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Documente Profesional
Documente Cultură
Thesis Submitted to the University of Agricultural Sciences, Dharwad In partial fulfillment of the requirements for the Degree of
DEPARTMENT OF AGRICULTURAL MARKETING, CO-OPERAATION AND AGRIBUSINESS MANAGEMENT COLLEGE OF AGRICULTURE, DHARWAD UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD-580005
JULY,2007
ADVISORY COMMITTEE
DHARWAD JULY,2007
(R.A.YELEDHALLI) CHAIRMAN
Approved By: Chairman:_________________________ (R.A.YELEDHALLI) Members:1.________________________ (BASAVARAJ BANAKAR) 2.________________________ (JAYASHREE HANDIGOL) 3.________________________ (K.A.JAHAGIRDHAR) _ 4._______________________ (VILAS KULKARNI)
CONTENTS
Sl. No.
Chapter Particulars
CERTIFICATE ACKNOWLEDGEMENT LIST OF TABLES LIST OF FIGURES 1. 2. INTRODUCTION REVIEW OF LITERATURE 2.1 2.2 2.3 2.4 2.4 3. Procurement and Inventory Management Marketing channels for flowers Costs and returns in production and marketing Marketing management of flowers Production and marketing problems
METHODOLOGY 3.1 Description of the study area 3.2 Sampling design 3.3 Nature and sources of data 3.4 Analytical tools and techniques employed 3.5 Definition of terms and concepts used in the study
4.
RESULTS 4.1 4.2 4.3 4.4 4.4 Procurement and Inventory Management of florists Marketing channels for floral products Costs and returns of florists Marketing management of florists Problems faced and suggestions made by florists
5.
DISCUSSION 5.1 5.2 5.3 5.4 5.5 Procurement and Inventory Management of florists Marketing channels for floral products Costs and returns of florists Marketing management of florists Problems faced and suggestions made by florists
6. 7.
LIST OF TABLES
Table No. 4.1 4.2 4.3 4.4 4.5 4.6 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 Title Procurement of cut flowers in North Karnataka. Source of procurement of cut flowers by the florists. Procurement costs incurred by florists in Dharwad Procurement costs incurred by florists in Belgaum. Procurement costs incurred by florists in Bellary. Procurement costs incurred by florists in Gulbarga. Cost of inventory at various stages by florists in Dharwad. Cost of inventory at various stages by florists in Belgaum. Cost of inventory at various stages by florists in Bellary. Cost of inventory at various stages by florists in Gulbarga. Costs of production of floral products incurred by florists. Returns to florists in Dharwad. Returns to florists in Belgaum. Returns to florists in Bellary. Returns to florists in Gulbarga. Costs and returns structure of florists in North Karnataka Promotional expenses of florists in North Karnataka Sale pattern of finished products to the customers Sale pattern of finished products to the customers Month wise demand for floral products Problems faced and suggestions opined by florists
LIST OF FIGURES
Figure No. 1.
1. INTRODUCTION
India is blessed with a diversity of agro-climatic conditions prevailing in the different regions in the country. A wide range of climatic and edaphic conditions in the Indian subcontinent ensure that it is ideally suited to produce almost all the ornamental crops throughout the year. Cut flowers and ornamental plants play an important role in the floriculture industry. In many advanced countries, ornamentals are the major exportable crops. In our country, ornamental commodities will increase tremendously in the near future. Continuous efforts are being made in ornamental crop research during the last five decades which has generated awareness in the recent advances made by the universities and research institutes in this direction. Currently, floriculture is recognised as a lucrative profession. The demand for flowers in the world market is growing at around 15 per cent each year. The floriculture industry in India comprises the florist trade, nursery plants, potted plants (including house plants), bulb and seed production, micro propagation (tissue culture raised plant) material and extraction of essential oils from flowers. The industry is worth $200 million. Flowers like China aster, chrysanthemum, crossandra, gladiolus, marigold, jasmine, rose and tuberose are used in religious and social events. These traditional flowers are grown on large acreage of land, on a commercial scale (out door) for loose flower production. Modern cut flowers like rose, gladiolus, chrysanthemum, carnation, gerbera, anthurium, tuberose and orchids are basically used in floral arrangements. Area under cultivation of ornamental plants in India is: Jasmine (6630 ha), rose (5498 ha), chrysanthemum (3752 ha), marigold (1404 ha), tuberose (912 ha), gladiolus (289 ha), orchid (46ha), gerbera (36 ha) and carnation (16 ha). Credit for this cultivation goes to the efforts of multidisciplinary group of scientists from several state agricultural universities and other national institutes
Global Scenario
The world cut flower industry is a highly dynamic industry. Product varieties, the origin of production, production techniques, markets and retailing arrangements are all undergoing continuous change, challenging the adaptive capacity of the factors involved. In a slowly but steadily growing world market new developing country exporters are gaining market share at the expense of existing producers. These producers try to stay ahead by raising productivity and through diversification and innovation. The world cut flower trade is characterized by a high degree of concentration by product and sources. Roses are the main traded product; Germany is the main market for imports, and the Netherlands the world's leading exporter.
Customers have divided opinion over the price that the florist charges them for flowers. Price normalization and price bands especially during seasons can improve the scenario. If the customer feels cheated for the price that he is charged, he will continue to shy away from becoming a regular and voluminous customer. Highly disorganized state of the flower market will make it very difficult to achieve price normalization and price-bands. Efforts to bring in the floral marketers under one community will help the cause. Most of the floral retailers and wholesalers occasionally advise their customers on the buying pattern. The retailers should further develop the communication with the customers, with an initiative coming from the retailers themselves. Most of the flower retailers are illiterate and poor communicators. They also have poor knowledge about the flowers, especially about those which are not available with them. Retailers may offer some scheme whereby customers may become eligible for some free flowers or gifts on the next purchase in case they refer some friend to his outlet. Such promotion schemes will work to really conceive the retailers. Flowers if associated with human values and culture can increase the non-verbal expression of the flowers to a large extent. This is not a simple process since customers may take a long-time to imbibe such relationships. Flowers can be offered as combo-products with cards or gifts and customers may be provided the combination at a slightly lesser price than the cumulative prices of both the products. Owing to the perishability of the flowers such combo-products have to be carefully made. Worship and religious purpose form the prime reason for flower use among majority of customers. Instead of pushing modern cut flowers too hard, marketers should perhaps try to cash on the traditional flowers owing to their strong religious and cultural affiliations. Cut flowers present a high margin and lucrative option to the retailers. Besides, the scope to develop other products from flowers such as bouquets, baskets, wreaths, pots etc. is very high. Most of the customers are aware of the number of flower retailers in their area. This shows that although the retailer location density is not very high, the present number of retailers has a high visibility. This can be used as a cushion to launch the aggressive marketing drive. The high degree of visibility of the floral-retailers is perhaps due to the high degree of visibility that flowers enjoy naturally and not because of the popularity of the retailers. So the retailers in spite of the high visibility have to create a good image of them. Customers in general think that advertising and promotional schemes will help to enhance the marketability of flowers. In the opinion of the customers, television can be the most effective medium for advertisement and promotion of flowers. Promotion of the flowers on television and other media (internet already being used) can really help to create awareness and flair for enhanced use of flowers. Advertising in a largely unorganized sector may be a tough call. However, floriculture sector can take a leaf out of some other largely unorganized sector like milk and egg sectors. These sectors have seen the formation of associations or councils, which have promoted the product rather than the brand. Occasionally florists do offer any type of promotional or seasonal discounts. Certain sales promotion efforts like discounts, free gifts etc. can really push the sales. The scene is totally different at present, where in fact the retailer is charging more during festival seasons rather than offering discounts. A large majority of customers are not aware of branded flowers. Branding of flowers and floral products can help the innovative retailers to really differentiate their product on the basis of quality i.e., freshness, shelf life, colour, aroma etc. Branding of flowers is a new concept in India. Such efforts no doubt are beneficial but because the sector is largely unorganized, there is hardly any awareness or understanding of branding among general customers.
balance in nonperishable floral products. Industry retail sales increased significantly in the recent years.
Indian Scenario
Flower industry is emerging as a blooming business not only in India but in other countries as well. Flower industry /floriculture denotes cultivation of flowers, developing new varieties of commercial value, sale of flowers as raw commodities, processing, distribution etc, for the local and international market. After liberalization, the government of India identified floriculture as a sunrise industry and accorded it 100 per cent export oriented status. In the flower industry, cut flowers have assumed prominent place in respect of consumer use. From amongst wide range of flowers, only certain type of flowers are grown as cut flowers because of their special features. Final consumer use of cut flowers is different from other flowers. Cut flowers are mainly used for preparing bouquets. India is a minor player in the global floricultural trade. Indias foreign exchange earnings from cut flowers is Rs. 30 crores, accounting for less than one percent of the world trade with the industry beginning to blossom, it is estimated that the country has the potential to capture 10 to 15 per cent of the world trade. In India, flowers are grown in an area of 1.16 lakh hectares (National Horticulture Board 2004-05), out of which 45,000 hectares is under modern cut flowers such as rose, chrysanthemum, gladiolus, carnation, tuberose and orchids. Cultivation of traditional flowers such as jasmine, marigold, champaka, barleria and crossandra still dominate the floricultural scenario in our country. Indias market for floricultural products is focused mainly at the USA, European and West Asian countries. Among different floricultural products, cut flowers dominated with a share of about 65 per cent of the total exports (Siddique and Seth, 1996). Indias floricultural exports have recorded a steady compound growth rate at 3.89 per cent per annum from 1980-81 and 1995-96 (Kundu et al. 1997). Indias floriculture exports have recorded a robust growth from Rs 180 million in 1993-94 to Rs 3.05 billion in 2005-06. The domestic floriculture industry has been witnessing an unprecedented growth during the past years and has also been getting increased acceptability in world markets, currently estimated at US$ 50 billion. The floriculture industry has been growing at an annual rate of 17 per cent, which has also seen a number of corporate houses entering the fray during the past three to five years. Higher standards of living and the growing desire to live in an environment-friendly atmosphere have led to a boom in the domestic market as well.
