Repeat Business

 Repeat customers are the foundation of continued strong sales. Repeat business is generally
more profitable because of lower overhead costs required for development of new sales contacts.
Table 11 shows that the overall share of woody ornamentals sales to repeat customers was 84 percent.
Very large firms had a somewhat higher share of repeat business (90%), which is consistent with the
above-mentioned finding of greater negotiated sales. This rather high percentage of business
conducted with repeat customers suggests that competition for customers in this industry may be
characterized as a zero-sum game (Haydu, 1990). In other words, often the acquisition of a new
customer by one firm means loss of a customer from another firm.

 Table 11--Sales to Repeat Customers by Firm Size Class,
 104 woody ornamental nurseries in Florida, 1988.


Firm
Size


Sales
$1,000


Percent


Small 7,722 86.1%
Medium 14,344 81.2%
Large 39,691 79.4%
Very Large 43,377 89.8%


Total


105,134


84.2%


Pricing

 Establishing prices for products has become a major issue in the ornamentals industry because
of widespread below-cost pricing (Haydu, 1989). As costs of production have continued to rise along
with inflation in the general economy, prices for ornamental products have remained relatively stable
for a decade, resulting in a cost-price squeeze that requires producers to analyze costs more carefully
than ever before.


 Data were collected in this survey for
rankings of factors used to determine prices on a
scale of one to six, with rankings of 1 being most
important. Figure 6 shows that the most important
factor reported for determining prices was cost of
production, which received a number one ranking
from 49 percent of growers. Comparison to other
firms and market demand were the next most
important factors, each top-ranked by 17 percent of
firms. These two factors also were rated as
important secondary factors by 30 percent and 29
percent of firms, respectively. Grade (quality) was
the first-ranked factor by 11 percent of growers.
Inventory levels (availability) of product were
consistently rated as a tertiary consideration in price
determination, with 22% and 23% of firms giving
this a third or fourth ranking, respectively.


Figure 6--First-ranked factors used for
 V.4U15 ilbr UU At 1A hiA di 104 r


 ts s ng Uro uc r uce, wu o WUuuy
 Less than half of growers responding did not ornamental nurseries, 1988.
base product pricing on costs of production, and
probably do not consider total costs in making
business decisions. One important step towards altering this adverse situation in the pricing of
ornamental products would be to educate growers about production costs and use of cost information
in management.


Otner
6%


Market demand
 17%


Cost of Productior
 49%


 Grade
 11%

Comparison to other
 17%