Sales & Marketing, Business Concepts in the Floriculture Industry

1. Sales & Marketing, Business Concepts in the Floriculture Industry At the completion of this unit. Students will be able to: Objective 1: Price floral design work. A. Determine Costs B. Assess pricing strategies C. Calculate Mark-up Objective 2: Prepare floriculture crops for sale. Objective 3: Explain the basics of marketing in the floriculture industry. A. Use advertising B. Complete Sales Tickets C. Use proper telephone techniques Objective 4: Describe floriculture business management. A. Differentiate the types of floriculture businesses. B. Recognize costs related to floriculture production. C. Analyze the importance of marketing, promotion, and sales. D. Describe career opportunities associated with floriculture management

2. Pricing • A very important responsibility of the owner or manager of retail florist shop is to construct beautiful designs that are appropriately priced. • Floral customers must be motivated to purchase! • Design construction –Quality/Value • Pricing

3. Buying Floral Materials(Plant material and Hard goods) • Sources of Goods Used • Wholesalers: the link between grower/broker and the retail florist. They may sell only plants or plants and hard goods. Most deliver and offer large quantities. • Growers: can supply plant material direct to retail florist. • Flower Market: Usually in very large cities. Wholesalers are represented. • Broker: An agent who purchases flowers from growers and sells to wholesale and retail florists.

4. Being a Successful Buyer • Be an informed and knowledgeable buyer. • Know your flowers and how they are sold! By the stem, weight or bunch. • Ask around, find out who supplies the best quality. Who handles their flowers the best? • Report damaged or poor quality flowers to supplier. • There can be a trade off with pricing and high quality. • Build good relationships with suppliers. • Be honest.

5. What does it cost to operate a floral? • Calculate the unit cost of goods – the price of a single item determined by dividing the overall bunch or case price by the number of items in the bunch or case. • Example $24.00 a case of vases  36 vases in the case = $.66 • Wholesale cost of goods or wholesale price is the total of all unit costs added together. • Retail Price – is the florists selling price.

6. Determine Cost of Goods • You need to know how much a single unit or item costs. • Example: Carnations are 11.50 for a bunch of 25. How much per stem? 11.50/25 - .46 per stem.

7. Other costs of operating a floral 1-Labor -Florists are labor intensive! Floral owners not only pay a salary but also have to pay: • Pay roll taxes such as Social Security, FIDC, unemployment, workers compensation etc. • Employee health Insurance • Other benefits

8. What does it cost to raise a successful crop? 2- Cost of Goods Soft Goods: plant materials Hard goods: supplies – tape, wire, vases, ribbon etc.

9. What does it cost to operate a floral business? 3- Operating Expenses -Utilities for heat/cooling -Water -Rent or mortgage -Electric bill

10. What does it cost to operate a floral business? 4- Marketing/Advertising -Ads in the yellow pages -Printing signs/flyers/brochures -Newspaper Ads -Billboards -Radio/TV ads

11. Pricing Methods • Ratio Mark-UP • Percentage Mark-up

12. C. Determine Retail Prices How are retail prices calculated? Usually live plants are marked up using a 3:1 ratio Example: -If it costs $1.50 to a raise a geranium, it will sell for $4.50 $1.50 X 3 = 4.50 -If it costs $3.00 to raise an Easter Lilly, it will sell for $9.00 $3.00 X 3 = $9.00

13. C. Determine Retail Prices Calculate Cost of raising 1 poinsettia 3:1 mark up above cost of materials covers misc expenses and provides for a profit

14. Ratio Mark-UP • A mark-up is used to determine retail price. • Example: Hardgoods are usually a 2:1 markup and perishables like flowers are 3:1. • You multiply the wholesale cost for supplies by 2 and the wholesale cost of flowers by 3. • See table 12-5 on page 278. • These ratios may vary from florist to florist! Some use a consistent 3:1 while others may charge 5:1 for labor intensive design work.

