A viable alternative for dealing with hardwood bark residue is to market the bark as hardwood bark mulch. This paper provides a succinct overview of the hardwood bark mulch industry and discusses considerations of developing a marketing plan for this product.
There are many manufacturers of hardwood bark mulch. There are also many different types and grades of bark. This promotes considerable competition in the industry. Manufacturers differentiate themselves from competitors based on product related attributes, including the species of bark comprising the mulch, particle size, particle consistency and age of the mulch. Likewise, service attributes, such as credit terms, product availability, promptness of delivery (or time to load if picked up at mill) and supplier/purchaser relationships are also successfully used to differentiate between mulch suppliers. The industry also faces competition from substitute products including pine bark nuggets, pine straw, cypress bark mulch, stone and rock chips, and wood chips.
Bark mulch may be sold in bags or bulk. Bagged mulch is targeted primarily toward homeowners and “do-it-yourself” landscapers. The appeal of bagged mulch is its convenience. Unlike bulk mulch, bagged mulch can be transported in the trunk of a car without mess. It is easy to work with and can be purchased in small quantities. Bagged mulch, however, is expensive since the consumer must pay for the additional cost incurred by the bagging operation and the longer channels of distribution needed to get bagged bark to market. Bagged bark is generally sold through retail stores which deal in lawn and garden and landscaping materials. Such stores may range from large chain superstores to small privately owned “mom-and-pop” nurseries. Generally, bagged mulch is of high quality and well processed, a result of the relative low cost of the bark as compared to the bagging costs. Also, automated bagging operations tend to perform best when bagging processed bark.
Bulk mulch is generally targeted to larger users such as professional landscapers. However a limited retail market exists for bulk mulch targeting homeowners. The range of quality across mulch suppliers is much greater in the bulk mulch market than in bagged mulch. Bulk mulch may be highly processed, or sold directly off the debarker without screening or grinding. Likewise, pricing is more varied in bulk mulch, where a trade-off exists between price and quality.
Regardless of whether the mulch is sold bagged, or in bulk, hardwood bark mulch is usually sold based on volume instead of weight. However, bulk mulch is generally sold in units of cubic yards, whereas bagged mulch is sold in cubic feet. There are 27 cubic feet in a cubic yard.
When attempting to penetrate an existing market, a firm should expect to meet resistance from current suppliers. The new entrant acquires market share usually at the expense of existing suppliers. When a new entrant competes against existing suppliers they are usually at a disadvantage. The new entrant does not have the experience, knowledge or customer relationships held by existing suppliers. In the face of such challenges, a firm should have a well planned marketing strategy. At the simplest level, the marketing plan should address the classic four Ps of marketing: product, price, place, and promotion. Each of these areas will be discussed below.
The first concern a firm must address is what product (and service) attributes it wishes to offer. This includes determining the quality of mulch to manufacture, how it will be sold, and what other important differentiating attributes it wishes to offer. In other words, a firm must position itself against potential competitors with respect to its product and service offerings.
Higher quality mulches generally consist of a large percentage of reddish-brown colored barks (such as the oaks), and are more extensively manufactured to produce a consistent texture. Mulches which consist of high percentages of light colored barks such as yellow poplar, are considered less desirable. Likewise, mulches comprised of highly inconsistent particle size are characteristic of low end products.
A firm interested in entering the hardwood bark mulch industry can easily conduct a simple investigation to determine if their bark can be successfully marketed in their region. By simply placing a sample of mulch in a container (filling the bed of a pickup truck works exceptionally well) and visiting potential customers, an assessment of the marketability of the product can easily be accomplished. Not only should the potential customer be asked what they like and dislike about the bark, but also, what characteristics and service attributes they desire from a supplier. Based on reactions expressed by landscapers and other potential buyers, the firm may then consider altering its product and services to target the chosen market.
It should be noted that service attributes can have as great an impact on the customer’s decision to purchase as does product attributes. For example, a landscaper who does not receive payment from his customer until the landscaping job is complete, may not have immediate funds to purchase mulch. This potential customer’s decision to use a particular supplier may be strongly influenced by the credit terms offered by that supplier. The important thing is for the firm to determine which product and service attributes are most important to the targeted market and incorporate them into the marketing strategy. Figure 1 offers a list of product and service attributes which may be considered by a firm in defining their product/service mix.
|Product Attributes||Service Attributes|
|Age of bark||Availability|
|Color of bark||Credit terms|
|Consistency of particle size||Delivery time|
|Packaging of bark||Dependability|
|Texture of bark||Ability to supply large or small loads|
|Personal relationship with supplier|
|Settle disputes quickly|
Once a firm has defined the product and services it wishes to provide, a price structure must be developed. A good starting point is to look at competitors’ products and prices. Differences in pricing across competitors should reflect differences in product quality and service offerings. A firm should determine price structures from its most similar competitors and price its product accordingly. Delivered prices (instead of mill prices) should be used for these comparisons.
Place, to a marketer, refers to defining the targeted market and determining how to get the product to market. A firm must decide who it wishes to sell to and through what channel. Figure 2 shows a flow chart of the channels of distribution typically used in the hardwood bark mulch industry. As shown, the bark producer may sell at any point in the chain of distribution. However, there are tradeoffs in deciding at which point in the channel to sell. Generally the higher up the channel, the lower the price received for the product, but the larger the order. As the firm moves down the channel of distribution, more orders of smaller volume must be sold. This involves increased paperwork and liabilities, as well as additional costs. The firm must decide based on its own situation where on the channel of distribution to position itself.
Potential geographical markets are generally limited to regions near the manufacturing facility. The effective distance in which a firm can be competitive depends on competing mulch prices in the geographical region in question. Potential regions to target can be graphically demonstrated by plotting price data on a map. By comparing the firm’s delivered prices (mulch price plus freight) to average market prices in each region, a map of potentially successful geographical areas can be generated.
Promotion is very crucial when a firm enters a new market. It is very important that potential customers are informed that the new supplier of hardwood bark mulch exists and that the new supplier is offering better products and services. Promotional efforts may involve personal visits to prospective customers (probably one of the most effective), mass mailings to potential customers, newspaper advertisements in regional papers and cold calling prospects identified from yellow page lists, or a combination of methods.
Personal contact with potential customers is critical during the formative stages of the marketing program. Not only does it provide exposure for the firm, but it also provides an opportunity to collect important marketing data. When talking to potential customers, the sales staff should 1) identify what product and service attributes are most important to the customer (this information can be used to refine the product); 2) determine immediate competitors and their prices; 3) identify the competitions’ strengths and weaknesses and; 4) procure leads for other prospective customers. Likewise, personal relationships with potential customers are developed when a face is associated with the supplying company.
The above discussion is intended to provide basic marketing concepts to assist in strategic marketing planning. A well thought out plan greatly increases the probability of success. A firm entering a new market should not do so blindly. The firm should consider current and future demand for the product, the intensity of expected competition and expected profit margins. The risks and expected profit associated with entering the hardwood bark mulch industry should be compared to those of other possible alternatives of handling bark residues.
Publication date: Sept. 1, 1995
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