by Bill and Mary Weaver
Whether you’re a greenhouse ornamental grower thinking about switching to edibles or a vegetable grower thinking about putting up a greenhouse to extend your season year round or part of the year, the big question is the same: what can you plant that can bring a profit?
The “Marketing Guru” of horticulture at Michigan State University, Dr. Bridget Behe, has some suggestions on how figure this out. Start by Googling a website called city-data.com. “It’s free,” says Behe. “You can find out important demographic information that can be helpful. Type in your zip code, or the zip code where you’ll be selling, and find out the average age, income, country of origin, and household size in that area.
This information can be helpful in many ways. For example, continued Behe, “We know that women over 40 eat the most spinach [and presumably kale] and teenage girls eat the least. Per capita, spinach consumption is highest among those of Asian descent. Spinach, like kale, is a green that comes in a variety of attractive forms that can be eaten fresh or cooked. What do the demographics of your area tell you about the potential for profit of a greenhouse used to grow greens, (or perhaps used for growing hard-to-find ethnic vegetables?)
And “greens” don’t necessarily have to be green. “My Mother used to tell me that people eat first with their eyes. When I can have a plate with different colors – in rainbow chard or red leaf lettuce or tomatoes or bell peppers or melons, the diversity raises the perceived value of that produce, and gives a bit of novelty value also. If foods are unique visually, they capture our attention, and people actually believe the foods will make a more desirable salad or meal.” Tomatoes, of course, also come in orange and in yellow, and in many sizes and shapes. So do sweet peppers. Notice the price per pound of the small, multi-colored sweet peppers, called “poppers,” which provide easy, nutritious snacking.
Are you thinking of growing something new and different? “I tell my marketing students that product life cycles are very predictable,” explained Behe. “If you understand how these cycles work, it can help you to make good decisions.
“Product life cycles are just as predictable as plant or insect life cycles. The only difference is that, with products, we can’t predict how long each phase of the cycle will run. But if we monitor price and availability, we can have a pretty good idea when it may be wise to jump into or out of the market for a given edible. We can also better understand risks and profit potential.
“The first person to enter the market with, say, purple carrots, takes the most risk, but also gains highly defensible ground if that product catches on with a larger audience. By being the first with a new product, you can be seen as an innovator, and other customers looking for that product will be directed to you.”
But very predictably, the first person in an area to market purple carrots takes the biggest risk, and sales will be small at first, although prices will be high. This is because the first group, called “Innovators” willing to purchase a new item is a small group – only 2 to 5% of the market. These are the people who “got to have it” at any price, just because it’s new and different. “This is the riskiest time to enter the market, but your rewards can be high if your product catches on.”
Predictably, the next group to try a new item is a considerably larger one, the “Early Adopters.” At first, they’ll think, ‘Purple carrots? I’m not so sure about that,’ but when they continue to see purple carrots for sale, they will try them. This group will also pay a price premium for the new and different.
“This is a good time to get into the market to position yourself for the next predictable phase in the product life cycle, the time when the ‘Early Majority’ (about 34% of customers), enters the market. This phase is your best time to make money. These customers will still pay a price premium, although not quite as high as before, and there will still be a somewhat limited supply.”
The next stage of the market curve is the ‘Late Majority,’ again about 34% of customers. “The opportunity for profit drops here,” continued Behe. “These customers are typically looking for deals. If you jump into the market at this point, you need to understand the risks.”
The last phase of the market curve is the “Laggards”, about 16% of customers. This is the time to find a new product. Most consumers have gone on to the next new thing. Prices will be low, and you may find yourself throwing unsold product away.
“We wish the whole world would be full of ‘Innovators,’ who would buy early and pay a premium price,” Behe continued. “But human being are very emotional creatures. We can take advantage of that if we understand the predictable product curve, and follow it by tracking prices and product availability, no matter what the product is.
“Whether the product happens to be geraniums, basil or pink petunias, the curve will be the same. The only thing we can’t predict is the length of time the curve will last. With a novelty ice cream product it may three months. With Ivory Soap, it’s been 100 years. That’s why we have to pay attention to prices and supply, so we know where we are in the curve. We can, however, restart the product curve by coming out with new colors, new sizes, and new varieties.”
The price advantage is less fickle with items that do not store well or ship well, are not yet in season, but are in high demand. Behe cited the example of raspberries. If you can get fresh local raspberries to market 2 to 4 weeks early, you will be well rewarded both in price and reputation.
Check with restaurants and distributors to see what is in short supply from local growers and when. If you can supply them with those products when they need them, this is a good way to work into these markets. If you direct- sell, do your market research. Check what is already available in farmers markets, grocery stores, ethnic stores, and convenience stores, and at what price.
Also keep in mind that not all produce items are ideally suited to greenhouse growing. Workers trained to work with ornamentals will need to be trained in safe food handling techniques.
Gather information and consider carefully before you commit yourself to a new direction