nurseries in the city. But should this be his only target market? No. He is losing business, so he must branch out and identify a new market in order to increase his sales. Grower #1 finds out through research that no one in his area is supplying nursery stock to retail outlets, and that all stock comes from outside suppliers. The nurseries in his area aren’t aware that he even exists; no marketing was directed in his own town. He is aware that shipping and freight have increased dramatically over the years, and businesses could save money just by purchasing locally grown stock. His new additional target market is local nurseries, so how does he make them aware?
Knowing the competition of your business is essential in developing a marketing strategy. Competition is defined as any other product or brand that a customer may buy instead of the one that is being sold. Competition in the nursery industry may come not only from other tree and shrub producers in the field but from container production, bedding plants and perennial production as well. Understanding what other growers are producing for the market will help to develop a better position for your products and/or services. By developing a competitive analysis one can find out the kinds of products that will sell in the industry, along with pricing strategies and promotions that are necessary for keeping the customer interested in what you do.
After the competition is analyzed and identified, you must find a way to set yourself aside from the rest. In marketing terms, you must find your niche. A niche is defined as a specific situation that is suited to one’s character or abilities. In the corporate world, to get the edge on your competition one must have a product or service that others perceive as different from everything else offered, while also fulfilling the wants and needs of consumers better than any other product or service. In the nursery industry there is no real difference. In order to successfully develop a niche, one must determine what it is about your product that makes them better than everyone else’s. Is it quality, selection, lowest price, fastest service; what defines your nursery?
For example, a wholesale nursery grower offers basically the same selection you would find at any other nursery, with the exception of one group of plants; Japanese maples. His Japanese maple production began as a hobby until one of his regular customers brought to his attention that the cultivars he had where next to impossible to find locally, that they were available through mail order only. This grower had the means to produce many more Japanese maples, and began to specialize in this particular species. Offering such a product that was currently unavailable locally increased the sales of his other stock simply by getting customers in the door. People began inquiring about his Japanese maples and saw that this was only a small part of his business, and that he grew other quality plants as well. By developing a niche, sales throughout the nursery increased.
Four P’s of Marketing
Marketing of any business can be broken down by using the 4 P’s, Product, Price, Promotion and Placement. Product we have already covered in the above sections, such as what is the product and what sets it aside from others.
You have the product, and know it’s time to sell it. What should the price be? First and foremost, the price should be set high enough to generate a profit for the business. One must also make the price attractive to the consumer, getting them excited that a ‘sale’ or ‘special’ is taking place. In determining the price, several questions must be asked.
*What are customers willing to pay?
*Are all costs covered; where do you break even?
*What does the competition charge?
*How much profit do you want to generate?
In determining your price it is important to use the cost of production as the base. To determine this, divide the production cost into variable and fixed costs. Variable costs are out-of-pocket, such as labor, materials, and advertising. Fixed costs are those that you will incur whether you sell anything or not, such as equipment, utilities, and taxes. Listed below are formulas that are used throughout business in determining your production cost. If after using these models you find that the selling price is more than that of your competitors, you may want to find ways to lessen costs of production or accept less profit without affecting your overall quality of the product.
Assume that a nursery has determined there is a market for 2 gallon Red Japanese maple seedlings. The costs of materials are $3.00 ($2.50/plant + .50/pot & media) per plant. It takes ½ hour of labor to maintain each plant until ready for sale, with a labor rate of $6.00/hour. Overhead is fixed at $2.00 per plant.
Materials + overhead + labor (production time x hourly wage) divided by number of units = selling price per unit
Example: $3.00 + $2.00 + $3.00/ l plant = $8.00 per plant
Materials + overhead + labor + profit divided by 1 unit = selling price per unit
Example: $3.00 + $2.00 + $3.00 + $2.50 /1 plant = $10.50 per plant
In this example an absolute decision is made about how much profit you want from each unit sold. Profit, labor, and overhead do not change.
From the examples above one can see how different factors affect pricing. These are only models to find production costs; they do not take into account factors such as market price trends that affect pricing. You must be aware of constant changes in the market such as over saturation and availability that will affect the bottom line.
Promotion strategy is everything that a person does to the customer to encourage them to purchase the product. This includes not only advertising but public relations and personal contact. Just as a nutrition company doesn’t sell vitamins so much as it sells the benefits of a healthy body; a nursery doesn’t necessarily sell only the plant but the aesthetic beauty it will provide in the landscape. You need to decide what the product will do for its consumers. The concept of your promotion strategies are to capture the attention of the public and get them to buy the product.
For example, Grower #1 in the previous example had decided to market to his area in addition to already selling his stock in a nearby city. A simple classified add in the local paper announcing his varieties of species and cultivars could do the trick, but the public usually demands something more. Instead he decides to take out a display add featuring plants he offers in a beautiful landscape setting. In the consumers mind this not only tells them plants are available, but what the plants can do for them and their landscape, making them more appealing. In turn, he has opened up not only to the wholesale market but the retail as well, making people aware that his business exists and these things are available right here in there home town, grown locally. If the ad generates more sales it was a success. If not, he will know not to be so elaborate in advertising next time and rely on one or several of the many other ways to promote the product; Such as radio and TV ads, brochures, business cards, direct mail, and magazines. Each of these channels of promotion provides different ways to get your product known to the buying public.
Now that the product is ready for sale, priced, and consumers know that it exists, how do they get it? This is known as placement of the product, or getting the goods to the customer when and where they want it (distribution). Distributing the product can represent from 10-50% of the final price of the product in shipping and freight situations.
Often businesses such as nurseries do not have the resources within to individually deliver the product to the consumer. A nursery must rely on the channels of distribution that are established that wholesalers, retailers, distributors, brokers, and cooperatives make up. A nursery can produce the best quality plants around, have a reasonable yet appealing price, and everyone may know about it; but if the consumer has no access it is a formula for failure. On time deliveries and prompt services build the name of a business, promoting word-of-mouth advertising (which is the best kind, FREE!).
Marketing in the nursery industry is just as important as marketing among any other business. One cannot simply rely on people to just ‘know’ that you are a good grower; you have to make it known. With the proper marketing strategies it is possible to succeed in this business. Remember, growing the plants right and maintaining them is only the first step; people can’t buy it if they don’t know about it.
Benedict, Linda. 1993. Home-Based Business: Market YourProduct. University of Missouri Extension.
Knipe, Dar. 2000. Steps to Marketing Your Product. University of Illinois Extension.
Passewitz, Gregory R. 1995. Pricing, Small Business Series. Community Development Fact Sheet. The Ohio State University.
Schmidt, Donald. 1985. Marketing for Success. Tutorial. University of Missouri-Columbia.