15. Percentage Mark-up • This method plans for profit $$$. • This is taking the wholesale cost of goods and dividing that by the cost of goods percentage as determined by the shop’s financial statement. The florist must analyze their business to determine. Four areas should be evaluated to determine the percentage to mark up: Gross Sales, Operating Expenses, Cost of goods and Net Profit.

16. Example of Percentage Mark-up • Uses a 30 to 33 percent cost of goods percentage. • For example if a design cost $5.00 for supplies. You divide the $5.00 by 30 percent. Total selling price would be $16.66.

17. Assignment • Calculate the price of a vase arrangement that contains the following: Wholesale costs: • 15 mixed flowers • 5 of them cost $.50 each • 5 of them cost $.75 each • 5 of them cost $1.00 each • Foliage is $.25 stem – 10 stems are in the arrangement • Vase is $1.00 • Floral preservative $.05. • Time to create 15 minutes. (labor) • In your notebooks answer these: Show you work!!!! • Arrangement price calculate by Ratio method use a 2:1 for hard goods and 3:1 for perishables. • Ratio plus labor. Assume an hourly pay of $15.00 per hour • Percentage method – use 30%

18. Which would you rather buy?

19. Which would you rather buy? • Pots should be covered with a holiday foil • Add a bow to increase appeal • Remove any dead or poorly colored leaves/bracts

20. Quality vs Quantity • What does the customer want? • What are you producing? • What types of stores focus on each type.

21. Preparing a potted plant product for sale. • Clean it up • Remove dead, dying, diseased or unsightly material. • Wrap it or add value to it. • Label it. • Other ideas? • Watch the slide show on poinsettia prep.

22. Sales & Customer Service

23. Marketing Terms • Marketing: all business activity undertaken to encourage the moving of goods from the grower or producer to the final consumer, including selling, advertising, promotions, and packaging. • Four variables used in marketing, the 4 P’s: • 1. Product • 2. Place • 3. Price • 4. Promotion • Advertising: the presentation of a product, idea, or service for the purpose of inducing others to buy, support, or approve of it. • Media: collectively, channels of communication, either electronic or print, that serve mass or targeted audiences; e.g., newspapers, magazines, radio, television, etc.

24. Marketing Terms • Promotion: all advertising, publicity, and personal selling activities leading to the public recognition of a business and the generation of sales. • Publicity: collectively, acts or devices intended to attract public interest, especially information with news value. • Open house: a promotional effort intended to bring customers into a business establishment, often in advance of a major floral holiday, such as Christmas.

25. Marketing Terms • Loss leader: a promotional tool whereby a retail article is sold at a loss in order to attract customers. • Turnover: the number of times merchandise is sold and re-stocked for sale in a given time period.

26. Marketing Terms • Target market: a defined group of customers whom a retailer attempts to attract. • Niche market: a special area of demand for a product or service.

27. Marketing Terms • Circulation area: the geographic area where product is delivered and advertising is done, particularly with respect to printed media. • Demographics: the statistical characteristics of a population, such as age, income, gender, and education level that are used to develop targeted marketing efforts. • Psychographics: the behavioral and cultural characteristics of consumers, such as lifestyle, attitudes, values, and buying patterns, that influence purchasing habits.

28. Marketing Terms • Customer: one that purchases a commodity or service • Customer service: the manner in which a vendor accommodates the needs and demands of the customer or client, which may enhance the perceived value of a product or service. • Customer base: a group of individuals and commercial clients who regularly patronize a business

29. Types of Customers • Decided customer: has a definite floral need, may already know exactly what he or she wants to buy. • Undecided customer: has a floral need, but has not determined exactly what he or she wants. • Browser: may be looking for an idea or a bargain, not interested in pressure for a sale, may be a potential customer, hardest to sell to. 

30. Types of Customers • Foot traffic: collectively, the people who come into a retail store who may or may not make a purchase. • Walk-in: a colloquial term describing a customer who enters a business establishment, without an appointment, to make a purchase or place an order, rather than using the telephone or internet.

