feature story



Current efforts to create a national marketing campaign are the latest in a long tradition of industry promotional activities.

by Amy Bauer


In addition to the efforts of businesses throughout the floral industry to raise awareness of their own offerings and services, the industry consistently has been searching for the formula to tap into those elusive shoppers who aren’t choosing flowers, thereby increasing floral consumption across the board. Different tactics have been used over the years. Today, a group is closing in on determining whether another attempt at a unified national promotion of fresh cut flowers and greens is the answer to raising demand. To better understand their efforts, we look at past and present promotional, advertising and public-relations campaigns.

PAST
american floral marketing council

The American Floral Marketing Council was formed in 1969 as an independent committee affiliated with the Society of American Florists (SAF) to boost flower and plant sales between major holidays. This voluntary effort included nationwide radio advertising, billboards, decals on floral trucking company vehicles, and appearances by spokespeople on TV news and in radio and print interviews. Local florists could employ materials such as posters, fliers and radio scripts to engage their local communities.

A voluntary collection system was set up where retail florists could contribute 1 percent of outgoing wire orders; wholesalers 0.2 percent of gross sales; suppliers 0.5 percent; and growers 0.25 percent of sales at the farmgate. A committee of volunteers from a cross-section of the industry oversaw the council’s work.

Jennifer Sparks, SAF vice president of marketing, says AFMC’s annual budget was $5 million at its peak in the early 1990s. While direct measurements of the effects of its advertising messages are difficult to track, Ms. Sparks says, “The industry heard the commercials and reported that their customers were reacting to them.”

Twenty-seven years after its founding, the council was merged into SAF following the implementation of a mandatory national marketing program called PromoFlor. With wholesalers and growers paying into this new marketing pool, their contributions to AFMC waned. “While the AFMC name went away, the function of the program did not,” Ms. Sparks emphasizes. Where PromoFlor was creating a national advertising identity, SAF continued AFMC’s lead with nationwide public-relations programs and local marketing materials.

floraboard
One earlier effort at tapping into a mechanism for a mandatory nationwide promotion was dubbed Floraboard. This campaign, in the early 1980s, encompassed not only cut flowers and foliages but also potted plants. Using mechanisms available under the U.S. Department of Agriculture (USDA), this effort proposed assessing domestic growers and importers of all of these floriculture products 0.5 percent of their sales to fund industrywide research and promotion, increasing that amount in 0.25 percent increments annually up to a maximum of 1.5 percent. Producers or importers with sales less than $100,000 were to be exempt. In order to be implemented, Floraboard required a “yes” vote from two-thirds of the assessable companies, representing at least two-thirds of the assessable companies’ volume. In a 1984 referendum, the Floraboard proposal was rejected.

promoflor
Less than a decade later, a similar effort began. Dubbed PromoFlor, this campaign was limited to cut flowers and foliages and identified “handlers” as the collection point for its 0.5 percent assessment. Handlers were defined as wholesalers, growers or importers who sold cut flowers or foliages to retailers. Those with annual sales less than $750,000 were exempt.

PromoFlor took advantage of the option under the USDA of a delayed referendum, beginning its collections and implementing its advertising program before an initial vote of the assessable companies. The hope was that a successful program would spur a positive referendum vote, as opposed to the Floraboard result. PromoFlor was set in motion with its passage by Congress in 1993, and by the summer of 1995, a PromoFlor Council was established. Annual revenues were projected at $10 million to $15 million, according to a story in the September 1995 issue of Florists’ Review.

In February 1996, PromoFlor unveiled its national advertising campaign featuring “spokesbee” Buzz and his “Think Flowers” message, which played in cable TV and radio ads during nonholiday periods. Though consumer response to the promotion was positive, it didn’t enjoy the full faith of the industry. In PromoFlor’s first industry referendum, in June 1997, 58 percent (or 422) of the assessable entities voted against continuing the program.

Prior to the referendum, an analysis by economist Ronald Ward, of the University of Florida’s Institute of Food and Agricultural Sciences, estimated a $6.62 return for every dollar invested in the campaign and called the public’s recall of Buzz “phenomenal.” In a Florists’ Review story in August 1997, following PromoFlor’s defeat, industry members pointed to the mandatory nature of the assessments and the fact that a limited segment of the industry was responsible for those assessments as part of its downfall.
 

