This is part two of a two-part series. Read the first installment at bit.ly/marketing-fees.
In part one of this two-part series, we heard from industry players who were both for and against charging for marketing programs on branded plant lines. These fees are used to offset marketing programs and resources, including consumer advertising; photography; educational resources; and point of purchase (POP) materials.
Not surprisingly, national plant brand managers argued for the benefits that a comprehensive branding and marketing program can bring in terms of better consumer awareness and higher sales volumes. Growers had differing opinions on whether the additional costs were a means to maximizing sales or a risk to already thin profit margins.
Natalie Carmolli, PR and marketing specialist for Spring Meadow Nursery, part of the Proven Winners brand, asserts that breeding advancements and consumer awareness help growers’ investments into branded plants pay off.
“People are thinking, ‘I need the cheapest inputs possible so that I can get the best margin.’ But when you’re growing plants that take less space, and that perform more reliably, are more attractive to the buyer, and more recognizable to the buyer, you’re really investing in a plant that will increase its margins on its own.”
Matthew Chappell, professor of horticulture at the University of Georgia and state nursery extension specialist who sees both sides of the issue in his dual roles, has a different view.
“Branded plants are a hook — they’re a way to get people in the door,” he says.
Instead of trying to make a profit on branded plants, Chappell thinks growers should try to upsell customers who are attracted by branded plants with non-branded plants that offer higher margins.
Ed Tankard of Tankard Nurseries, who shared many of his objections to national marketing programs in part one of this series, rejects this strategy, saying, “Profit margins have been declining precipitously since 2008. I don’t know if nurseries can afford a loss leader.”
Is the price right?
Chappell agrees that pricing is stuck where it was pre-recession.
“Inflation adjusted, plants now are cheaper than they’ve ever been,” he says.
He encourages growers to raise prices, even if it means exceeding the pricing structure suggested by brands.
Bridget Behe, professor at Michigan State University in the Horticulture Department and horticultural marketing consultant, suggests going a step further by charging an additional premium on new introductions. “What we should be doing is charging more for newer cultivars. People enjoy fragrance, new colors, novel leaf patterns, [and] some consumers are still willing to buy even if you charge more. Why wouldn’t you take advantage of that?”
However, Behe stresses that timing is everything.
“We only have a short time to mark-up new cultivars and have the competitive advantage. It just breaks my heart when people price a new cultivar the same as the older, established cultivars because they’ve lost the opportunity to make a higher profit,” she says.
Growers who are in close touch with the retail experience agree that an improved plant can command a higher price with consumers.
“Certain plants and certain prices appeal to the right person. They will pay the price for a better product, and the key word there is better,” says Chase Johnson, vice president with Johnson Nursery Corp., a grower which also operates a small retail arm from its location near Wilmington, North Carolina.
Tim Kane at Prides Corner Farms in Lebanon, Connecticut, which grows exclusively for independent garden centers, thinks that the marketing provided by brands helps remove price objections at the retail level.
“Many of us have shot ourselves in the foot and haven’t asked for the right price. The consumer will pay for it if they’re excited about it, it’s displayed nice and there’s great information about it,” Kane says.
But do retailers feel the same, or do growers risk losing customers by raising prices?
“You live by price, you die by price, because someone can always undercut you,” says Behe.
Instead, she suggests offsetting premium pricing by “promoting other attractive benefits that the customer can relate to.”
Kane relies on extraordinary service to put price out of the equation. He even employs dedicated merchandisers to help time-strapped retailers display branded product and use point of purchase (POP) materials to best advantage.
“Growers like us have to provide resources for them,” telling customers, “we can help them set up displays, we can help them manage their inventory, we can help them sell their products,” Kane says.
Safeguard your investment
There are other strategies growers can use and share with their retailer customers to maximize profit potential on branded plants.
Share the good news. Get retailers excited about carrying branded plants by letting them know what brands are doing to generate consumer demand. Share the lines’ promotion calendars so they can plan for demand by stocking and merchandising the plants consumers are seeing advertised each month. Show retailers how they can use coordinated messaging like social media graphics provided by brands in their own customer communications to amplify promotional campaigns.
Help retailers with displays. “We push all this POP downstream and we assume that [retailers] are going to know how to use it,” Behe says.
Chappell agrees that expecting hourly wage employees to effectively display signs and other merchandising tools is a recipe for failure. Instead of burdening your sales staff with the task, consider following Pride Corner Farms’ example by investing in part time merchandisers to support your IGCs.
Put your own spin on things. Johnson Nursery responded to the call from Proven Winners to create their own video to promote ‘At Last’ rose with winning results. What you do not see in the video is Johnson Nursery’s name — they created this as a resource for their retailers to brand and share with their customers.
If you do not have the time or budget to create something original, you can still find creative ways to reuse what the brand marketing teams make available. Prides Corner Farms repurposed van wraps from Bailey Nurseries’ Endless Summer press tour to turn their vehicles into mobile billboards.
Make it easy. Grouping plants by brand, as done in the Proven Winners ColorChoice destination concept, is another way to make things easier for retailers and their customers. Behe compares this “store within a store” approach to the way clothing lines are clustered in department stores, allowing shoppers to focus on brands that promise the qualities they are looking for.
But more importantly, it encourages consumers to buy an entire wardrobe. Behe explains that garden centers can sell an entire landscape using the same model. “It isn’t profitable for the IGC to sell [one plant] at a time. Let’s put the outfit together,” she says.
Sell by solution. Behe also likes the way the Proven Winners destinations displays are organized around solutions and thinks this is a strategy all growers can use.
“When possible, do some of the work for the retailer,” Behe says.
This means restructuring your product list and offering retailers a certain number of packages based on benefits and not attributes or botanical lines.
“We’re too often very short sighted when we focus on product attributes… that doesn’t tell people what it’s going to do for them in the landscape…. If the grower said, ‘Here’s some packages that I think you could market [by solution],’ let’s present that along with point of purchase displays,” Behe says.
She believes that approach is “the way we’re going to connect with consumers.”
One of the easiest things you can do to make sure you and your customers are getting the most value from marketing fees. Call on brand marketing teams for help.
“We have a whole host of things that are easy to use and easy to start up,” says Carmolli, who wants growers to know, “we’re a resource for them — that’s why we’re here.”