Karnataka Scenario
Karnataka is considered as one among the progressive states with excellent potential for horticulture development in general and floriculture in particular. Many flowers such as rose, gladiolus, tuberose, aster, chrysanthemum, jasmine and crossandra are commercially grown in the state. The above flowers are spread over ten different agro-climatic regions with a production of 1, 50,024 in numbers (National Horticulture Board, 2004-05). Karnataka accounts for the production of about 50 percent of the total roses produced in India. Karnatakas share in Indias total flower exports is about 50 percent with almost 99 percent of them constituting roses. The AEZs for flowers being set up in the state covering urban and rural Bangalore, Kolar, Tumkur, Coorg and Belgaum is expected to attract more growers and will produce more flowers for exports.
complain that they do not receive fair prices for their flowers due to inefficient marketing system. The absence of proper grading at the growers level has further aggravated the problem since there is no incentive to good quality flowers. The price of flowers depends on the quality, supply pattern, demand and freshness. Unlike other commodities, there is little organized market for selling cut flowers. Another dimension added to the floriculture trade in country is the growth of florists and retail shops. Besides, some vendors who sell the cut flowers from pavements on roadsides have up-market shops and boutiques in major cities. The large super markets and retail chains coming up across the country are further fillip to this growth. Though each one of the market intermediaries in the cut flower chain plays a specific role, the retailer at the fag end of the chain is the one who takes a substantial chunk in the consumers rupee and also bears a lot of risk. Since, no information is available about how he handles and assesses the market demand; this study has been undertaken with a specific objective of assessing the profitability and business management strategies adopted by the florists in north Karnataka. Looking at the emerging importance and thrust given to floricultural industry by both central and state governments, it is important to study the different aspects of management of flower business by the retailers. The present study is an attempt to understand the demand and retail marketing of cut flowers in north Karnataka, as the demand for flowers in this area is also increasing at a faster rate with the development of new urban/semi-urban cities and rise in the standard of living of people with the corporate people making their entry to these areas. The study would also shed light on identifying the problems in the retail cut flower trade, so as to come up with appropriate policy measures that are needed to boost the retail cut flower business. Research studies show that the growing affluence and improved living standards of people are triggering a growth in the demand for flowers, particularly modern cut flowers. The demand however, lags far behind the potential. Realizing the importance of retailing of floriculture products in north Karnataka the present study is focused on the following specific objectives. 1. To study the procurement and inventory management of florists. 2. To identify the marketing channels and ascertain their relative costs in marketing of products. 3. To ascertain the costs involved in preparation of different products and returns of florists. 4. To analyze the marketing management of products prepared by florists. 5. To identify the problems faced by florists
2. REVIEW OF LITERATURE
In this chapter, an effort has been made to critically review the literature of the past research work relevance to the present study. Since, the studies related to management of florists and their business relatively few; the available literature on the related subject has been reviewed and presented under the sections namely 2.1 2.2 2.3 2.4 2.5 Procurement and Inventory management Marketing channels for flowers Costs and returns in production and marketing Marketing management of flowers Production and marketing problems
2.1
Heyes and Baker (1980) based on the location of the inventories located in the production cycle classified them into four different categories namely raw material inventories, work in process inventories, finished product inventories and work in sales inventories. Jairath et al. (1981) evaluated mandi milk supply scheme which collected milk from 100 villages covering a distance of 50 kilometers, with five chilling centres. They found that the milk procurement cost worked out to 40 per cent of the total cost of marketing milk. Singh et al. (1983) studied the management of milk procurement from three villages by co-operative, private and public sectors district of Andhra Pradesh. They found that monthly variation in milk prices was almost constant in case of co-operatives. Whereas, in private sector, it was high during three months of the study period that is, April to June, while the public sector varied the price quarterly. Nagaraj et al. (1989) in their study on evaluation of the performance of Karnataka Agro Fruits ltd. Bangalore noted that almost all the fruits except mango were procured through Horticultural Produce Co-operative Marketing Society (HOPCOMS). The mango was purchased directly from the producer farmer. Natarajan (1990) observed that the major cost in milk production was cattle feed (20%). He suggested that Agricultural Price Commission in consultation with Economic Ministries and Planning Commission to recommend, from time to time to the procurement and support prices of milk and milk products as done for other agricultural commodities. In addition, he reported that for better performance of Dairy Co-operative Societies (DCS), four factors were important viz., high milk utilization, better milk marketing, distribution of cattle feed and credit for buying and technical assistance to milk producers through co-operatives. Ali (1992) in an analytical study on fruit processing units in private and public sector located in Bangalore found that the annual procurements of raw materials to be higher in case of private sector units over that in public sector units and above 591.75 MT (valued at Rs. 11.59 lakh) for public sector unit. Amrutha (1994) in her study on economics of processing paddy in Chitradurga and Dharwad districts revealed that the total cost of procurement incurred by an average size rice mill was Rs. 20.83 per quintal, of which Rs. 10.54 (50.6%) spent in transportation which was found to be maximum, while amount spent on gunny bags, Rs. 2.46 (11.81%) was found to be minimum. The market fee and commission accounted for 37.59 per cent of the total cost. Dev (1998) in his study on cashewnut processing units in Uttara Kannada district of Karnataka found that storage cost, cost of maintaining the stock and interest on investment carrying the inventories as the main components of cost of inventory management. Further he observed that the total per quintal costs on carrying the inventory to be about Rs. 536.42, Rs. 558.33 and Rs. 545.60 for small, medium and large units, respectively. In overall inventory
carrying cost about 99.73 per cent was contributed by storage cost and stock maintenance cost put together. Tondon (1999) suggested the strategies of vendor realization, strategic sourcing and demand forecasting as the main tools for tackling the costs associated with inventory management. Kamat (1999) in his study on different strategies for inventory management opined that demand forecasting and just-in-time method were helpful in reducing the inventories in store, sales and in process. Further he also stated that the demand forecasting strategy can be executed within 14 to 21 weeks while the just-in time strategy can be executed within 5 to 10 weeks. Ali (2000) in his study on Business performance of co-operative oil mills observed that the interest on capital locked in carrying the inventory, store maintenance and storage costs and material losses were the major components in the overall cost of the inventory management for both large and medium scale units. Lichtenberg and Zilberman (2000) developed a model to examine storage technology choices in the inventory management of commodities that are relatively highly perishable, and their impacts on resource allocation, prices, the environment, and the economic welfare of consumers or producers. The model was used to derive the socially optimal level of spoilage reducing input use and to examine the effects of alternative policies for addressing environmental damage on supply, market equilibrium and consumer and producer incomes. It was shown that storage technology choices affect total output as well as the temporal distribution of supply, consumption, and prices. Reddy (2004) in his study reported that most (61%) of the retailers get their requirements from wholesalers, 15 per cent from the large and other retailers. Over 17 per cent of the selected retailers get their goods from more than one source, but a small percentage of retailers get some of their requirements from producers. From the side of the terms of supply 67 per cent of retailers get their requirements by paying cash. Only 13 per cent of the retailers get their requirements on credit and 19 per cent get credit partly from the suppliers. Apart from this, the study also shows that the organized retailers/ hyper malls and super marketers get wholesales margin plus concession as they buy in bulk and are also the producers.
2.2
Varadarajan and Raveendran (1976) identified the following marketing channels for flowers in Coimbatore region: Producer Producer Producer Wholesaler Wholesaler Wholesaler Retailer Consumer
From the study it emerged that wholesalers largely financed the flower trade and undertook risks in marketing. The producers and retailers were observed to have weak marketing power. Subrahmanyam (1986), tracing the marketing channels for chrysanthemum in Kolar district, observed that most of the cultivators (92%) in Chikkaballapur taluk sold their produce through commission agents. Whereas, in malur taluk most of the cultivators (81%) sold through pre-harvest contractors. Subrahmanyam (1989) made an in detail study relating to marketing of flowers such as jasmine, rose, chrysanthemum and marigold in Karnataka. It was observed that the cultivators followed mainly two channels of marketing viz., selling through commission agent at the market (channel I) and selling through pre-harvest contractors (channel II). In case of jasmine and rose most of the cultivators sold through commission agents. Sales through preharvest contractors were negligible forming only two per cent in case of jasmine, 14 per cent in marigold and 45 per cent in chrysanthemum.
