Charles R. Hall
Extension Economist – Horticultural Marketing
Most business managers have heard the phrase “effective marketing is the key to profitability”, but many do not fully understand what this means. The tendency is to associate marketing with “selling” or “advertising”. These are, in fact, only a couple of aspects of marketing. From a managerial perspective, marketing may be defined as the total system of business activities designed to plan, price, promote, and distribute nursery products that satisfy the wants/needs of potential/present customers, while achieving the businesses’ objectives.
The major emphasis in this definition is the customer, first and foremost. The business that provides customers with what they want, when and how they want it, will be the most successful. In an industry as large and diverse as the Texas nursery industry, it is impossible to develop a general marketing program that would apply to all participants in the nursery industry because management skills, market opportunities and resource availabilities vary considerably in each part of the country. Thus, step-by-step guidelines are presented which can be used to develop an individualized marketing plan. The planning framework presented in this paper (see Figure 1) represents an application of the total strategic market planning process. It is practical, workable and with slight modification, it can be used for any specific nursery or garden center operation. While developing a market plan alone cannot guarantee success, it does insure that factors affecting the profitability and survivability of the nursery are considered.
Figure 1. Overview of the marketing planning processStep 1. Analyze the present marketing situation.
The first step in the marketing planning process is to analyze the present marketing environment. Marketing objectives cannot be determined before an assessment of where the nursery or garden center presently stands in its total marketing environment is carried out. In conducting a situational analysis (Table 1), the manager typically gathers two types of information: (1) internal or business related information; and (2) external or market related information.
Target Market Selection
Once possible markets have been segmented (Table 1), the task at hand becomes one of deciding which markets to target. This is based on the research findings and opportunities identified in the early stages of the situation analysis. After segmentation, certain target market options exist for the firm:
- Aim at the entire market (all segments) with a single marketing approach.
- Pursue several different segments with different marketing approaches for each segment.
- Focus on just one segment with a very direct marketing approach.
In the case of marketing nursery products, it is probably best to employ the second option and target 2-3 segments including a primary market, a secondary market, and a salvage market.
The old adage that marketing decisions should be based on marketing facts provides the foundation for situational analysis. In turn, the situation analysis provides basis for establishing objectives and determining practical and realistic marketing strategies and tactics. One major point that needs to be emphasized here is that the situational analysis is an ongoing part of marketing planning. Its purpose is to keep the manager aware of changes taking place inside and outside the business. It should not be viewed as a one-shot or once-a-year activity.
Step 2. Determine the marketing objectives to be achieved.
Objectives provide targets for the direction and guidance of the marketing plan. These objectives must be in line with the overall objectives of the nursery as well as with the financial objectives and production objectives. Marketing objectives are typically set in such areas as profit, return on investment, sales volume, market share, pricing, advertising, and promotion (Table 2). In determining marketing objectives the manager should be guided by a number of criteria. Marketing objectives should be measurable, specific, consistent with overall business goals, attainable and have specific deadlines. The determination of realistic marketing objectives requires a sound situational analysis. Since these objectives will guide the entire plan and its strategies they have to be realistic and clear. However, they may need to be refined over time. The setting of objectives is an ever changing part of the planning process. As market situations and competition change, so must the marketing objectives.
Step 3. Formulate the appropriate marketing strategies.
At this point in the process, the manager’s task is to determine an overall strategy to achieve the defined objectives. There are four basic market strategy positions including: (1) market penetration; (2) market development; (3) product development; and (4) diversification.
Using a market penetration strategy, the nursery attempts to fill the needs of an existing marketwith its present product mix. This type of strategy may use a number of approaches. For example, the manager may wish to increase the number of customers in present markets, or he may wish to increase the usage of particular plants of both present and potential customers. In addition, the manager also wants to prevent competitors from taking away present customers.A market development strategy is one that attempts to find new markets for the nursery’s existing product mix. The manager hopes to find new uses and/or new customers in new markets for plants that are already being produced and marketed. It is, of course, possible for any manager to employ market penetration and market development strategy at the same time, since they involve the same product mix, only the markets targeted are different.
A product development strategy exists when the manager attempts to develop new products for customers in the business’s present markets. A number of approaches may be used here as well. For example, a product improvement may be when a new plant (cultivar) actually replaces an existing plant that is slipping in the marketplace. The new product may be less expensive to produce, more appealing, or serve the customer’s landscaping needs better. Or maybe current products are offered in slightly different forms (bush form, topiary, espaliered, etc.). With this type of strategy, the manager wants to make a better impression in present markets through product changes and/or additions.
A diversification strategy occurs when the manager attempts to attract new groups of customers by moving into totally new markets with new products. This might involve taking a new product or service to totally new markets that the company didn’t previously serve. For example, a logical diversification for some nurseries may be landscape contracting or landscape maintenance. With this approach, the manager hopes to move into markets not served with new products. Diversification is the most risky of the four strategies, because it involves departure from both the product and market experience of the firm.
Step 4. Establish tactical procedures for implementing strategy.
After determining the overall strategy(ies), the next step in the planning process involves implementing and carrying out these strategies. This requires the development of marketing programs which involve tactical elements. The marketing strategies must be transformed into a set of specific actions or tactics for accomplishing marketing goals. These tactics are often referred to as the marketing mix. Decisions concerning the marketing mix are presented in Table 3. This list is not inclusive nor do all decisions or activities pertain to every nurseryman. The marketing mix is dependent upon which target markets are selected, the type of market strategy chosen, and requirements of customers as indicated in the situation analysis.
Step 5. Evaluation and control procedures
Performance of the plan must be measured, and this means that standards must be developed against which performance can be evaluated. Typically, the manager develops quantitative measures of overall planning performance such as the following:
- Comparing total sales and profits with figures from preceding years.
- Measuring performance relative to competitors (i.e. market share).
- Performing a sales analysis by breaking down sales into categories such as geographic region, primary customers, and fast-moving products.
- Measuring customer satisfaction with surveys and other market feedback.
The importance of proper and timely evaluation cannot be overlooked. Communication between the business and the customer is essential for success. Customers will try a new supplier “one time.” If they are not pleased with the product, they will look elsewhere. A good evaluation system and prompt corrective actions, when required, can assist managers in maintaining their individual market share.
Properly conducted, this step allows the manager to evaluate what is right and wrong and to make corrective actions. This step forces the manager to consider how the results of each planning period’s evaluation shall be used to improve performance in the next planning period. Information gained in the control and evaluation analysis may be used to update objectives, to alter strategy approaches, and even change tactics to be used. When this happens, the planning process has come full circle and the entire marketing planning process begins again.
A similar version of this article from a grower perspective appeared in the the July/August 1990 issue of The Texas Nurseryman. A retail oriented version appeared in the November 1, 1990 issue of American Nurseryman.