PRESENT AND FUTURE
saf fund for nationwide public relations

After PromoFlor’s defeat, promotional efforts for the industry as a whole were more scarce. “SAF was still promoting flowers with a limited budget out of member dues,” Ms. Sparks explains, “but with increasing costs, our budget became more limited as time went on. Therefore, in 2000, some forward-thinking industry members put their heads together to come up with the SAF PR Fund.”

The SAF Fund for Nationwide Public Relations was officially established in 2001 and is a voluntary effort to build positive floral messages in the context of news. Ms. Sparks says approximately $400,000 has been raised each of the past five years through the support of nearly 2,000 retailers, wholesalers, suppliers, importers and growers. On a voluntary basis, retailers contribute 10 cents from each outgoing wire order, collected through FTD and Teleflora; wholesalers contribute 5 cents per case of hard goods, collected by participating suppliers; hard-goods suppliers match the wholesaler collections; and importers and growers make annual or monthly contributions.

“So far, the effort has funded four consumer research studies and six public-relations programs,” Ms. Sparks details. As of Feb. 23, 2007, the fund had counted more than 744 million consumer impressions (seeing or hearing the message), including 59 national magazine placements and TV, radio, newspaper and online coverage in 160 local markets, which Ms. Sparks says translates to an advertising value of more than $12 million. Local marketing kits released annually to SAF members help florists capitalize locally on the PR messages.

“Our key strategy is to use third-party experts as spokespeople to add credibility to the floral message,” Ms. Sparks relates. “Having world-renowned university researchers talking about scientific proof of the benefits of flowers has been a key motivator for securing nationwide coverage.”

  current steering committee

 
 
Established in spring 2006, the Floral Marketing Funding Initiative Coalition consists of the following organizations, which are represented on the steering committee and have given financial support to the effort.

The Society of American Florists (SAF)
FTD Group, Inc.
Teleflora
Asocolflores, the Colombian Association of Flower Exporters
Association of Floral Importers of Florida (AFIF)
Flower Promotion Organization (FPO)
Produce Marketing Association (PMA)
American Floral Endowment (AFE),
which is prohibited by tax laws from contributing financially
American Institute of Floral Designers (AIFD)
California Cut Flower Commission (CCFC)


Officers are Chairman Harrison “Red” Kennicott, aaf, Kennicott Brothers Company, Chicago, Ill.; President Charles F. Kremp 3rd, aaf, Kremp Florist, Willow Grove, Pa.; Treasurer Clay Sieck, Sieck Floral Group, Baltimore, Md.
 


 

flower promotion organization
The Flower Promotion Org-anization (FPO) is an alliance launched in fall 2000 to take the proceeds from anti-dumping duties assessed on offshore flower growers and use those to grow the U.S. market for cut flowers. Illegal dumping, according to the U.S. Department of Commerce, is when a foreign producer sells a product in the United States at a price below its sales price in the country of origin or at a price lower than the cost of production. A settlement spanning August 1999 to January 2002 put the duties imposed as a penalty into the creation of the FPO. With an agreement by U.S. growers to add their own dollars to this pool and Colombian growers agreeing to continue contributing after the penalty duties had expired, the program was extended 21 months. In January 2004, the parties agreed to another extension, through December 2007.

The FPO’s initial emphasis was campaigns comprising TV and radio ads in Chicago, Ill.; Philadelphia, Pa.; San Diego, Calif.; Detroit, Mich.; and Houston, Texas (with a sixth city, Minneapolis/St. Paul, Minn., added later). A 2004 analysis by economist Mr. Ward noted, “The promotions have impacted the demand for flowers through increasing buyer frequency and, to some degree, attracting additional buyers.” Investments up to that point in the advertising were $6.84 million, according to the study, with 2.02 million added transactions directly attributed to FPO promotions.

Lacking funds to duplicate these results nationwide, the FPO focused its efforts in mid-2004 on public relations. “Although you don’t get the immediate high response from the consumer to public relations that you do from radio and TV, it’s more sustainable,” Executive Director Stan Pohmer relates.

