Price elasticities of demand for mums and pansies sold in independent garden centers

Abstract

Data from a survey of North Carolina independent garden center customers in Fall 1996 were used to determine the price responsiveness of mums and pansies. A survey was conducted of four garden centers in the Raleigh, N.C., area and four garden centers operating in the Triad marketing area (Greensboro, Winston-Salem, and High Point, N.C.). Information collected on 1608 consumers included various socioeconomic and demographic variables (age, value of residence, type of residence, number of years in the residence, housing tenure, and employment status) as well as plant purchase information (plant price, plant types, and plant sizes). Price responsiveness of consumers was estimated by analyzing how customers' responses change as prices varied from one store to another and from one location to another. Measures of price responsiveness indicated statistically significant price elasticities of demand of -0.76 for mums and -0.80 for pansies. These elasticities can be used to indicate how industry sales would respond to a change to the industry that affects all firms in the same way - such as the response to an increase in energy costs. The paper shows how to use the elasticities to develop particular pricing strategies under different circumstances facing firms in the industry.