Vedini and Gracy (1995) identified the channel comprising of producer trader cum commission agent marketing of jasmine in Mysore. retailer consumer as the major route in
Gulegudda (1996) studied production and marketing of flowers in Dharwad district and identified the following two channels: Producer Producer village trader consumer retailer consumer
The latter channel was found to be most popular. Chengappa et.al. (1998) identified three main marketing channels in marketing of cut flowers in Bangalore. Producer Producer Producer wholesaler florist/retailer florist/retailer consumer florist/retailer consumer consumer
pre-harvest contractors
From the study it revealed that the producers sold cut flowers through different channels and the retailers were observed to have a strong market power. Mukherjee and Shajahan, (1998) had observed four channels for cutflower (spike) trade in different districts of West Bengal. Producer Producer Producer Producer Paiker Paiker Retailer Wholesaler Retailer Retailer Consumer
Consumer
Wholesaler
The study revealed that the paiker, wholesaler, retailer was the most sought of channel for marketing of cut flowers. Gajanana and Subrahmanyam (1999) conducted a study on marketing of cut flowers a case study of gladiolus in Karnataka. The marketing channels identified by them were, Producer Producer Wholesaler Contractor Retailer Retailer Consumer Consumer
The channel I was found to be more efficient as most of the cut flowers were marketed directly to florists/wholesalers through mutual negotiations. Goyal, (1999) studied the economics of Rose cultivation and its Marketing in Sonepet district of Haryana state and identified the following two channels. Producer Producer Commission Agent Retailer Consumer Retailer Consumer
The research revealed that the channel II seems to be more efficient because the intermediaries margin was shared by the producers, consumers and also by the retailers themselves in the form of profit margin.
2.3
Acharya and Patil (1970) worked out the economics of chrysanthemum cultivation in Ahmednagar and Parner Tehsil of Ahmednagar district. The total cost of cultivation was estimated at Rs. 4,072.75 per acre. The major item expenditure was on marketing of flowers (Rs. 2,038.70) which comprise of weighing, hamali, transport, cost of baskets, postage and commission. The average yield of flowers was observed at 3,876 kg per acre, which fetched a
gross return of Rs. 8,699.22 resulting in a net profit of Rs. 4,626.47 per acre. Thus, chrysanthemum cultivation was found to be profitable. Moore et al. (1973) referred marketing costs as the expenses incurred in the marketing process. They included not only the cost of performing the various marketing functions but also taxes and other assessments as well in arriving at the marketing cost. Pawar and Patil (1976) worked out the per unit marketing cost of different fruits in Bombay. This study revealed packing and transportation as the major component of marketing costs in fruits like sweet orange, apple, grape and mango. Varadarajan and Raveendran (1976) analysed flower marketing in Coimbatore city. The total cost of cultivation of jasmine was estimated as Rs. 5,448 per hectare. The net profit realized amounted to Rs. 2,209 per hectare. It was indicated that a large percentage of labour was used for harvesting of flowers. Suryawamshi and Kahage (1979) while studying the marketing of rose in western Maharashtra found that the producer received Rs.2.31 per dozen of flowers which was 47.73 per cent of the consumers rupee. The commission charges and profit of traders formed more than 43 per cent of the total cost. Nambisan and Krishnan (1980) in the study relating to economic aspects of Gundu mallige, a variety of jasmine, revealed that profitable yield could be obtained upto 20 to 25 years. On an average, the crop cultivation per hectare was estimated at about Rs. 25,000 for the initial five years. The anticipated receipts for the same period were calculated at Rs. 62,000 leaving a net profit of Rs. 37,000 for five years. Chinnappa (1981) observed the per acre marketing cost of guava forming 32.21 per cent of the actual cultivation expenses. The major items of marketing costs were commission charges and transportation cost. About 65 per cent of the respondents felt that bus transportation facilities were not timely, while 73 per cent of them reported that transportation cost being very high. Lack of accurate and timely market information on price of guava was felt by most of the farmers. Mahandule (1983) estimated the marketing cost of chrysanthemum to be Rs. 2.35 per kg packing, commission and transportation charges formed the major items of marketing costs. The share of intermediaries in the consumer rupee was high (56.56%) as compared to that of producers (43.44%). The need for enforcement of Product Market Regulation Act for this commodity was stressed in the study. It was also suggested that the cultivators should come forward to form a marketing co-operative to mitigate the problems of marketing. Dangat et al. (1985) conducted repeat studies on economics of production of chrysanthemum in Palmer Tehsil of Ahmednagar district at two points of time. The first study was conducted during the year 1969-70 and the second in1981-82. The study revealed that marketing cost formed a substantial part of the total cost during both the periods. It is interesting to note that the share of marketing cost incurred increased from 38 to 58 per cent from the first to the second period. Rameshkumar (1989) found that a cultivator has to incur an average expenditure of Rs. 222 per quintal towards marketing of jasmine. The study revealed that the commission charges and transportation costs being the major items which accounted for 72.28 and 24.25 per cent of the marketing costs. Subrahmanyam (1989) observed that costs incurred for transportation, packing material, commission charges and marketing fee substantially contributed towards the marketing cost of flowers. Commission charges alone accounted for 68.12 per cent of the total marketing cost while packing material cost accounted for 25.22 per cent. Devi (1990) revealed that a cultivator has to incur, on an average, Rs. 231.50 per quintal towards marketing of kakada flowers. Commission charges and transportation costs constituted 77.75 and 21.82 per cent of the total marketing costs.
Jiyaulla (1993) highlighted the high cost involved in cultivation of chrysanthemum (Rs.10, 353.97 per acre). The labour cost accounted for a major portion of the input costs (35.08%) showing the labour intensive nature of the crop. Chengappa et al. (1998) compared the net returns across flowers such as rose, chrysanthemum, aster, gladiolus and tuberose. The study indicated the net returns to be maximum in rose (Rs. 77,671.56) followed by tuberose (Rs. 57,666.25) and gladiolus (Rs. 61,097.09). In terms of returns per rupee of investment it was observed that tuberose yielded the maximum input-output ratio at 1:3.28 followed by gladiolus (1:2.98), chrysanthemum (1:2.92) and aster (1:2.04). Goyal, (1999) studied the economics of Rose cultivation and its Marketing in Sonepet district of Haryana state identified that the marketing cost incurred by the retailers in case of channel I was Rs. 233.00 accounting for 11.61 per cent of the consumers price. Out of the total cost incurred by the retailers, Rs. 137.9 that is 6.88 per cent of consumers price was paid as commission of commission-agent and other marketing charges (market fee, auction charges, etc.). The other items of the marketing cost included transportation charges, packing cost, spoilage loss, etc. which together came out to be Rs. 94.90, accounting for 4.73 per cent of consumers price. Jyothi and Raju (2003) conducted a study on marketing of crossandra, jasmine and rose flowers in East Godavari district of Andhra Pradesh. They identified that the marketing cost incurred by the producer was Rs. 13.50, Rs. 19.50 and Rs. 9.00 per basket of crossandra, jasmine and rose respectively. Whereas, the cost incurred by the retailer in marketing of crossandra, jasmine and rose was Rs. 11.50, Rs. 12.50 and Rs. 7.50 per basket respectively. Tale et.al. (2003) made a study on the economics of marketing of different flowers in Nagpur district of Maharashtra. It was observed that the total expenditure incurred per kg was lowest in marigold and highest in tuberose. Producer had earned 86 per cent profit in simple rose and 56 per cent in gaillardia. Commission agent earned 98.27 per cent profit and retailer earned 97.28 percent profit. It is concluded that market intermediaries like commission agent and retailers earn huge profit over cost incurred. Rakeshkumar et al. (2004) conducted a study on the marketing of marigold, rose and jasmine in U.P. They identified that the total marketing cost incurred by the producer was Rs. 0.96, Rs. 2.20 and Rs. 1.47 per kg of marigold, rose and jasmine respectively. Whereas, the cost incurred by retailers in marketing of marigold, rose and jasmine was Rs. 0.69, Rs. 1.19 and Rs. 1.08 per kg respectively.
2.4
Varadarajan (1982) studied the seasonal variations in prices of jasmine flowers in Coimbatore city. His study concluded that the seasonal variation in prices goes with very elastic demand and relatively inelastic supply and creates risk of loss through price fluctuations to the traders. This is very high for the retailers who have little protection in the market system. Mitra et al. (1989) reported the seasonal price variation of tuberose cut flowers per kg and sticks per hundred in Noida district of West Bengal. The price of cut flowers and sticks remained highest during the winter quarter (October-December) of the year at Rs. 9.33 and Rs. 11.00 for cut flowers and flower sticks, respectively, while it remained low during the rainy or pre-winter quarter (July-September) of the year at Rs. 3.33 and Rs. 7.00. The upward movement of prices during the winter season was due to high demand in the market owing to marriages and festivals. Another reason for higher prices in winter can be due to low production of these flowers during winter because of their photosensitive nature. Borude and Talathi (1991) studied the seasonal variation in demand and supply of flowers in the Mumbai market. They stated that the flowers have continuous demand due to their social and religious value. The supply of these flowers increases during August to November in response to higher market prices owing to Ganeshotsava, Navaratri and Diwali. Besides, there is more demand for flowers during December due to Christmas and during March to June due to marriage ceremonies.