31. Selling Terms • Selling: the process of influencing a buying decision. *You must first greet the customer! • Impulse sale: an unplanned purchase. Such as a greeting card, etc. • Up-sell: to suggest or show to the customer one or more premium options rather than a less expensive choice. Up-selling may also encourage the sale of additional goods or services.

32. Telephone Etiquette • Confident, happy voice • Answer every call promptly • Friendly greeting • Include name of shop • Include name of person speaking • Offer assistance • “ Good Morning. Sally’s Flowers. Samantha speaking. How may I assist you?” • Aware of products and pricing • Obtain all information on order form—date, payment, delivery, items, etc. • Clarify name spelling • Clarify any items • Ask for questions • Thank customer • Invite further purchase • Let customer hang up first

33. Six ways to MarketWays to advertise! • Newspaper Ads • TV • Radio • Displays • Flyers • Coupons • Internet • Demonstration • Sponsorship

34. Advertising must do the following. • Attract potential customers • Have effective design • Simple message • Include name of business, address, phone, website, email • Products or services offered • Any special messages

35. Marketing tools • Paper Ads • Displays • Brochures • Radio/TV

36. Marketing Plan • A written plan that explains in detail how your products/services will be marketed. • Includes pricing strategies • Includes advertising methods • Includes marketing cost factors

37. What factors effect your purchase choices? Buying Decision? • Cost • Convenience • Quality • Where it was produced/grown • Features • Etc.

38. List what makes this salesman successful??? • Went to a target audience • Showed the qualities • Wasn’t afraid to ask • Let them try it

39. Example SalePattie’s Palm Trees • Identify potential customer • Present your product to them • Display it’s qualities • Make the sale • Arrange details (pick-up or delivery) • Follow through! • Southern Utah Resident • Mexican Fan Palm Tree • Grown in St. George, already acclimatized, supports local economy • Make the sale • I’ll deliver it on November 23rd at 10 AM • Follow through!

40. Methods of payment • Cash • Credit – cards or customer accounts • Purchase Orders – PO’s • Check

41. How to Create a Marketing Plan 1- Identify an audience 2- Determine how you can reach your audience - Newspaper Ad - Phonebook -Word of mouth -Flyers/brochures -etc 3- Design marketing materials

42. Greenhouse plant packs • Single pots can range in size 4” common • Pony Packs – usually 6 or four packs • Flats – contain pony packs, usually 12,8 or 10 • See Handout – provided. • Used to determine production costs - #seeds, soil, etc.

43. Are all Florals the same?

44. The Floral Industry

45. The Floral Industry terms • Floral industry: a collective term for the people and business entities engaged in the production, promotion, and sale of floral products and related merchandise. Aspects of the floral industry include growers, wholesalers, retailers, transportation, product-development, manufacturing, freelance designers, educators, allied associations, publications, wire services, etc. • Florist: a person or business entity associated with the sale of flowers, plants and other related products. 

46. The Floral Industry terms • Retailing: the business of selling goods obtained from a wholesaler or other supplier to the consumer • Wholesaling: one who buys flowers, plants, and/or related products from growers, brokers, and manufacturers.

47. The Floral Industry terms • Logo: a graphic representation of a name, brand, symbol or trademark, designed for easy and definite identification and recognition.

48. The Floral Industry terms • Wire service: a commercial organization whose primary function is to administer the handling of wire orders between member florists. Referring to the transfer of floral design orders from one shop for delivery by another shop.

49. Types of Flower Shops • Full-Service flower shop: a floral shop that provides every floral product and service needed by customers, including delivery and wire service. • Specialty flower shops: a floral shop that targets particular floral needs, such as weddings, high style designs, or everlasting designs.

50. Types of Flower Shops • Limited-service flower shops: a flower shop characterized by little or no added service and products; for example, a floral department in a grocery store. • Flower merchandisers: a retailer specializing in loose cut flowers sold by the stem or bunch who generally does not provide design or delivery services.