The FPO has teamed with SAF in recent years, contributing $312,500 in 2006 to research the power of flowers. The SAF/FPO Alliance conducted the “Home Ecology Study” and the “Flowers in the Workplace Study,” both led by Dr. Nancy Etcoff, of Harvard Medical School and Massachusetts General Hospital. In 2007, the alliance (with an additional $263,000 in funding, according to SAF’s Ms. Sparks) will be sharing the results of the workplace study with national media and will continue to tout the results of its “Home Ecology Study.”

On April 21, 2006, the FPO board was notified that the California Cut Flower Commission (CCFC), the main vehicle through which U.S. growers were directing funds to the FPO, would suspend its financial support “due to CCFC’s internal budget considerations and changes in its strategic direction and focus,” according to a news release from the FPO. Colombian growers followed suit. Mr. Pohmer says the FPO is operating from its reserves, which he says can support its efforts for a number of years.
 
  statewide marketing

 
 
The California Cut Flower Commission (CCFC) is a program that has been in existence since 1990 at the state level to promote the sale of California-grown cut flowers. The commission operates on a budget created by a 0.5 percent assessment on California cut flower growers whose sales exceed $500,000. In 2006, that represented about 70 qualified growers.

The CCFC, which is overseen by the California Department of Food and Agriculture, was granted another five years in operation after a majority of assessed growers (about 57 percent) voted in November 2005 to continue the program. Regular referendums are conducted to keep the program in place.
 


 

current mandatory effort
For the past year, organizers have been gauging consensus for another attempt at a nationwide floral marketing plan to increase demand for cut flowers and foliages. Formed in March 2006, the Floral Marketing Funding Initiative Coalition has settled on a basic outline, tapped a development committee, drafted a suggested promotion order under the USDA framework and is collecting feedback.

Under the coalition’s draft of the order, domestic growers and importers of cut flowers and foliages would be assessed 2 percent of gross sales. Those with sales less than $100,000 would be exempt. An initial vote of the assessable companies is proposed, where “yes” votes representing a majority of the assessable companies’ dollar volume would be required for the promotion order to take effect. A Cut Flowers and Cut Greens Promotion Council—six importers and six domestic producers nominated by the industry and appointed by the agriculture secretary—would oversee the promotional activities. Coalition president Charles F. Kremp 3rd, aaf, owner of Kremp Florist in Willow Grove, Pa., emphasizes that the details aren’t set in stone.

Organizers estimate $20 million would be raised annually at the 2 percent assessment level, based on $1 billion in industry volume—$650 million in imports and $350 million in domestic production, according to Mike Mellano Sr., part owner of California-based grower and wholesaler Mellano & Company and a co-chairman of the coalition’s development committee.

Mr. Mellano and Gustavo Moreno, president of Miami, Fla., grower and importer Vistaflor International and co-chairman of the development committee, have been meeting with growers, importers and other interested parties in open forums in California and on the East Coast. “What we’re hearing from the growers and the importers is that they’re very concerned that they will not be able to pass on the cost of this program in their pricing,” Mr. Mellano related in late February. Mr. Kremp at the time said that growers and importers were asking for a line-item charge that could be passed on to buyers, while buyers were refusing such a line item, saying instead that growers and importers should build the increase into the price of the product. Another issue that organizers found in their meetings was a high level of support from traditional retail florists, who don’t have a means to participate directly in the promotion order.

Expoflores, the Ecuadorian Flower Growers and Exporters Association, expressed its displeasure with the proposed order in a statement on its Web site, www.expoflores.com. “If this cut flower order is enforced, the Ecuadorian growers will believe, rightly or wrongly, that they will receive lower prices for their flowers,” the organization wrote, going on to say that should growers have to absorb the cost of the assessment, some likely would be forced to close. “Moreover, as neither Ecuadorian, Colombian nor other offshore growers have a vote regarding this cut flower order, Expoflores believes that this order amounts to taxation without representation,” the association wrote.

Mr. Kremp, in a news release answering Expoflores’ points, writes that Expoflores was among those associations invited to join the steering committee but declined. He says Expoflores’ concerns, that the cost of such an assessment would be passed on to consumers, mirror those he is hearing from others. “Their perspective has been well represented by Asocolflores [the Colombian Association of Flower Exporters], AFIF [Association of Floral Importers of Florida] and FPO. Since the issues are not solely felt by offshore growers, CCFC also has made many of the points raised by Expoflores,” Mr. Kremp writes. He also notes that the assessment would be applied equally to all cut flowers and foliages sold in the United States and only to those sold in the United States.