Chand et al. (1999) made a case study on marketing management of ice-cream in Bangalore. The dairy has a long product-line and product mix. Vanilla flavour accounted for the highest share of the total ice cream manufactured. The dairy followed skimming (targeting relatively prosperous consumers with regard to 'luxury' ice cream products) and penetration (targeting the poorer market segments with ice lollies and bulk-pack products) strategies in pricing of ice-cream. The marketing network was found to be satisfactory. Press advertisements remained the major advertising media for the dairy, although TV advertising had been commenced on a small scale.
2.5
Gopal (1978) made an in-depth attempt to study the problems in marketing of fresh vegetables in Bangalore city. Majority of the farmers felt that commission charges being high and they were forced to dell their vegetables immediately after harvest due to the urgent need for cash. The need for reduction in commission charges, provision of institutional finance, better transportation and storage facilities, establishment of co-operatives and better marketing information system for increasing the returns to growers were suggested. The major marketing problems faced by the producers of chrysanthemum as identified by Jiyaulla (1993) related to high commission charges, high cost of transportation, defective weighment, uncertainties of prices and violent price fluctuations. These problems were reiterated in a study related to jasmine by Guledagudda (1996) in Dharwad district. Chengappa et al. (1998) highlighted the major production constraints in cut flower production. These comprised of high cost of inputs, irregular supply of electricity, high incidence of pests and diseases, lack of knowledge of recommended practices, infrastructural constraints, and scarcity of trained labour and non-availability of quality planting material. The problems identified in marketing of cut flowers related to absence of organized markets, high commission charges, price fluctuations, high costs of transportation and high handling charges. Kadam et al. (2000) conducted a study on constraints in marketing management of oranges faced by farmers in 1998/99 in Amravati district, Vidarbha region, Maharashtra, India. Results indicate that a majority of farmers had a medium level of marketing management constraints. Education, land holding, socioeconomic status, management orientation, achievement motivation, mass media exposure and knowledge emerged as the important factors which affect marketing management. Major constraints reported by farmers were absence of pre-cooling centres, absence of cold storage centres, high transportation cost and lack of processing units. Rudolph et al. (2000) in their study suggested that the food retailers risk a loss of image or even a loss of the customer if they do not learn to react effectively to failures and improve their service strategy. Rao and Bramhanandan (2003) in their study on problems of retail traders in Guntur district of Andhra Pradesh found that increasing salary, other incentives and working hours were major problems from the employees side. Rent on building was a problem of retail traders (62%) since they were facing many problems from the building owner side like high rent, frequent repairs and demand for more good-will. Apart from these retailers (44%) also had faced many problems on media like high rates, inadequate information and coverage of area and timing problems. Rakeshkumar et al. (2004) conducted a study on the marketing of marigold, rose and jasmine in U.P. A variety of problems were identified by them with the marketing of flowers in the study area. They are, price fluctuation (78.50%), lack of institutional credit facilities (60%), inadequate transport facility (49%), delayed payment for the produce (34%), illegal deduction from the receipts of the farmers (25.50%) and improper weighment in the market (17.50%).
3. METHODOLOGY
In the process of achieving the objectives of the study, it is very important to follow a systematic and scientific approach so as to present and interpret the results of the study or investigation conducted. This chapter on methodology presents the details of the description of the climatic and economic feature of the study area, the sampling procedure, nature and source of data collected, analytical tools and techniques employed to evaluate the objectives of the present study. The details are presented under the following headings. 3.1 3.2 3.3 3.4 3.5 Description of the study area Sampling design Nature and sources of data Analytical tools and techniques employed Definition of terms and concepts used in the study
3.1
3.1.1 Location
The state of Karnataka is situated on a tableland where the Western and Eastern Ghat ranges converge into the Nilgiri hill complex, and is confined roughly within 11.5 degree North and 18.5 degree North latitudes and 74 degree East and 78.5 degree East longitude. The State is bounded by Maharashtra and Goa States in the North and NorthWest; by the Arabian Sea in the West; by Kerala and Tamil Nadu States in the South and by Andhra Pradesh in the East. The State extends to about 750 km from North to South and about 400 km from East to West, and covers an area of about 1,91,791 sq.km. It accounts for 5.83 percent of the total area of the country (32.88 lakh sq.km) and ranks eighth among major states of the country in terms of both geographical area (1.92 lakh kms) and population of 5.27 crore (2001 Census). The present study pertains to the state in general and North Karnataka in particular which covers Dharwad, Belgaum, Bellary and Gulbarga districts, which have commercial importance in trade and standard of living. Realizing the importance of cut flowers in the upcoming urban/semi-urban regions, especially in the above mentioned districts, therefore the study has been taken up in these areas.
1. Dharwad
The twin cities of Hubli-Dharwad are located at a distance of around 430 km from Bangalore, the capital of Karnataka state. The climate is hot and wet during the summer and rainy seasons and pleasant during winter. Dharwad is the administrative capital of the Dharwad district and Hubli serves as the commerce center. Dharwad is a quiet, pleasant, and fast growing city in the northern part of Karnataka. Together with Hubli, which is a city twentytwo kilometers away, Dharwad forms a twin city. These cities covers an area of 202.4 Sq Kms with the urban population of 7, 86,018 (http://en.wikipedia.org). Today, Dharwad has grown beyond its borders, with industries dotting both its northern and southern boundaries. In years ahead, it promises to be a beehive of commercial activity. The location of the city on the NH4 makes it equidistant from two of the most industrialised centers in the country - Bangalore, the capital of Karnataka state and Pune the 2nd most industrialised city in Maharashtra. The Hubli Dharwad twin cities form next only to Bangalore with many commercial establishments and industries which are coming up in the recent times with IT industry looking places for their establishments and hence provide ample scope for the floral industry.
2. Belgaum
Belgaum is one of the fastest growing cities in the northwest part of Karnataka. The district of Belgaum borders Maharashtra and Goa. Belgaum is accessible via air from Bombay and Bangalore. Belgaum is famous for the sweets and locally made ice cream. Belgaum is also home to several divisions of the Indian Armed Forces. The Commando School of the Indian Army is also situated in Belgaum. The Indian Air Force has a big airbase near
Belgaum. As of 2001 Census, the city had an area of 94.08 Sq Kms with population of 3, 99,653. The city has an average literacy rate of 78%, higher than national average of 65% (http://en.wikipedia.org).
3. Bellary
The Bellary district lies between 14o 131 to 150 501 north latitude and 750 401 to 0 1 77 11 east longitude. The district covers the geographical area of 8, 13,196 hectares with a population of 16, 56,000. The district has a dry and healthy climate with annual rain from both south west and north east monsoon rains. The ten taluks of the district put together are having 97,017 hectares of forest area. The district is suitable for raising cereals like paddy, bajra, maize, and jowar; pulses like Bengal gram, tur, cash crops like sugarcane, cotton and flowers.
4. Gulbarga
Gulbarga district lies between 160 121 to 170 141 north latitude and 760 041 to 770 421 east longitude. The district covers the geographical area of 16, 10,208 hectares with a population of 25, 82,169. The district has five taluks and around 68, 759 hectares of forest area. Gulbarga city to its border with Hyderabad gives Gulbarga a unique opportunity for establishment of commercial ventures. This gives scope for demand for variety of floral products in the city. The major crops are cereals like jowar, maize, paddy, wheat; pulses like tur, Bengal gram; cash crops like cotton, sugarcane and flowers are grown. The district has a dry and healthy climate and receives a good amount of annual rainfall.
3.2
Sampling design
Multi stage random sampling was followed for the selection of the florists (retail shops) in the study area. The present study pertains to the state in general and North Karnataka in particular which covers Dharwad, Belgaum, Bellary and Gulbarga districts, which have commercial importance in trade and standard of living. Among these districts only the cities of Dharwad Hubli, Belgaum, Bellary, and Gulbarga were taken for the study as more number of florists existed in these cities when compared to its taluks. Realizing the importance of cut flowers in the upcoming urban/semi-urban regions, especially in the above mentioned cities, the study has been taken up in these areas and selected for data collection. Twenty units in each city were selected for data collection. In the initial stage, Karnataka state was selected as it is one of the leading states in flower producing and marketing in India. At the second stage, North Karnataka was selected for the growing importance for flowers. At the third stage, four cities across North Karnataka such as Hubli-Dharwad, Belgaum, Bellary and Gulbarga were selected which have commercial importance in trade and standard of living, and among the districts only the HubliDharwad, Belgaum, Bellary and Gulbarga cities were selected. In the last stage, 20 retail florists from each city were selected randomly, so, that the total sample size selected for the study were 80. Karnataka state
North Karnataka
Dharwad
Belgaum
Bellary
Gulbarga
20 florists
20 florists
20 florists
20 florists
Realizing the importance of cut flowers in the upcoming urban/semi-urban regions, especially in the above mentioned cities, therefore the study has been taken up in these areas.
