The U.S. nursery and greenhouse industry (often referred to as the Green Industry) had ≈$16.8 billion in total grower cash receipts during 2005 (Jerardo, 2007). Although the Green Industry is a multibillion dollar industry that is still expanding (albeit at a slower rate), U.S. nursery and greenhouse owner/operators face numerous challenges in their struggle to have and/or maintain a successful business. Given that the industry is maturing (Hall, 2007), the competitive rivalry among firms is intensifying. With the increased competition that comes along with slower growth, firms compete by finding alternative markets or through capturing market share from other firms. Firms failing to adapt and implement new strategies during the transition from a rapidly growing to a mature market will face problems most likely resulting in their elimination from the marketplace.
Given the transition from a rapidly growing to a mature market, owner/operators should be taking an in-depth look at their business practices and determining if there are ways to increase sales and profitability. Increased sales may often come as a result of subtle changes in pricing behavior and vice versa. For instance, an operator that uses last year's prices as an important indicator of how to price this year may fail to incorporate key information regarding the present market conditions, thereby potentially lowering sales.
Recent research has addressed changes associated with marketing practices within the Green Industry. Behe et al. (2008) found that regional differences among nursery growers exist in various marketing practices, including sales management, selling practices, pricing, and advertising, whereas Hodges et al. (2008) found regional differences in various nursery production practices, including temporary labor force levels, growing systems, contracting, and use of integrated pest management systems. Campbell et al. (2009) compared industry practices in 1988 versus 2003 and found numerous changes have occurred in production, marketing, and advertising practices with some regions experiencing more structural change than others. Yue and Behe (2008) found that the purchase of specific plant products affects consumer choice of outlet. Finally, Andrade and Hinson (2009) evaluated factors affecting choice of rewholesalers and other nursery marketing channels and found that diversified growers, in regard to their marketing strategies, were more likely to use a mass merchandiser and garden center channel and that plant group also affected the choice of mass merchandiser and landscaper channels.
Based on the varying practices noted within previous research, our objective was to evaluate the effect of pricing influences (i.e., cost of production, other grower prices, plant quality, market demand, product uniqueness, product inventory, and last year's prices) and selling characteristics (e.g., total advertising, tradeshow attendance, and percentage of: repeat customers, negotiated sales, native plant sales, wholesale sales, exports, and pre-committed sales) on total gross firm sales as well as gross sales associated with several plant categories (trees, roses, shrubs and azaleas, herbaceous perennials, bedding plants, foliage, and potted flowering plants) for commercial nurseries and greenhouses. By understanding the effects of pricing influences and selling characteristics, we can identify which factors play the largest role in increasing/decreasing sales, thereby offering valuable insights to commercial nursery and greenhouse owner/operators. To control for other factors that may contribute to a firm's sales, we use other variables associated with business characteristics and local demand factors as control variables. By understanding the impacts of pricing and selling characteristics, owner/operators will be able to better evaluate their business-specific practices and more accurately determine where changes can be made to increase sales.
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