Making the most of marketing fees

With profit margins feeling ever tighter and the economic uncertainties of a pandemic, the marketing fees that go along with branded plants may feel like an unnecessary — or even risky — investment. What are you getting for those extra costs? And can you turn them to your advantage?

Let’s start with what a brand does. A brand offers an implied promise that its products are better than the generic.

“Let’s take Proven Winners because I think their name is very telling,” says Bridget Behe, a professor at Michigan State University and retail marketing expert serving the horticulture industry. “The customer is buying into the promise that these are winning or well-performing.”

Brand marketing, when done right, conveys that brand promise to the consumer. A brand’s marketing also raises awareness of the product and creates demand in the marketplace.

While we are covering the basics, let’s also review the types of fees that are associated with branded plants. In addition to the marketing fee, there may also be a royalty fee. Sometimes these are rolled together into one “program fee.” The royalty fee is the portion that is passed back to the breeder, in compensation for their work in identifying, selecting and trialing the new genetics.

“It’s important that if you’re going to create a better plant that performs better for the consumer that we’re compensating the people that are doing the work to make that happen,” says Natalie Carmolli, PR and marketing specialist for Spring Meadow Nursery, part of the Proven Winners brand.

In some cases, the breeding work may be done by the brand, who also typically conducts plant trials and stock buildup. In all, it can take five to seven years, if not longer, to fully ready a new introduction.

Breeding before branding

The investment into breeding is key to the brand promise that lines like Endless Summer and Proven Winners offer. New is nice, but “new and improved” is even better.

Those improvements are meant to benefit growers as well as consumers.

“In order for a product to go into one of our brands, it has to be something that everyone through the system has the ability to be successful with. Certainly, it has to have a consumer benefit at the end, but as importantly or more importantly, it has to be something that a grower can be successful with,” says Alex Charais, marketing and communications manager for Bailey. “It has to look good in a pot. Our genetics approach has to have some measurable benefit to the grower, whether it’s lower input costs, maybe less pruning, less disease management, and that’s where trialing comes into play for us.”

“It’s an absolute necessity, and actually growers that think otherwise have just got their feet so far in the past I wonder how they can manage. The branded plants give you such an advantage. It’s the cost of doing business, and it’s also the thing that helps stimulate you selling the material,” Kane says.

Pulling back the curtain

So why aren’t all growers on board with branded plant lines and marketing fees?

Matthew Chappell, professor of horticulture at the University of Georgia and state nursery extension specialist, sees both sides of the issue in his dual roles. He says part of the problem comes from a lack of understanding on the growers’ part of what goes into a national marketing program and what it takes to run one smoothly. He puts the responsibility on the brands to bridge that gap with better transparency into how fees are being spent, so that growers do not see it as a profit center for the brands.

Natalia Hamill, brand and business development manager for Bailey, gives some insight by comparing the launch of two recent Endless Summer hydrangea varieties. Her story shows the difference a coordinated and well-executed marketing campaign can make.

With BloomStruck hydrangea she says, “We had a great plant,” but she admits that she and Charais, both new in their roles at the time, had not yet fully developed the marketing programs, grower communications and supply chains that were needed for a strong launch. By her estimate, it took six to seven years for sales numbers to meet the potential the company felt the plant offered.

In contrast, by the time Summer Crush hydrangea was ready to hit the market, all their tools were at the ready.

“It was a really very focused, multilayered approach to launching that plant. When Summer Crush hit the retail market for the first time in spring 2019, every plant that every grower [wanted to sell] was sold,” she recalls.

According to Charais, some of the components that go into a successful campaign include print, digital and outdoor advertising, social media, public relations and consumer-facing websites that include dealer locators. These programs are shared with growers to promote to their customers, along with point of purchase materials and other retailer marketing tools. The brands also put resources into consumer education, under the theory that a homeowner who knows how to grow the plant will be more successful, and more likely to buy again. For example, Proven Winners sponsors the YouTube Garden Answer channel, which Carmolli calls “outrageously successful.”

A portion of the marketing fee also typically goes toward marketing programs aimed at growers, including cultural information.

“While the end goal is to reach the consumer with a great message, it all starts with the grower and making sure they’re supported well from the beginning,” Charais says.

Why would a grower want to support marketing going to other growers? According to Hamill, the answer lies in a robust supply chain to support the demand the brand is creating through consumer marketing.