3.3
The research was exclusively based on primary data and was collected from the florists on the various aspects of the retail flower unit using pre-tested questionnaire through personal interview method in order to accomplish the various objectives of the study and are illustrated with their heads as follows. The primary data on procurement aspects like channels of procurement of cut flowers, quantity procured, costs of procurement and inventory aspects like quantity and value of different inventories maintained at different stages and their cost of carrying were collected to understand the procurement and inventory management by the florists. Similarly, the data on problems faced by the florists such price fluctuation in market, quick deterioration in quality, wastage of cut flowers, improper stall location etc., were also collected from the florists.
3.4
In order to analyse the objectives of the study, the data collected were subjected to analysis through appropriate techniques as follows:
3.5
1. Florist: Is the one who buys cut flowers from wholesalers or farmers and sells them as it is or by making floral arrangements to the ultimate consumer. 2. Marketing channel: It consists of agency that performs various marketing functions so as to move the floral products from the florists to the ultimate consumer. 3. Floral arrangements: These are the products produced or prepared by using the cut flowers and other packing materials so as to make it attractive and good looking. 4. Singles: These are the single cut flowers sold loose by just making value addition to it to make it look attractive. 5. Bouquets: It is a bunch of different cut flowers usually most popular among all other floral products. 6. Pot arrangements: These are the bunch of different cut flowers arranged in a good form in smaller to medium pots of different shapes. 7. Basket arrangement: These are also a bunch of cut flowers arranged attractively in a basket in different shapes which are usually made from bamboo. 8. Garlands: The flowers are tied continuously using a thread to give it a semi circular shape with some special flowers used to give a good look to it. 9. Procurement cost of products: It was computed by multiplying the average quantity of each of the cut flower handled per parcel with the average price per bunch of each of the flowers and adding this with items of transportation, loading and unloading charges. 10. Inventory: It is defined as usable but idle resource at different stages.
11. Raw material: It means that the cut flowers brought by the retailers from the wholesalers/local market. 12. Work in process: Here, the cut flowers are processed or made value addition by making it into different types of floral products using some packaging/decorative material. 13. Finished product: After processing/value addition floral products are kept for store. 14. Work in sales: Here, the floral products are kept in the sales counter for sale. 15. Storage cost: It includes the maintenance charges where in the products are stored. 16. RMI: Raw material inventory. 17. WPI: Work in process inventory. 18. FPI: Finished product inventory. 19. WSI: Work in sales inventory. 20. Fixtures: It includes stands, buckets, furniture, glass, lighting, board for which the depreciation is taken at eight years. 21. Inventory and maintenance cost: It is obtained by taking only the material loss cost and maintenance cost. 22. Material loss cost: It is calculated by dividing the average value of inventory in each stage to that of the percentage of loss in each stage. 23. Rent: The average rent value has been taken from all the retailers in the selected cities. 24. Labour cost: The average labour cost incurred by florists has been taken from each of the selected cities. 25. Packaging material: It includes floral foam, plastic and silver papers, tape, thread, thermocol, ribbon and others. Some of these definitions and procedures are adopted from Vinay Kamat, 1999.
26
4. RESULTS
In the present study, an attempt has been made to understand management of flower business in North Karnataka by the florists. In consistence with the objectives of the study, the necessary data collected from various sources were analyzed and interpreted and the results of such analysis are presented under the following headings. 4.1 4.2 4.3 4.4 4.5 Procurement and inventory management of florists Marketing channels for floral products Costs and returns of florists Marketing management of florists Problems faced and suggestions made by florists
4.1
In any marketing enterprise procurement and inventory management forms an important component of business management. Marketing of cut flowers with its unique features of product availability and their marketing poses unique problems in procurement and inventory management. Since, the cut flowers are procured from different locations; it poses a challenge for the florists in the efficient marketing and delivery system. The production of cut flowers is mostly concentrated in the southern Karnataka and thinly distributed in northern Karnataka. Hence, the districts in North Karnataka have procurement and inventory management problems to deliver efficiently to the customers and meet the demand in these non-traditional places.
Sl. No. 1.
Location
Dharwad
2.
Belgaum
4.40
17.60
211.20
3.
Bellary
3.00
12.00
144.00
4.
Gulbarga
3.50
14.00
168.00
were calculated. The average price of the cut flowers and average quantity were taken to calculate the procurement cost of florists. 4.1.3.1 Procurement costs incurred by florists in Dharwad The procurement costs of cut flowers incurred by the florists in Dharwad are presented in Table 4.3. Each parcel of cut flowers procured by the florists contains flowers of different varieties ranging from 10-15 types of flowers such as anthurium, aster, rose, gladiolus gerbera, carnation and other types of cut flowers. The florists usually handled quantities ranging from 1.65 bunches in the case of bird of paradise flowers to 10.00 bunches of gerbera, 8.85 bunches of aster, 7.95 bunches of gladiolus which are largely procured for preparing floral products. The purchase price also varied according to the value of the flowers. The flowers like anthurium, gladiolus, carnation, bird of paradise and orchids usually are priced higher compared to other flowers. Loading, unloading and transportation costs are the major expenses incurred. Transportation costs have a major share where in florists incurred about 141.90 rupees per parcel. The total cost incurred for each parcel was found to be Rs. 3, 958.85. 4.1.3.2 Procurement costs incurred by florists in Belgaum In Belgaum, the procurement costs of cut flowers incurred by the florists are presented in Table 4.4. The florists procure usually cut flowers of different varieties ranging from 10-15 types of flowers such as anthurium, aster, rose, gladiolus, gerbera, carnation and other types of cut flowers in each parcel. The florists usually handled quantities ranging from 2.70 bunches in the case of chrysanthemum flowers to 10.70 bunches of gerbera, 8.15 bunches of rose, 7.85 bunches of carnation which are largely procured for preparing floral products. The purchase price also varies according to the value of the flowers. The flowers like anthurium, gladiolus, carnation, bird of paradise and orchids usually are priced higher compared to other flowers. Loading, unloading and transportation costs are the major expenses incurred. Transportation costs have a major share where in florists incurred about 160.50 rupees per parcel. The total cost incurred for each parcel was found to be Rs. 4, 690.50. 4.1.3.3 Procurement costs incurred by florists in Bellary In Belgaum, the procurement costs of cut flowers incurred by the florists are presented in Table 4.5. The florists usually procure cut flowers of different varieties ranging from 10-15 types of flowers such as anthurium, aster, rose, gladiolus gerbera, carnation and other types of cut flowers in each parcel. The florists usually handled quantities ranging from
Table 4.2: Source of procurement of cut flowers by the florists (N=80) Sl. No 1. 2. 3. 4. 5. Location Dharwad Belgaum Bellary Gulbarga Total Wholesalers 20 20 20 20 80 Local market 3 20 13 20 56
Table 4.3: Procurement costs incurred by florists in Dharwad (Per parcel) Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Cut flowers Anthurium Aster Rose Tuberose Carnation Gladiolus Gerbera Chrysanthemum Lily Bird of paradise Orchid Daisy Golden rod Asparagus Palm leaves Total Average quantity handled (bunch/parcel) 4.25 8.85 6.70 5.35 5.60 7.95 10.00 2.85 1.90 1.65 1.85 6.60 7.10 6.15 3.05 79.85 Average price per bunch 125.00 15.00 60.00 40.00 75.00 70.00 30.00 25.00 50.00 100.00 250.00 30.00 12.00 20.00 15.00 Average purchase cost (Rs) (a) 531.25 132.75 402.00 214.00 420.00 556.50 300.00 71.25 95.00 165.00 462.50 198.00 85.20 123.00 45.75 3802.20 Other expenses (Rs) Loading (b) 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 7 Unloading (c) 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 8 Transportation (d) 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 9.46 141.9 Total cost (Rs) (a+b+c+d) 541.71 143.21 412.16 224.46 430.46 566.96 310.46 81.71 105.46 175.46 472.96 208.46 95.66 133.46 56.21 3958.85
Table 4.4: Procurement costs incurred by florists in Belgaum Average quantity handled (bunch/parcel) 4.90 7.35 8.15 4.75 7.85 6.75 10.70 2.70 5.60 3.10 2.80 7.10 7.40 5.60 3.80 88.55 Average purchase price (Rs) (a) 612.50 110.25 489.00 190.00 549.50 506.25 321.00 67.50 252.00 279.00 700.00 177.50 88.80 112.00 57.00 4512.30 Other expenses (Rs) Loading (b) 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 0.47 7 Unloading (c) 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 8 Transportation (d) 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70 160.50 (Per parcel) Total cost (Rs) (a+b+c+ d) 624.38 122.13 500.88 201.88 561.38 518.13 332.88 79.38 263.88 290.88 711.88 189.38 100.68 123.88 68.88 4690.5
Cut flowers
Average price per bunch 125.00 15.00 60.00 40.00 75.00 70.00 30.00 25.00 50.00 100.00 250.00 30.00 12.00 20.00 15.00
Anthurium Aster Rose Tuberose Carnation Gladiolus Gerbera Chrysanthemum Lily Bird of paradise Orchid Daisy Golden rod Asparagus Palm leaves Total
Table 4.5: Procurement costs incurred by florists in Bellary Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Average quantity handled (bunch/parcel) 3.00 4.95 5.50 4.40 5.05 4.70 5.90 3.15 2.35 2.20 1.90 4.70 4.70 4.95 2.55 60 Average price per bunch 125.00 15.00 60.00 40.00 75.00 70.00 30.00 25.00 50.00 100.00 250.00 30.00 12.00 20.00 15.00 Average purchase price (Rs) (a) 375.00 74.25 330.00 176.00 353.50 352.50 177.00 78.75 105.75 198.00 475.00 117.50 56.40 99.00 38.25 3006.90 Other expenses (Rs) Loading (b) 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 6.25 Unloading (c) 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 7.25
(Per parcel) Total cost (Rs) (a+b+c+d) 385.91 85.16 340.91 186.91 364.41 363.41 187.91 89.66 116.66 208.91 485.91 128.41 67.31 109.91 49.16 3170.55
Cut flowers
Transportation (d) 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 10.01 150.15
Anthurium Aster Rose Tuberose Carnation Gladiolus Gerbera Chrysanthemum Lily Bird of paradise Orchid Daisy Golden rod Asparagus Palm leaves Total
1.90 bunches in the case of orchid flowers to 5.90 bunches of gerbera, 5.50 bunches of rose, 5.05 bunches of carnation which are largely procured for preparing floral products. The purchase price also varies according to the value of the flowers. The flowers like anthurium, gladiolus, carnation, bird of paradise and orchids usually are priced higher compared to other flowers. Loading, unloading and transportation costs are the major expenses incurred. Transportation costs have a major share where in florists incurred about 150.15 rupees per parcel. The total cost incurred for each parcel was found to be Rs. 3, 170.55. 4.1.3.4 Procurement costs incurred by florists in Gulbarga The procurement costs of cut flowers incurred by the florists are presented in Table 4.6. Usually, each parcel of cut flowers procured by the florists contains flowers of different varieties ranging from 10-15 types of flowers. Usually they contain anthurium, aster, rose, gladiolus gerbera, carnation and other types of cut flowers. The units usually handled quantities ranging from 0.45 bunches in the case of bird of paradise flowers to 5.40 bunches of aster carnation and chrysanthemum which are largely procured for preparing floral products. The purchase price also varies according to the value of the flowers. The flowers like anthurium, gladiolus, and orchids usually are priced higher compared to other flowers. Loading, unloading and transportation costs are the major expenses incurred. Transportation costs have a major share where in florists incurred about 163.00 rupees per parcel. The total cost incurred for each parcel was found to be Rs. 2, 500.00.
