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Business and Marketing Practices of U.S. Green Industry
Ariana Torres, Ph.D.Assistant ProfessorMarketing SpecialistPurdue [email protected]
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
2.542
0.981
Output in $ billions
direct sales indirect sales
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 output impact
• 39,260 full-time and part-time jobs
• $2.113 billion in value added impact
31,798
7,463
Number of Jobs
direct indirect
2013 IMPLAN model and data from the Green Industry Research Consortium
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 output impact
• 39,260 full-time and part-time jobs
• $2.113 billion in value added impact
1.423
0.191
0.499
Impact in $ billions
Labor incomeTax on production and importsOther property
2013 IMPLAN model and data from the Green Industry Research Consortium
Not all businesses are equal
127 118
1,080
299
91995
14
592
54
226
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Crop Production Lawn and gardenequipment
manufacturing
Landscape services Wholesale Trade Retail Trade
$ M
Sales
• $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
1,447
12,390
72386
4,456
427
1,771
0
5,000
10,000
15,000
20,000
25,000
Crop Production Lawn and gardenequipment
manufacturing
Landscape services Wholesale Trade Retail Trade
Num
ber o
f job
s
Jobs in Industry
Jobs outside industry
• 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
113 15 759 121
41524 13
258
61
144
5 1
34
34
117
0
200
400
600
800
1,000
1,200
Crop Production Lawn and gardenequipment
manufacturing
Landscape services Wholesale Trade Retail Trade
$ M
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%)
• The other 8% was generated by other types of businesses
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
59
39
22
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
0
10
20
30
40
50
60
70
80
90
100
Full Sample Landscape Only Landscape and Retailer Landscape, Retailer, and Grower
Perc
enta
ge o
f pro
duct
form
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
(%)
Landscape, retailer, and grower
(%)
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
1
2
45
3
6
7
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 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
areas
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
(%)
Landscape, retailer, and grower
(%)
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
0
10
20
30
40
50
60
70
80
90
100
Full Sample Small Medium Large
Perc
enta
ge o
f pro
duct
form
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