Task One: Marketing
Erik Toth
Western Governor’s University

A1. New products and services Owning a Christmas tree farm, you must always be looking for new places to market and sell your product. As part of the strategy we will be looking to market Christmas trees to Mexico. Most only think of Christmas trees as the cut tree you place in your house during the holiday season for roughly two weeks. There are other avenues of sales that Christmas trees farms don’t realize that has a huge potential of revenue production. Christmas trees can be dug out of the ground to have a root ball; this enables the tree to be replanted at a later time when the weather and conditions apply. There is another part of the business that I will attempt to market to Mexico and that is wreaths made of Christmas tree branches. These branches are usually left behind in the field to be mulched the next spring. Also there are trees that are unable to be cut to use as Christmas trees that would have to be destroyed and marked as a loss. In identifying if the Mexican market is a place that is in need of Christmas trees and wreaths, the company had to do a mailing survey to home owners and business owners. We also conducted phone calls to three of the larger suppliers in the Mexican market within the country. As a third view of looking at the demand we contacted the large box stores, Home Depot and Lowes to understand their supply and demand concerns. It was identified that all three methods of contact justified they need to enter into this market. All parties explained that there was a huge need for trees and wreaths. The biggest of those contacted were the box stores. They explained that there has been a huge decline in the quality of the product being shipped in to them that they would be willing to look at our product. In the past twenty years there have been many Christmas tree farms that have popped up around the country; everyone saw it as an easy return on investment. Most soon found that to not be so true. They failed to realize all the care that goes into growing a tree: from spraying chemicals so that bugs don’t kill the tree, to simply shearing the tree for it to keep its shape. One of my biggest competitors in the market is only 20 miles away. This company has only been around for 18 years and does not have the experience of growing for 65 years like my company. With these years of experience we know what type of tree to plant in which field as it will grow better there than anywhere else. We know exactly which chemical to spray when depending on temperature, wind and time of year. All of this produces a thicker, fuller Christmas tree which every customer is more interested in. Secondly in discussing with the end user on the mailings and phone calls we discovered that they are unhappy with our competitor’s trees; they turn brown early and needles fall off earlier leading to not being able to be sold. Our trees have been known to last well over three months after being cut before turning brown or losing needles. This is also true of our wreaths, seeing the branches come from our trees the same holds true. Longer lasting and a much fuller tree places ours at the top of the product list. While launching these products in another country there will always be inherent risks, just as there are with your products being sold at the corner store. While moving products locally you have a lower risk of losing product and profit. The biggest risk in launching Christmas trees and wreaths to Mexico is the ability to acquire shipping at a reasonable cost due to the distance and crossing of a border. Most often Christmas trees and wreaths are shipped via ground on the back of a tractor and trailer. This could be very costly to travel 2000 miles. The second inherent risk is being able to keep the sun and heat off the trees during the shipping phase. The excessive heat would damage the trees rendering them unsalable. The best way to minimize these risks is to use cargo shipping via air. This will keep the heat and sun off the trees. Shipping via air in large quantities comes at a lower cost than what ground transportation. Therefore, the product arrives at the final destination in a usable state, in a reasonable time, all for less cost.
A2. Customer Relationship Management (CRM) In doing business you must have a software system to manage all business contacts, information, and billing/invoicing in one program. My company has been using Microsoft Dynamics as our primary CRM. Since most correspondences have to be typed in an email or document state this CRM program allowed for ease of use. This software allows for new customers to be entered into the database keeping a “paper trail” of all interactions with the customers. It keeps track of phone calls and email interactions allowing you or the next person that contacts this client to have an understanding of what the prior conversations were. Also within the CRM there is the ability to track how much product one customer has purchased month by month or yearly and what new products they have voiced interest in your field. This allows for possible business expansion; seeing yearly sales numbers gives you the information you need for making decisions on what products and how many to plant the following year. Within the CRM is the ability to send invoices to customers and receive purchase orders from your clients. This will aid in keeping financial data in one program, tying it to, again, what each customer has purchased from you.
A3. Distribution Channels We will plan on shipping the trees via shipping containers via air. This will allow for an enclosed container to protect the trees and get them to the final destination the fastest. The ability to cut a tree or make a wreath at the beginning of November and have it to Mexico in two weeks will eliminate some of the inherent risks noted above. The use of large box stores will be the end seller of our product. While crossing the border into another country you always stand a chance that your product will be held up in the customs check area. (Carr, 2013) If this would occur with trees and wreaths, time sensitive material, the product could be rendered unusable or delayed in reaching the shelves for sellers to purchase for the holiday season. At any point in time there could be a law made that would not allow the product you are selling allowed into Mexico. In 1994, the signing of the free trade agreement has allowing hundreds of thousands of products being sold in Mexico from the US. (Tuscon Sentinel) This could always be put back into place at any time increasing the cost to supply the product. While supplying the product there are the inherent risk noted above, but there are other risk in production that could inhibit you from having the product on hand. In order to have trees available to cut you must have seedlings to plant approximately eight years prior to put in the ground to achieve proper growth. Year over year you must protect the trees that are growing from insects and diseases. This requires spraying chemicals on the trees, relying on a third party to supply you with the chemicals. There could be a cut in supply of chemicals due to regulations put in place. This would allow the trees to possibly be infected and die. You may have some control over this scenario if other suppliers could provide the needed products. One aspect that you have no control over is the weather patterns. Trees need water to grow. A year of drought could cause significant loss of product. The more mature trees are heartier but seedlings are very vulnerable and must be constantly be watered. This would then add to your cost of labor and equipment.
A4. Pricing Strategy We will be using negotiated pricing in order to sell our products. (cengage) Seeing our products are only sold for a few months out of the year, we can set limits for price and negotiate from there. This strategy allows for everyone within the company to know the exact charge for that product to that particular company. Even though we may be dealing with numerous buyers we can negotiate a separate agreement with each. This can be based on the quantity of product purchased and any other off set cost associated with production. This could also allow us to expand to new customers at a low price negotiation. Even though this could be a break-even sell or possible loss, we have gained a new customer for the next season and can renegotiate a contract at that time. The ability to sell your product depends on your understanding of the associated production costs. For a Christmas trees, the associated cost from beginning to harvest per tree is $12.00. The cost of shipping raises this cost to $16.00 per tree. The wreath cost is $4.00 per wreath; with shipping it raises up to $8.00 per wreath. Ongoing evaluation of the quality of the product must be assessed. If you supply product and no one is purchasing it you must figure out the reasons. Is it because you are priced too high or is it that your quality of product doesn’t match your competitors’? This evaluation must be done at multiple stages of our marketing and sales process. Those same customers that you reached out to during the phone and mailing evaluation will need to be contacted and asked, “For a top notch product are you willing to spend $43 for our Christmas trees?” During the selling phase there will need to be someone in the store evaluating how much product is moving compared to our competitors’ product. If the product is selling, ask the customer why they are purchasing that tree or wreath over the others. At the end of the selling season there will need to be a follow up to the customer to evaluate what they thought of the product. This could be done either via mailing and/or phone call again. Our product will be accepted seeing it is a top quality product at the same price point of the other suppliers. A market evaluation showed that the competitor’s prices per tree were $45.00 and wreaths were $20.00. In the negotiation of price we were able to get agreements to sell trees at $43.00 per tree and $16.00 per wreath. This gave us the information we needed in order to enter the market at a lower price, negotiate, and successfully gain more market share.