(Per parcel)
Cut flowers Anthurium Aster Rose Tuberose Carnation Gladiolus Gerbera Chrysanthemum Lily Bird of paradise Orchid Daisy Golden rod Asparagus Palm leaves Total
Average quantity handled (bunch/parcel) 0.70 5.45 5.95 3.85 5.40 4.95 8.20 5.05 1.60 0.45 0.55 4.40 3.95 3.45 3.25 57.20
Average price per bunch 125.00 15.00 60.00 40.00 75.00 70.00 30.00 25.00 50.00 100.00 250.00 30.00 12.00 20.00 15.00
Average purchase price (Rs) 87.50 81.75 357.00 154.00 378.00 371.25 246.00 126.25 72.00 40.50 137.50 110.00 47.40 69.00 48.75 2326.9
Other expenses (Rs) Loading 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 6.05 Unloading 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 6.80 Transportation 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 10.85 162.75
Total cost (Rs) 99.20 93.45 368.70 165.70 389.70 382.95 257.70 137.95 83.70 52.20 149.20 121.70 59.10 80.70 60.45 2502.50
Table 4.7: Cost of inventory at various stages by florists in Dharwad (Per parcel) Cost components (Rs/parcel) Storage & maintenance (b) 4.35 Material loss (in percentage) (c) 6.25 Cost of material loss (d) 67.70 Total (a+b+d) 1155.40
Sl. No.
Inventories
1.
RMI
22.75
1083.35
0.91
2.
WPI
30.50
1452.41
0.73
5.70
8.45
122.72
1580.83
3.
FPI
16.35
778.58
0.53
3.35
5.75
44.76
826.69
4.
WSI
10.25
488.10
0.41
2.90
3.25
15.86
506.86
5.
TI
79.85
3802.45
2.58
16.30
23.70
251.04
4069.78
Note: RMI= raw material inventory; WPI= work in process inventory; FPI= finished product inventory; WSI= work in sales inventory; TI = total inventory
4.1.4.3 Costs of inventory at various stages by florists in Bellary In Bellary also the quantity of flowers kept in work in process inventory was high which was about 23.9 bunches out of the total bunches which accounted for about 60 bunches. The value of the inventory was high in case of work in process inventory valued at Rs. 1, 197.87 and the total value of all the inventories was about Rs. 3, 007.20. The average number of days florists maintained inventory was about 2.35 days for each parcel of the cut flower they procure (Table 4.9). The average total storage cost accounted for Rs. 14.65 for all the inventories. The material loss was high in case of work in process inventory about 8 per cent and the total material loss in all the inventories accounted for 22.55 per cent. The cost of the material loss was found to be Rs. 191.05. The average total cost incurred by the florists for inventory management was about Rs. 3, 212.90. 4.1.4.4 Costs of inventory at various stages by florists in Gulbarga In Gulbarga, all the florists had more inventory as work in process inventory and about 23 bunches were kept in this inventory. The total quantity of inventory kept in different inventories was about 57.20 bunches of cut flowers (Table 4.10). The value of the product in work in process inventory was high which was about Rs. 935.64 and the total value of all the inventories was Rs. 2, 326.90. The average number of days that florists kept the inventories was about 2.26 days. The storage and maintenance cost for all the inventories was about Rs. 15.95. The material loss was also high in work in process inventory which was about 8.05 per cent and the total material loss from all the inventories accounted for 22.45 per cent. The cost of the material loss was found to be Rs. 147.68. On an average the total cost of all the inventories maintained by the florists accounted for Rs. 2, 420.02.
4.2
An attempt was made to trace the marketing channels for marketing of floral products by the florists. In the study area, only one marketing channel for the marketing of floral products was identified. The florists sold the floral products directly to their customers. The important channel involved in the procurement of cut flowers is as follows. Marketing channels for marketing of floral products by the florists Florists Customers
(Per parcel)
Sl. No.
Inventories
Cost components (Rs/parcel) Storage & maintenance (b) 4.70 Material loss (in percentage) (c) 6.05 Cost of material loss (d) 80.31 Total (a+b+d) 1412.51
1.
RMI
26.05
1327.50
0.65
2.
WPI
34.20
1742.83
0.68
6.00
8.00
139.42
1888.25
3.
FPI
16.35
833.19
0.35
3.30
5.40
44.10
880.59
4.
WSI
11.95
608.97
0.29
3.10
3.08
18.75
630.82
5.
TI
88.55
4512.50
1.98
17.10
22.53
282.58
4812.17
Note: RMI= raw material inventory; WPI= work in process inventory; FPI= finished product inventory; WSI= work in sales inventory; TI = total inventory
Table 4.9: Cost of inventory at various stages by florists in Bellary (Per parcel) Cost components (Rs/parcel) Storage & maintenance (b) 5.05 Material loss (in percentage) (c) 5.80 Cost of material loss (d) 51.45 Total (a+b+d) 943.62
Sl. No.
Inventories
1.
RMI
17.70
887.12
0.79
2.
WPI
23.90
1197.87
0.82
4.80
8.00
95.82
1298.49
3.
FPI
11.90
596.43
0.43
2.70
5.65
33.69
632.82
4.
WSI
6.50
325.78
0.32
2.10
3.10
10.09
337.97
5.
TI
60.00
3007.20
2.35
14.65
22.55
191.05
3212.90
Note: RMI= raw material inventory; WPI= work in process inventory; FPI= finished product inventory; WSI= work in sales inventory; TI = total inventory
Table 4.10: Cost of inventory at various stages by florists in Gulbarga (Per parcel) Average value (Rs) (a) 679.36 No. of days stored 0.71 Cost components (Rs/parcel) Storage & maintenance (b) 4.45 Material loss (in percentage) (c) 5.65 Cost of material loss (d) 38.38 Total (a+b+d) 722.19
Sl. No.
Inventories
1.
RMI
16.70
2.
WPI
23.00
935.64
0.83
4.80
8.05
75.31
945.24
3.
FPI
11.40
463.75
0.40
4.05
5.70
26.43
494.23
4.
WSI
6.10
248.15
0.32
2.65
3.05
7.56
258.36
5.
TI
57.20
2326.90
2.26
15.95
22.45
147.68
2420.02
Note: RMI= raw material inventory; WPI= work in process inventory; FPI= finished product inventory; WSI= work in sales inventory; TI = total inventory
(Rs/unit of product)
Sl. No.
Products
Dharwad
Belgaum
Bellary
Gulbarga
1. 2. 3.
4.
Basket arrangement
60.00
80.00
60.00
60.00
5.
