I FLOWERINGPLANTS

s^ByWho are the flowering plant growers and howare they marketing their product?

BY SANDRA L. BORN, THOMAS L. PRINCE, DAVID A. SCHILLING, JOHN G. SEELEY

A descriptive profile of the flowering plant industry has been developed on the basis of demo

graphic and marketing informationcollected as part of the Greenhouse Operations Management Project at TheOhio State University.1 The data werecollected to better understand the industry being studied as well as for inputs to a potential computerized cropscheduling model. The flowering plantindustry, for purposes of this research,was defined as those firms that produced potted flowering plants, beddingplants or hanging baskets.

A mail survey was distributed in November 1984 to more than 1200 flowering plant growers across the UnitedStates to gather information on industrycharacteristics, marketing practicesand types of crops being produced.Eight hundred and five, or 67 percentof the surveys, were returned, representing a very good response rate; 744were usable. The other respondents indicated they did not grow floweringplants. Databases were designed tostore the information collected, makingit possible to easily access, sort, andanalyze the data by various criteria.

Since most U.S. Census of Horticulture Specialties2 statistics combineboth flowering plant and cut flowerproducers, little demographic and marketing information exists exclusivelyfor flowering plant producers. In thissurvey, that information was collectedby including questions to determinenumber of years in flowering plant production, number of employees, numberof production locations, total square

32

Figure 1

SQUARE FEET IN

FLOWERING PLANT

PRODUCTION

Figure 2

CHANNEL OF

DISTRIBUTION

(UNDER 25,000)—43%

(25,000-100,000)—37%

CONSUMER-

27%

Figure 3

PRIMARY CHANNEL

OF DISTRIBUTION

RETAIL—34%

RETAIL—34%

MIXED—28%

SIZE OF

OPERATION

VERY LARGE-

18%

- LARGE—39%

-MEDIUM—34%

- SMALL—9%

SAF —May, 1986

scarcely think what needs to be donetomorrow, much less next year. Planning, good planning, suffers. I was recently in a greenhouse visiting with theowner and on the wall in his office wasa printed poster that stated, "I musttake the time to THINK for doing isgetting in the way." When questionedabout this poster he related that it tookhim forty years to decide that the besttime investment he makes is the timeto think. He regularly sets aside a halfday every week in which to do nothingbut think and plan.

Another thing that I have observedis that many operators allow sentimental or emotional feelings to prevail overhard facts. We seem to be prone to thisproblem. We all have certain flowersor colors we like or dislike. We tend

to satisfy our feelings rather than whatthe cash account figures show or themarket demands.

Finally. I find that very few growersproject a reasonable cash flow statement ahead of time. Today, lendinginstitutions are demanding statementsbut they are seldom in a position todetermine if the statement is reasonableor not. After all, few of them are greenhouse growers and at most there arevery few of you to provide them witha comparison. A good cash flow statement requires planning and actualfacts. Each requires time to think.

Three C's

I believe every greenhouse operationtoday needs to be involved in the three"C's" to maintain their viability andexistence. Number one of the three"C's" is change. Change is needed inorder to take advantage of opportunitiesand to maintain excellence. I onceworked for an owner who often stated,"One needs to grow or go." He saidthis in the broadest sense of the word— not only meaning size but excellenceof operation. The middle "C" is forcreativity. We must continue to develop our businesses into unique operations offering both product and service.New plant material grown in a differentmanner or marketed in an unusual wayare trademarks of good management.Creativity has to be useful. One can'tafford uniqueness at the expense ofbeing not wanted. The final "C" is thecomputer. The major benefit of computers in the management of greenhouses today is in the area of tabulationand analyzing. They can reduce thehours of menial labor and cover themultitude of options in an easy and precise manner. (g£

Allen is a professor of horticulturaltechnology at the University of Minnesota. Article reprinted with permission from New York State Flower Industries Inc. Bulletin, Jan.IFeb. 1986.

SAF—May, 1986

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feet of bench space devoted to flowering plant production, and channels ofdistribution used for marketing flowering plants. The industry demographics coi/ected for the Greenhouse Operations Management Project supplyuseful information by themselves, butwhen combined with information onthe current industry marketing practices provide a view of the relationshipbetween these two dimensions.

Industry DemographicsGeographical Location. The 744

survey respondents located in 48 different states were categorized into the9 USDA geographical regions. Thepercentage of respondents per regionwere: New England. 6 percent: Middle-Atlantic. 14 percent: East North Central. 36 percent: West North Central.10 percent: South Atlantic, 12 percent;East South Central. 5 percent: WestSouth Central. 6 percent: Mountain. 4percent: and Pacific. 7 percent. Whencomparing these respondents with theCensus of Horticulture Specialties statistics, they appeared to be representative of the floral industry in general.However, no direct comparison can bemade since the Census combines flow

ering plant and cut flower producers.The results of the Greenhouse Operations Management Project survey indicated the largest firms, in terms ofsquare feet in flowering plant production, were concentrated in the SouthAtlantic, the East North Central, andthe Pacific regions.

Size of Production Facility. The sizeof the production facility was definedas the total number of square feet ofbench space devoted to flowering plantproduction. The survey respondentsrepresented greenhouse operationsranging from less than 10.000 squarefeeUo over I.()()().()()(). The firms wereclassified as small, medium, large, orvery large. The survey results (Figure1) show that 43 percent of the respondentswere involved in small greenhouseoperations. 37 percent were mediumsized, 16 percent were large, and 4 percent very large.