“Remember there’s not just one company that’s growing and representing that brand, but that there’s a coalition, if you will. Simply put, that’s where the power of the brand really resonates. If you try to forge that road on your own as either a grower or as somebody trying to market your brand without strong strategic partners, it’s really hard to get off the ground,” Charais adds.

National brands in a regional market

Carmolli thinks “the objections [to marketing fees] are really simple — it’s ‘I don’t want to spend extra money on a plant.’”

But for Ed Tankard at Tankard Nurseries on Virginia’s Eastern Shore, the reasons are more complex than that. A lot of his objections have to do with national programs not working at his local level.

“I don’t really relish the idea that someone from another area of the country is doing marketing for my region or market segment,” he says.

Feeling a demand in his region for native plants, he wants to be able to keep his plant choices tailored to the local climate.

He also suggests that perhaps a national approach does not send resources where they need to be and may be promoting poor performing plants.

“We’re not interested in including the newest vogue plants until they have proven themselves,” he adds.

Chase Johnson, vice president at Johnson Nursery Corp. in Wilmington, North Carolina, admits he also feels the push from national brands to grow their entire line, but says, “It isn’t a pain point for me. I get that perspective that the brands are trying to go national, and they are. But I feel like they’ve given us enough power…to say to certain [customers], ‘Here’s what you want to focus on.’”

Nickel and diming on pots and tags?

Where Chappell thinks the brands lose buy-in and trust among growers is the upcharge on branded pots and tags.

“Most growers look at it as, ‘I’m paying a tremendous amount,’ not just in the royalty fees, but what really gets the grower is they’re paying more for the tag and pot. Those are the two things that really annoy the growers. Not that they have to use [branded materials] — it’s that there’s an obvious, tremendous mark up on the tag and the pot. They see it as a bit of a rip off. I think a lot of growers would just rather pay a higher royalty fee,” Chappell explains.

But Johnson thinks that cost cuts down on competition.

“We believe in the product enough that we want that product to stand out. Of course, if it were cheaper it would be better. But it does allow those of us that really believe in it to stay in it, and those who are on the fence to stay out. The exclusivity is appealing to us,” Johnson says.

The bottom line

In the end, it may not really matter what you think about plant branding programs, Behe says.

“I would encourage [growers] to take a longer perspective and try to put themselves in the end customer’s shoes. Not everyone makes a choice based on a brand, however, there is a significant market segment for most products that prefer a branded product. If [growers] focus on the customers’ perception of the product and the market potential of the individuals who prefer a brand, that’s where they can begin to see a profit potential,” Behe says.

Carmolli is also focusing on the consumer when she designs marketing programs.

“[Growers] don’t want to pay a marketing fee, but it’s not going to help them to grow a plant that no one knows about and nobody’s asking for,” Carmolli says. “We want people to not just happen to pick up a plant, we want people to go and to ask them for a plant because they know it’s going to do really well. We want [plant buying] to be purposeful for the gardener, and I think that’s what the marketing fee really provides.”

In the pages below, we will continue this topic by looking at what you can do to reap the most out of your investment into branded plants, including pricing, merchandising and marketing strategies.

Photo couresty of Bailey Nurseries

In the pages above, we heard from industry players who were both for and against charging for marketing programs on branded plant lines. These fees are used to offset marketing programs and resources, including consumer advertising; photography; educational resources; and point of purchase (POP) materials.

Not surprisingly, national plant brand managers argued for the benefits that a comprehensive branding and marketing program can bring in terms of better consumer awareness and higher sales volumes. Growers had differing opinions on whether the additional costs were a means to maximizing sales or a risk to already thin profit margins.

Natalie Carmolli, PR and marketing specialist for Spring Meadow Nursery, part of the Proven Winners brand, asserts that breeding advancements and consumer awareness help growers’ investments into branded plants pay off.

“People are thinking, ‘I need the cheapest inputs possible so that I can get the best margin.’ But when you’re growing plants that take less space, and that perform more reliably, are more attractive to the buyer, and more recognizable to the buyer, you’re really investing in a plant that will increase its margins on its own.”

Matthew Chappell, professor of horticulture at the University of Georgia and state nursery extension specialist who sees both sides of the issue in his dual roles, has a different view.

Instead of trying to make a profit on branded plants, Chappell thinks growers should try to upsell customers who are attracted by branded plants with non-branded plants that offer higher margins.

Ed Tankard of Tankard Nurseries, who shared many of his objections to national marketing programs in part one of this series, rejects this strategy, saying, “Profit margins have been declining precipitously since 2008. I don’t know if nurseries can afford a loss leader.”

Is the price right?