Garlands
20.00
30.00
20.00
20.00
Table 4.12: Returns to florists in Dharwad Sl. No. 1. 2. 3. 4. 5. 6. Sale type (per month) Singles Bouquets Pot arrangement Basket arrangement Garlands Total Average sale price per unit (Rs) 7.33 50.00 100.00 120.00 40.00 Average total quantity sold per month 1850 (61.80) 600 (20.60) 130 (4.40) 90 (3.01) 320 (10.15) 3155 Total value (Rs per month) 13560.50 (16.91) 30000.00 (37.42) 13000.00 (16.21) 10800.00 (13.47) 12800.00 (15.96) 80160.50 (100.00)
Note: Figures in the parenthesis indicate the percentages to the total value
Sl. No. 1. 2. 3. 4. 5. 6.
Sale type (per month) Singles Bouquets Pot arrangement Basket arrangement Garlands Total
Average sale price per unit (Rs) 7.33 60.00 120.00 150.00 50.00 -
Average total quantity sold per month 2300 (63.63) 650 (19.44) 150 (4.30) 115 (3.42) 383 (9.92) 3858
Total value (Rs per month) 16859.00 (14.39) 42000.00 (35.87) 18000.00 (15.37) 17250.00 (14.73) 22980.00 (19.62) 1,17,089.00 (100.00)
Note: Figures in the parenthesis indicate the percentages to the total value
Sl. No. 1. 2. 3. 4. 5. 6.
Sale type (per month) Singles Bouquets Pot arrangement Basket arrangement Garlands Total
Average sale price per unit (Rs) 7.33 40.00 90.00 120.00 35.00 -
Average total quantity sold per month 1877 (65.21) 525 (19.60) 95 (4.03) 83.25 (2.90) 238 (8.26) 2878.25
Total value (Rs per month) 13758.41 (22.39) 21000.00 (34.17) 8550.00 (13.91) 9990.00 (16.25) 8330.00 (13.55) 61448.41 (100.00)
Note: Figures in the parenthesis indicate the percentages to the total value
4.4
Sl. No. 1. 2. 3. 4. 5. 6.
Sale type (per month) Singles Bouquets Pot arrangement Basket arrangement Garlands Total
Average sale price per unit (Rs) 7.33 45.00 80.00 100.00 35.00 -
Average total quantity sold per month 1600.00 (62.98) 540.00 (21.23) 103.40 (4.26) 70.80 (2.81) 221.00 (8.69) 2656.20
Total value (Rs per month) 11728.00 (19.83) 24300.00 (41.10) 8272.00 (13.99) 7080.00 (11.97) 7735.00 (13.08) 59115.00 (100.00)
Note: Figures in the parenthesis indicate the percentages to the total value
Table 4.16 Costs and returns structure of florists in North Karnataka (Rs/year
Item of cost
Dharwad
Belgaum
Bellary
Gulbarga
Fixtures Interest on FC @ 12% Depreciation Total Fixed Cost 2. Variable costs Raw material procurement cost Inventory and maintenance cost Rent Labour Packaging Material Promotion costs Total Variable Costs Total Costs (1+2) Total returns Net returns (4-3)
3. 4. 5.
6,08,079.36 41,063.42 25,980.00 32,400.00 36,870.00 1,982.50 7,46,375.28 7,47,717.33 9,61,926.00 2,14,208.67
9,53,040.00 63,292.41 27,780.00 33,300.00 39,030.00 2,005.00 11,18,447.41 11,20,266.14 14,05,068.00 2,84,801.86
4,33,036.80 29620.80 17,700.00 27,000.00 27,270.00 1,960.00 5,36,587.60 5,37,844.55 7,37,380.92 1,99,536.37
3,90,919.20 27,489.84 24,300.00 36,000.00 29,220.00 2397.50 5,10,326.54 5,11,348.89 7,09,380.00 1,98,031.11
Note: Fixtures include cost of stands, buckets, furniture, glass, lighting, board for which the depreciation is taken at eight years Inventory and maintainence cost is obtained by taking only the material loss cost and maintainence cost. The average rent value has been taken from all the retailers in the selected cities The average labour cost incurred by florists has been taken from each of the selected cities. Packaging material cost includes cost of floral foam, plastic and silver papers, tape, thread, thermocol, ribbon and others.
Table 4.17: Promotional expenses of florists in North Karnataka (Rs per year) Sl. No. 1. Promotional measures Dharwad 260.00 (13.11) 512.50 (25.85) 985.00 (49.68) 225.00 (11.34) 1982.50 (100.00) Belgaum 305.00 (15.21) 485.00 (24.18) 930.00 (46.38) 285.00 (14.21) 2005.00 (100.00) Bellary 390.00 (19.9) 440.00 (22.44) 805.00 (41.07) 325.00 (16.58) 1960.00 (100.00) Gulbarga 582.50 (24.3) 632.50 (26.38) 825.00 (34.41) 357.50 (14.91) 2397.50 (100.00)
Pamphlets
2.
Boards/banners
3.
Visiting cards
4.
Print media
5.
Total
Note: Figures in the parenthesis indicate the percentages to the total value
Table 4.18: Sale pattern of finished products to the customers (Per month) Products Sl. No Customers Singles Average quantity sold Family Hotels Govt. offices Private business organizations Decorators Hospitals Total 189.81 149.06 56.06 34.06 129.62 45.87 604.48 Bouquets Average quantity sold 34.50 17.87 27.00 14.62 26.75 15.21 135.95 Pot Average quantity sold 20.87 9.15 15.56 9.50 12.75 9.43 77.26 Basket Average quantity sold 17.31 7.72 9.31 8.16 10.81 7.56 60.87
1. 2. 3. 4. 5. 6. 7.
Months Products Jan-May High High High High High Jun-Aug & Dec Medium Medium Medium Medium Medium Sep-Nov Low Low Low Low Low
three classifications were made for the months as there were similar results obtained from all the florists in the study area. According to the classification made, the months between January to May have high demand for all the floral products. The months between June to August and December have a medium demand for all the floral products. The months between September to November have a low demand for all the floral products. Some of the singles of flowers like gerbera, carnation and rose will have a uniform/more demand throughout the year.
4.5
In the study made, there were many problems faced by the florists, which are classified under two main types that are in procurement of cut flowers and in selling of cut flowers. All the florists in the study area revealed that price fluctuation in the market and quick deterioration in quality of the cut flowers were the major problems in procurement of cut flowers. These two were followed by problems such as lack of new varieties, lack of continuity in supply and non availability of all varieties and quantity. Most of the florists about 94 per cent of the total florists opined about wastage of cut flowers and lack of awareness among the customers accounted for 65 per cent of the total florists who identified as the major problems of florists in selling of cut flowers. The results are presented in the Table 4.20. Some suggestions were made by the florists for overcoming the problems and to improve the business and to get more profit. Among the suggestions made all the florists suggested for generic promotions to improve the business and to create awareness among the consumers. Also all the florists suggested for the stabilization of the prices of flowers so that there will not be a larger price fluctuation and uniform demand can be maintained throughout. About 50 florists suggested for encouraging the local cut flower growers so that the transportation costs can be reduced and also the cut flowers can be obtained at a reduced price than obtaining from the wholesalers from far places. Some florists also suggested for the development of more contacts with the consumers so that they can get more business from them and in turn obtain more returns.
Table 4.20: Problems faced and suggestions opined by florists (N=80) Sl. No. A. I. 1. 2. 3. 4. 5. II. 1. 2. 3. B. 1. 2. 3. 4. Problems Procurement of cut flowers Price fluctuation in market Quick deterioration in quality Lack of new varieties Lack of continuity in supply Availability of all varieties & quantity Selling of finished products Wastage of cut flowers Lack of awareness among consumers Lack of regular consumers Suggestions for improvement Generic promotions Development of more contacts Stabilization of prices Encourage local cut flower growers 80 48 80 50 100.00 60.00 100.00 62.50 75 52 26 93.75 65.00 32.50 80 80 22 15 5 100.00 100.00 27.50 18.75 6.25 Particulars Retailers Percentage to the total sample size
Number
5. DISCUSSION
The results of the study presented in the previous chapter are discussed in this chapter under the following heads: 5.1 5.2 5.3 5.4 5.5 Procurement and inventory management of florists Marketing channels for floral products Costs and returns of florists Marketing management of florists Problems faced and suggestions made by florists
5.1
5.1.2
The results of the analysis of the source of procurement of cut flowers by the florists that are presented in Table 4.2 reveal that 100 per cent of the florists procured cut flowers through the wholesalers. Since the floriculture industry is concentrated in the southern Karnataka, most of the florists in north Karnataka procure cut flowers from wholesalers located in Bangalore, Pune, Hyderabad and other cities, who transmit the consignments directly to the florists. Hence, there are no intermediaries or agents between them in the sale of cut flowers. Belgaum and Gulbarga cities florists procure cut flowers from local market as some irrigated pockets grew cut flowers which come to the local market and hence procure from local market.
which was about Rs. 1,742.83 because of more quantity of cut flowers stored. A total valve of Rs. 4,512.50 was stored by the florists in different stages of inventories. The florists maintained the cut flower inventory for 1.98 days on an average because the frequency of procurement of cut flowers is more in Belgaum. The average total storage and maintenance cost accounted for Rs. 17.10 by the florists, it is higher than others because of more quantity of procurement. The material loss was high in case of work in process inventory and the total material loss accounted to 22.53 per cent of the total quantity of inventory. On an average the total cost of all the inventories maintained by the florists accounted for Rs. 4,812.17.