A5. Promotional Strategy There are many avenues to gain new customers in the Christmas tree business. One of the most successful is the trade shows that occur across the country. These usually occur in the month of January. Prospective buyers attend and are looking for product for the next season. This would be a face to face interaction allowing you to relate on a more personable level and build a relationship with the buyer. There is potential that this buyer will spread the word to some of his contacts with other stores leading to another point of contact leading to potential more sales. Outside of the trade show you would have to think of other prospective buyers that did not attend. You can reach out to these individuals through mass media releases. I would first use advertising in the box store where our product is sold. If a customer in the store is impressed with our product, they are likely to tell their friends. One of those friends could be the next potential bulk purchase buyer. Secondly, I would do another mass mailing in the surrounding market. This mailing will explain the product, provide pictures, and list selling locations. Another way of potentially getting the word spread about our product is through a sales promotion. You negotiate a price and then part way through the season you cut your price just to be able to sell more products; this could attract the attention of other potential buys looking for a similar deal. The use of social media has grown rapidly in the past five years. We will be using an internet site that has the capability of a mobile site. Our advertisement will scroll in the side bars of internet pages most commonly used in the market, new websites, or public domain sites. The advertisement will allow the customer to click on the tab and take you directly to our site. Our site will then give the viewer a detailed description of the trees and wreaths, pictures of our products, and also provide a listing of the places that our products can be purchased. This will allow for customers to look us up from anywhere in the world. The second use of social media used will be Facebook. This allows us to continuously stay in contact with our customers. Updating our pictures regularly and allowing our customers to see what the others are saying about us in the marketplace. In order to gain more market share and customers, it is always good to have some sort of promotional activity throughout a season. In working with the box store you could have your product placed in one of their weekly fliers that are sent to millions of consumers weekly. In the flier you could offer a coupon giving a percentage off of your products. Another possible activity would be to offer a lower price on wreaths if you purchase a tree or even a free wreath with the purchase of a tree. Another would be to just simply undercut the market price by taking a loss on both of your products just to initially get into the market. As a grower I know that I have so many trees to get rid of this year, if I don’t move those trees I will have to cut them and destroy them taking a total loss. If I can potentially sell them at a loss, I still regain some of the monies spent in production and hopefully gain a market that we didn’t have before.

References Tuscon Sentinel. Retrived January 31, 2016. Retrieved from http://www.tucsonsentinel.com/arts/report/122212_mex_xmas_trees/christmas-inc-american-trees-take-over-mexico/
Carr, M. (2013). Global Expansion and the Need for and Effective Distribution Channel Strategy. http://ng.cengage.com/static/nb/ui/index.html?nbId=41151&nbNodeId=7159619&deploymentId=9296221314011075662709261&eISBN=9781305088559#!&parentId=7159768 Blanchard, D. (2011). Marketing Could be Your Demand Chain’s Weakest Link Industry Week/IW, 260(1), 48-49