Chappell agrees that pricing is stuck where it was pre-recession.

“Inflation adjusted, plants now are cheaper than they’ve ever been,” he says.

Bridget Behe, professor at Michigan State University in the Horticulture Department and horticultural marketing consultant, suggests going a step further by charging an additional premium on new introductions. “What we should be doing is charging more for newer cultivars. People enjoy fragrance, new colors, novel leaf patterns, [and] some consumers are still willing to buy even if you charge more. Why wouldn’t you take advantage of that?”

However, Behe stresses that timing is everything.

“We only have a short time to mark-up new cultivars and have the competitive advantage. It just breaks my heart when people price a new cultivar the same as the older, established cultivars because they’ve lost the opportunity to make a higher profit,” she says.

Growers who are in close touch with the retail experience agree that an improved plant can command a higher price with consumers.

“Certain plants and certain prices appeal to the right person. They will pay the price for a better product, and the key word there is better,” says Chase Johnson, vice president with Johnson Nursery Corp., a grower which also operates a small retail arm from its location near Wilmington, North Carolina.

“Many of us have shot ourselves in the foot and haven’t asked for the right price. The consumer will pay for it if they’re excited about it, it’s displayed nice and there’s great information about it,” Kane says.

But do retailers feel the same, or do growers risk losing customers by raising prices?

“You live by price, you die by price, because someone can always undercut you,” says Behe. Instead, she suggests offsetting premium pricing by “promoting other attractive benefits that the customer can relate to.”

Kane relies on extraordinary service to put price out of the equation. He even employs dedicated merchandisers to help time-strapped retailers display branded product and use point of purchase (POP) materials to best advantage.

“Growers like us have to provide resources for them,” telling customers, “we can help them set up displays, we can help them manage their inventory, we can help them sell their products,” Kane says.

Safeguard your investment

There are other strategies growers can use and share with their retailer customers to maximize profit potential .

Share the good news. Get retailers excited about carrying branded plants by letting them know what brands are doing to generate consumer demand. Share the lines’ promotion calendars so they can plan for demand by stocking and merchandising the plants consumers are seeing advertised each month. Show retailers how they can use coordinated messaging like social media graphics provided by brands in their own customer communications to amplify promotional campaigns.

Help retailers with displays. “We push all this POP downstream and we assume that [retailers] are going to know how to use it,” Behe says.

Chappell agrees that expecting hourly wage employees to effectively display signs and other merchandising tools is a recipe for failure. Instead of burdening your sales staff with the task, consider following Pride Corner Farms’ example by investing in part time merchandisers to support your IGCs.

Put your own spin on things. Johnson Nursery responded to the call from Proven Winners to create their own video to promote ‘At Last’ rose with winning results. What you don't see in the video is Johnson Nursery’s name. They created this as a resource for their retailers to brand and share with their customers.

If you do not have the time or budget to create something original, you can still find creative ways to reuse what the brand marketing teams make available. Prides Corner Farms repurposed van wraps from Bailey Nurseries’ Endless Summer press tour to turn their vehicles into mobile billboards.

Make it easy. Grouping plants by brand, as done in the Proven Winners ColorChoice destination concept, is another way to make things easier for retailers and their customers. Behe compares this “store within a store” approach to the way clothing lines are clustered in department stores, allowing shoppers to focus on brands that promise the qualities they are looking for.

But more importantly, it encourages consumers to buy an entire wardrobe. Behe explains that garden centers can sell an entire landscape using the same model. “It isn’t profitable for the IGC to sell [one plant] at a time. Let’s put the outfit together,” she says.

Sell by solution. Behe also likes the way the Proven Winners destinations displays are organized around solutions and thinks this is a strategy all growers can use. “When possible, do some of the work for the retailer,” Behe says.

This means restructuring your product list and offering retailers a certain number of packages based on benefits and not attributes or botanical lines.

“We’re too often very short sighted when we focus on product attributes … that doesn’t tell people what it’s going to do for them in the landscape…. If the grower said, ‘Here’s some packages that I think you could market [by solution],’ let’s present that along with point of purchase displays,” Behe says.

She believes that approach is “the way we’re going to connect with consumers.”

One of the easiest things you can do to make sure you and your customers are getting the most value from marketing fees. Call on brand marketing teams for help.

“We have a whole host of things that are easy to use and easy to start up,” says Carmolli, who wants growers to know, “we’re a resource for them — that’s why we’re here.”

The author is owner of Spot On Communications, specializing in content marketing for the green industry.