5.2
The results from the figure 4.1 reveal that there was only one marketing channel identified for the marketing of floral products in North Karnataka. The florists in all the selected cities sold their floral products directly to the customers because the florists were operating their business in a smaller scale. The florists are now realizing more demand for cut flowers than earlier years. So, they are yet to develop other marketing channel for selling the cut flower products.
5.3
also have a price range varying from Rs. 20.00 to Rs. 500.00, but the most commonly sold price of bouquets is around Rs. 50.00. About 650 numbers of bouquets are sold per month, this shows the demand for bouquets is more than other floral products. It is followed by the returns obtained from the singles which is valued at Rs. 13,560.50 having a share of 16.91 per cent of the total value of products. Then this is followed by the returns from pot arrangement, garland and basket arrangement which are having a value of Rs.13, 000.00, Rs. 12, 800.00 and Rs. 10, 800.00 respectively with a total share of 16.21, 15.96 and 13.47 per cent respectively.
5.4
5.5
The results from the Table 4.24 revealed that florist faced two types of problems that are in procurement of cut flowers and in selling of cut flowers. All the retail florists in the study area revealed that price fluctuation in the market and quick deterioration in quality of the cut flowers were the major problems in procurement of cut flowers. This is because the demand for cut flowers varies in different seasons and also upon the market arrivals and availability of cut flowers. Cut flowers are perishable ones and hence they cannot be stored for many days. Also the climatic factors play an important role in the quick deterioration of the flowers. These two were followed by problems such as lack of new varieties, lack of continuity in supply and non availability of all varieties and quantity. Sometimes there may be a less supply of cut flowers due to loss in production and so there will be a lack of continuity in supply. Most of the new varieties released may not be under extensive cultivation so there will normally be a lack of new varieties. Most of the retail florists about 75 of the total florists accounted for wastage of cut flowers and lack of awareness among the consumers accounted for 52 of the total florists were identified as the major problems of florists in selling of cut flowers. Cut flower requires some processing so as to give a good attractive look, and in the process there will be wastage of some of the flowers and also flowers will be waste if unsold. There is a lack of awareness among the people about the aesthetic value of the flowers and so people still not come frequently for buying cut flowers. The results are on par with Nagendra (1998).
Some suggestions were also made by the retailers for overcoming the problems and to improve the business and to get more profit. Among the suggestions made all the retailers suggested for generic promotions to improve the business and to create awareness among the consumers because for any business to get kick started generic promotions are very essential. Also all the retailers suggested for the stabilization of the prices of flowers so that there will not be a larger price fluctuation and uniform demand can be maintained throughout. About 50 retail florists suggested for encouraging the local cut flower growers so that the transportation costs can be reduced and also the cut flowers can be obtained at a reduced price than obtaining from the wholesalers from far places. Some retail florists also suggested for the development of more contacts with the consumers so that they can get more business from them and in turn obtain more returns. This is given more concentration by most of the florists to obtain contacts of customers and improve their business by keeping in touch with them. The results are on par with Nagendra (1998).
Methodology
Sampling design
Multi stage random sampling was followed for the selection of the florists (retail shops) in the study area. The present study pertains to the state in general and North Karnataka in particular which covers Dharwad, Belgaum, Bellary and Gulbarga districts, which have commercial importance in trade and standard of living. Among these districts only the cities of Dharwad Hubli, Belgaum, Bellary, and Gulbarga were taken for the study as more number of florists existed in these cities when compared to its taluks. Realizing the importance of cut flowers in the upcoming urban/semi-urban regions, especially in the above mentioned cities, therefore the study has been taken up in these areas and was selected for data collection. Twenty units in each city were selected for data collection.
6. Florists in all the cities on an average incurred Rs. 3.00 each for production of singles, Rs. 25.00 to Rs. 60.00 for bouquet preparation, Rs. 40.00 to Rs. 65.00 for pot arrangement, Rs. 60.00 to Rs. 80.00 for basket arrangement and Rs. 20.00 to Rs. 30.00 for garlands production. 7. The returns from the sale of bouquets were high in all the four cities as the quantity sold of these was also high. The customers in all the selected cities demanded more for bouquets followed by singles, pot arrangement, garlands and basket arrangement. The cost of pot arrangement and basket arrangement are more and so customers
prefer for bouquets which are available at cheaper cost than pot and basket arrangements. 8. The florists in Belgaum had better returns as they had more transactions than other florists of the study area. The demand is also more in Belgaum for floral products when compared to other selected cities. 9. The variable costs were found to be high for florists in all the selected cities than that of the fixed costs which was very less. The maximum costs incurred by florists as variable costs are raw material procurement cost, material loss cost, rent, packaging material and labour cost. The florists obtained good returns from the florist business and all the florists on an average obtained an income ranging from Rs. 15, 000.00 to Rs. 23, 000.00. 10. The florists incurred more costs in visiting cards as a means of promotion measure. Most of the florists gave visiting cards to their customers in some functions and other occasions so that they can develop contacts and promote their business. 11. The floral products were sold to different customers like families, hotels, government offices, private business organizations, decorators and hospitals. Among them, families, hotels and decorators bought more of singles flowers. Bouquets were mostly purchased by families and government offices. 12. The demand for floral products was found to be high in January to May and medium in June to August and December and it was low in the months of September to November. 13. Florists major problem in procurement of cut flowers was price fluctuation in the market (100 per cent) and quick deterioration in quality (100 per cent). 14. Florists major problem in selling of cut flowers was wastage of cut flowers per cent) and lack of awareness among the consumers (65 per cent). (93.75
Policy Implications
1. It reveals from the study that the procurement made by the florists were very less to meet the required demand. The cut flowers being highly perishable in nature, the units did not venture to procure large quantities to meet the week long demand. There is an urgent need to create arrangements to stock the cut flowers and increase their keeping quality through adoption of better methods of transportation and storage. 2. Work in process inventory was found to be highest among the inventory levels which could be reduced by efficient methods of quick and safe procurement methods. 3. It reveals from the study that the cost of procurement was high as a result of lone component of transportation which was major source of difference. With the development of logistics, especially transportation, the procurement costs could be reduced which will have the direct impact on the total retail price. 4. The results of the study indicate that among the product mix, bouquets were found to be popular out of the total sales made by the units in all the cities. Efforts need to be made to impart training to the personnel of the units so as to realise better returns from variety of bouquets sold to the customer. 5. The results of the study show that most of the units adopt to use visiting cards and banners/boards during ceremonial occasions to popularize their products and firms. The firms can improve their business through use of the modern methods of promotional methods like video and audio types of techniques to improve their business. 6. The results of the study indicated that the demand for floral products comes mainly from families, hotels and decorators, who usually buy in singles compared to bouquets and other types of products. If we look at the total quantities that are sold by
the florists in all the district head quarters, there is ample demand and scope for floral products. Hence efforts should be diverted towards popularizing floral products through exhibitions, fairs etc. through which the floriculture industry could get a boost in the business. 7. The results on the costs and returns to florists indicate that it can provide better employment opportunities and income to skilled persons and can earn an average income of Rs. 20, 000 per month. The government should devise strategies through training and financial assistance for taking up such ventures especially in these nontraditional areas under study. 8. As revealed from the study, price fluctuation of cut flowers and quick perishability are the major problems faced by the florists. These problems could be overcome by providing better amenities for maintaining stability in prices and to reduce perishability through adequate infrastructure like cold storages, mobile cold chains, providing market finance etc.
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ABSTRACT
Management of florists in North Karnataka was conducted by highlighting the management aspects of florists. The study was made in selected cities of north Karnataka, HubliDharwad, Belgaum, Bellary and Gulbarga. Multistage random sampling was followed for selection of florists in the study area. 20 retail florists from each city were selected randomly and total sample size selected for the study was 80. Tabular analysis was exclusively used to interpret the results obtained from the investigation. The results revealed that, florists in Belgaum were found to procure highest number of parcels per week to the extent of 4.40 parcels followed by Gulbarga (3.5 parcels), Dharwad (3.2 parcels) and lastly Bellary (3 parcels). All the respondents procured cut flowers through the wholesalers. The florists also procured cut flowers from local markets depending on the availability in different months. Procurement cost of cut flowers included the cost of cut flowers, transportation cost, loading and unloading charges. The different stages of inventories are raw material inventory (RMI), work in process inventory (WPI), finished product inventory (FPI) and work in sales inventory (WSI). Of which the inventory was maintained more in case of RMI and the material loss was also more in RMI. The florists obtained more returns by the sale of bouquets than other floral products. The raw material cost was found to be highest followed by inventory and maintenance cost, packaging material, rent, promotional costs and other fixed costs. The florists obtained good returns from cut flower marketing of around two lakh per annum. The florists sold the floral products mostly to the families than other customers. The period between December to May found to have high demand for floral products. Price fluctuation in market and quick deterioration in quality were found to be major problem in procurement of cut flowers for florists.