Number of Locations. The surveydetermined the number of separate locations that each firm had in floweringplant production. Four out of five ofthe respondents had only one location,while two-thirds of those with multiplelocations, operated two sites.

Years in Production. In regard to thenumber of years a firm had been inflowering plant production, a fairlyeven distribution was observed across

the various categories. This indicatesan industry with a diversity of experience including almost as many olderestablished operations as new enterprises. One fourth of the respondentsindicated thev had been in business 10

SAF—May, 1986

years or less, while one fifth had beenin business over 50 years, probably representing third generation operations.Of those in business less than 10 years,two-thirds had less than 25.000 squarefeet in flowering plant production. Theresults suggest that, initially, most new

more of a product was distributedthrough one channel, it was considereda primary channel of distribution. Asshown in Figure 2. one third of thesurveyed producers marketed primarilyto the retailer, while one in ten indicated that the major portion of their

44One third of the producers marketed primarily

to retailers, while one in ten said the major portion of their product was delivered to massmarket outlets. Direct to consumer was theprimary distribution channel for more than onefourth of the producers, while nearly the samenumber had a mixed marketing strategy."

businesses in the industry begin as relatively small operations or devote onlya small portion of their bench space toflowering plants.

Number of Employees. The surveyresults indicated that nearly nine out often of the firms categorized as "small"employed fewer than five full-time employees, while the majority of medium-sized firms had between 5 and 20 people working in flowering plant production. Two-thirds of the respondentswith large operations had 11 and 50full-time employees, and almost 80percent of the very large firms employed more than 50 people. From theanalysis of the data, it appears thatsmall and medium size firms had on

the average one full-time employee foreach 5.000 square feet of floweringplant production area. As the production area approaches 100.000 squarefeet and over, that ratio changed to approximately one full-time employeeper 10.000 square feet.

Distribution ChannelsA distribution channel is a method

or system for moving products from theproducer to the ultimate consumer. Thethree major channels of distribution forflowering plants were defined as thefollowing: I) from producer to retailfio. ists and garden centers. 2) from producer to mass markets outlets, and 3)from producer direct to consumer. Asmall percentage of plants going to retail florists and garden centers may bechannelled through a wholesale florist.For this profile, when 60 percent or

flowering plants was distributed tomass market outlets. Direct to consum

er was the primary distribution channelfor more than a quarter of the surveyrespondents; while a nearly equivalentnumber had a mixed marketing strategy, with a portion of their productgoing through each of the threechannels.

Retail Channel. The respondentsdistributing their product to retail flower shops and garden centers fall intothe following size categories; only onepercent had over a half million squarefeet, while four out of five firms hadless than 100,000 square feet in flowering plant production. For greenhouseoperations concentrating on marketingto the retail segment of the industry.100.000 square feet of bench space allocated to flowering plants appears tobe sufficient.

Mass Market Channel. The results

of the survey confirm that over 50 percent of the firms marketing primarilyto mass markets are either large or verylarge greenhouses with over 100.000square feet devoted to flowering plantproduction. (Figure 3). Many massmarket outlets require a large volumeof product, so growers who decide tofocus on the mass market segment needto have a large enough facility to meetthe demand. Only nine percent of thesmall operations indicated they marketed the majority of their floweringplants to mass markets.

Direct to Consumer Channel. Mar

keting directly to the consumer was theContinued on page 34

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Continued from page 33primary distribution channel used bysmall operations. Of those marketingdirectly to the consumer, 24 percenthad between 25,000 and 100,000square feet and 73 percent had less than25,000 square feet. The results suggestthat an operation with less than 25,000square feet of production area devotedto flowering plants is adequate whencatering to this market. Most of theseare probably retail-growers.

Mixed Channel. Firms that split theirproduct distribution over two or threechannels were considered to have amixed marketing strategy. This type ofstrategy was employed by 28 percentof those surveyed. Of those, almostthree-fourths had less than 100,000square feet in flowering plant production. These firms represent either diversified operations that rely on multiple channels for their productdistribution, or firms attempting to develop a primary channel.

SummaryThe Greenhouse Operations Management Project was the first research project to conduct a nationwide survey ofthe flowering plant industry. The survey was used, in part, to collect demographic and marketing informationfrom growers and to provide an improved understanding of the industry.Another major benefit of the researchwas the development of a descriptiveprofile of the U.S. flowering plant industry, thus allowing the opportunityfor each firm to compare itself to industry standards.

This project, enhanced by the development of computerized databasesfor storage, management and furtheranalysis of the data, provides a solidbasis for future research. It also establishes a foundation for developing continuing studies to track industry trends.In addition, due to easy retrieval andmaintenance of information stored incomputerized databases, it will providea valuable source of information for theentire flowering plant industry.

Literature Cited

1. Schilling, D.A., J.G. Seeley, T.L.Prince, and S.L. Born. The Greenhouse Operations Management Project. Ohio Florists Association Bulletin.Number 668:1-3. June, 1985.

2. 1979 Census of Horticulture Specialties, Volume 5, Special Reports,Part 7. U.S. Department of Commerce,Bureau of the Census. 1978.

Thisresearch wasfunded inpart by theD.C. Kiplinger Chair in Floriculture,the American Florists Endowment andthe Ohio State Floriculture/LandscapeHorticulture Alumni Association. A

SAF —May, 1986