Tag Archives: profitability

Why companies should not compete on price

This article on pricing was recently posted to the Executive Adviser, a business journal put out by the MIT Sloan Management Review. It is well worth the read.

How will the current retail environment affect green industry sales in the spring?

Quick overview of some of yesterday’s December retail data (no real surprises): Wal-Mart cut fiscal Q4 earnings target about 10%.Costco posted a 4% drop in December same-store sales.Family Dollar gained 8%; Same store sales gained 6%.BJ’s Wholesale had 1.6% sales growth; the lowest in a year.Sears (the largest U.S. department-store) sales fell 7.3%.Target same-store sales fell 4.1%.Macy’s December sales fell 4%.Gap stores sales fell 14%.Abercrombie & Fitch fell -24%.Neiman Marcus reported a 28% drop off.Limited Brands reported a 10% drop. Also, a recent DJN press release states: Food… Read More →

Which windfall profits should we tax?

Let’s proceed with a game I’d like to call … Pick the Profiteer! Your choice will indicate the industry that’s clearly making more than its fair share. We’ll tax those excess profits to subsidize the unreasonable prices that consumers pay for the industry’s products. Sound good? Here are your choices:Take all the time you need. Ready to tax that windfall? That was pretty easy, right? Clearly the oil company is C, the one making the most money off of every dollar of sales. Nope! Actually, that’s Coca-Cola (NYSE:… Read More →

More on pricing…

In the most recent OFA Bulletin (Jan/Feb 2008), Behe and Dudek presented an article that reinforced the negative impacts of retailers discounting prices needlessly. Using prices collected from Michigan garden centers, the authors demonstrate the WIDE variation in pricing for similarly-sized products in the same trade area. The analysis showed that significant dollars can be left “on the table” from under pricing — using price as the single mechanism used to attract customers (see Table 1 – click on the table to view in larger format). However, the… Read More →

An Economic Justification to Raising Your Prices

In the January issue of GrowerTalks, Chris Beytes provided us with some excellent case studies of firms that have recently raised their prices (great job Chris!). I think it merits repeating that the only way in which this makes sense economically is if the company successfully differentiates itself in the mind of the customer in terms of the types of products or services offered and the segment(s) of customers that are being targeted. It is a well-proven fact that customers use five different attributes in making a decision… Read More →

Profitability in a Maturing Marketplace

There is little doubt that the green industry has been characterized with unprecedented growth, innovation, and change over the last couple of decades. Yes, the fact that the green industry in the United States represents $148 billion in economic impacts and almost 2 million jobs nationally is impressive. The fact that nursery and floral production still represents one of the fast growing sectors in agriculture means profitability in the industry has been evidenced otherwise such growth would not have occurred. However, slowing growth in demand tighter margins (along… Read More →

How can they sell it at that price?

Let’s face it. Business in the Green Industry is competitive and sometimes cut-throat. In recent years, I have had many growers ask me the question: What do I do when another grower is selling product in my market at a price that is below my break-even cost? While there is no perfect answer to this question, I have included several tried and true suggestions below. Sharpen your sales skills. For example, educate buyers regarding your unique selling proposition in terms of your quality, value, service, convenience, and selection… Read More →