Both Mr. Kremp and Mr. Mellano said in late February that if the vote had to be taken at that time, the promotion order as written wouldn’t pass. But both said the coalition wasn’t giving up and still was assessing options to address the industry’s concerns. Mr. Kremp said at that time, with more meetings scheduled throughout March, that he anticipated knowing by mid-April whether an acceptable course could be achieved. “By June, we’re going to know if we were successful in convincing the industry they should get behind this or if the industry just says, ‘We’re not going to do it,’” he says. “There’s no rush. If we see that there’s a dramatic change that would work, then we start over again.”

Wilja Happé, owner of Brand Flowers Inc. in Carpinteria, Calif., and new chairman of the CCFC, noted one of her goals “is to see if I can find the support within the California industry” for the initiative. She says grower sentiment expressed at the California town hall meetings has shown “that we are all 100 percent in agreement that there has to be more funds available for promotion of cut-flower consumption in the nation ... but we are not all in agreement yet on who should foot the bill.”

Mr. Mellano stressed that consensus is key before moving to a vote. “If it appears that there is no chance for it to pass, we do not want to go to the USDA and ask for an election,” he says. The USDA estimates that the cost for a new marketing program, including both administrative fees for the startup process and for conducting the actual election, can range from $75,000 to $200,000. While those costs will be reimbursed from the assessments if the election is successful, a bond is required to cover such costs if the election should fail.

Mr. Kremp pointed to the declining number of U.S. floral buyers, pegged at 28.3 percent of buying households in 2005 according to the “IPSOS/American Floral Endowment Consumer Tracking Study.” That was a decline of 1.1 million households from 2003. “If any other industry would see that 72 percent of the population do not buy their product, they would be out there spending $100 million or so, and they’d see a great result,” Mr. Kremp says. “We just sit back and beat each other up, and it’s a shame.”
 
  ONLINE EXTRA

 
 
commodity study
Efforts like those of the Floral Marketing Funding Initiative Coalition fall under the Commodity Promotion, Research and Information Act of 1996, a federal law that provides a vehicle for industry collections to support commodity marketing efforts. Such well-known campaigns as those of the beef industry (“It’s What’s for Dinner”) and pork industry (“the Other White Meat”) as well as the American Egg Board (“The Incredible, Edible Egg”) and state efforts like the California Milk Processor Board (“Got Milk?”), which later expanded nationwide, are similar examples.

A September 2006 study, the Floral Industry National Marketing Campaign Feasibility Report, was commissioned from researchers at The Wharton School at the University of Pennsylvania by the floral coalition to assess such programs and the potential for the floral industry.

The study notes returns per dollar spent for other national mandated marketing programs, including $5.80 for the beef industry, $15.50 for the pork industry, $4.30 for the egg industry and $6.26 for the dairy industry. The study also assessed potential net returns to the floral industry over a five-year period based on potential advertising levels from $15 million to $55 million. Potential net returns ranged from $122 million industrywide to $255 million industrywide, but the authors noted “actual returns will depend significantly on execution and may vary dramatically.”

The study’s authors noted in their summary, “All of our analyses suggest that an integrated national marketing campaign for the floral industry would effectively expand revenue and yield a positive benefit-to-cost ratio. While we believe the industry should execute a national marketing campaign, it is critical to conduct further research addressing proper execution, measurement and evaluation of such a program.”

For more about commodity promotions, resources include:
Agriculture Marketing Service, U.S. Department of Agriculture, www.ams.usda.gov
American Beef Council, www.beefitswhatsfordinner.com
The American Egg Board, www.aeb.org
California Avocado Commission, www.avocado.org
California Milk Processor Board, www.gotmilk.com
California Raisin Marketing Board, www.calraisins.org
Cornell Commodity Promotion Research Program, http://commodity.aem.cornell.edu/
National Pork Board, www.otherwhitemeat.com
The Popcorn Board, www.popcorn.org
 


 

You may contact Amy Bauer by e-mail at abauer@floristsreview.com or by phone
at (800) 367-4708. 

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