Karnataka

BUSINESS MANAGEMENT OF FLORISTS IN NORTH

KARNATAKA- A PROFITABILITY ANALYSIS

Thesis Submitted to the

University of Agricultural Sciences, Dharwad In partial fulfillment of the requirements for the

Degree of

MASTER OF BUSINESS ADMINISTRATION In

AGRIBUSINESS

By RAVI SHANKAR .M.

DEPARTMENT OF AGRICULTURAL MARKETING, CO-OPERAATION AND AGRIBUSINESS MANAGEMENT

COLLEGE OF AGRICULTURE, DHARWAD UNIVERSITY OF AGRICULTURAL SCIENCES,

DHARWAD-580005

JULY,2007

ADVISORY COMMITTEE

DHARWAD (R.A.YELEDHALLI) JULY,2007 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. INTRODUCTION

2. REVIEW OF LITERATURE

2.1 Procurement and Inventory Management

2.2 Marketing channels for flowers

2.3 Costs and returns in production and marketing

2.4 Marketing management of flowers

2.4 Production and marketing problems

3. 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 Procurement and Inventory Management of florists

4.2 Marketing channels for floral products

4.3 Costs and returns of florists

4.4 Marketing management of florists

4.4 Problems faced and suggestions made by florists

5. DISCUSSION

5.1 Procurement and Inventory Management of florists





6. SUMMARY AND POLICY IMPLICATIONS

7. REFERENCES

LIST OF TABLES

Table No.

Title

4.1 Procurement of cut flowers in North Karnataka.

4.2 Source of procurement of cut flowers by the florists.

4.3 Procurement costs incurred by florists in Dharwad

4.4 Procurement costs incurred by florists in Belgaum.

4.5 Procurement costs incurred by florists in Bellary.

4.6 Procurement costs incurred by florists in Gulbarga.

4.6 Cost of inventory at various stages by florists in Dharwad.

4.7 Cost of inventory at various stages by florists in Belgaum.

4.8 Cost of inventory at various stages by florists in Bellary.

4.9 Cost of inventory at various stages by florists in Gulbarga.

4.10 Costs of production of floral products incurred by florists.

4.11 Returns to florists in Dharwad.

4.12 Returns to florists in Belgaum.

4.13 Returns to florists in Bellary.

4.14 Returns to florists in Gulbarga.

4.15 Costs and returns structure of florists in North Karnataka

4.16 Promotional expenses of florists in North Karnataka

4.17 Sale pattern of finished products to the customers

4.18 Sale pattern of finished products to the customers

4.19 Month wise demand for floral products

4.20 Problems faced and suggestions opined by florists

LIST OF FIGURES

Figure No.

Title

1. Map of Karnataka showing the study districts

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 sub-continent 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.

Current Scenario, Scope and Challenges for Flower Marketers/Retailers

Majority of the customers are casual buyers in India. India represents a large untapped prospective consumer base. Well organized and planned marketing efforts will be required to break the inertia. The frequency of customers buying flowers for presentation (as bouquet) is not very high. Modern cut flowers can fulfill an affordable gifting option for the people. Flower as a product has to be developed and similar taste has to be developed among the consumers. The average monthly expenditure of customers on flowers is very low. The fattening salary packets especially in the growing Indian metros shows that a good portion of the disposable income can still be spent on flowers. Customers have to be made to realise the value for money when they buy flowers and why flowers should be an integral part of their lives.

Customers in general are satisfied with the type of flowers that they get in the market. This satisfaction with the type of flowers can be used as a platform to push the sales with supporting marketing endeavours, more exotic varieties can be added. The challenge is to have a high shelf-life of the flowers and to really make the non-customers start liking the flower. Customers are also satisfied to a certain extent with the quality of flowers available in the market. This is again a silver lining for the marketers to really latch-on to and push the sales further. Satisfaction with the quality of flowers is not very high in smaller cities and district centres.

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.

Retail Floral Outlets

There are now more florist shops nationwide when compared with earlier years. Traditional flower retails have shifted from the traditional retail florist to organized retail florist outlets and supermarkets, most significantly for potted plants and cut flowers. This trend began in the early 1999; today retail florist outlets floral sales represent a significant market share. Florists continue to hold specialty floral markets, but find it increasingly difficult to advertise flowers in mass media. Retail florist shops average gross sales are better and it is being operated small businesses. Half of their sales are loose or arranged cut flowers, 25 per cent of sales are blooming potted plants, 15 per cent foliage and bedding plants, with the

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. India’s 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. India’s 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). India’s 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). India’s 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. Karnataka’s share in India’s total flower exports is about 50 percent with almost 99 percent of them constituting roses. The AEZ’s 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.

Need for the study

Trade in floriculture can play a significant role in promoting economic development. A developing country like India which has a comparative advantage in the production of cut flowers and the export of these items could be the main source of foreign exchange earnings. Infrastructure is an important factor in horticulture and it is here that India is very disadvantageously placed. Further, right treatment of flowers, packaging, storage and transport of flowers is no where near the required standards. The growers of cut flowers often

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 Procurement and Inventory management


2.3 Costs and returns in production and marketing



2.1 Procurement and inventory management

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.


Varadarajan and Raveendran (1976) identified the following marketing channels for flowers in Coimbatore region:

Producer � Wholesaler � Retailer � Consumer

Producer � Wholesaler � Bulk consumer

Producer � Wholesaler � Commission agent � Agents in other Cities � 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 pre-harvest 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 � retailer � consumer as the major route in marketing of jasmine in Mysore.

Gulegudda (1996) studied production and marketing of flowers in Dharwad district and identified the following two channels:

Producer � village trader � consumer

Producer � commission agent cum wholesaler � 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 � wholesaler � florist/retailer � consumer

Producer � florist/retailer � consumer

Producer � pre-harvest contractor’s � florist/retailer � consumer

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 � Paiker � Wholesaler � Retailer � Consumer

Producer � Paiker � Retailer � Consumer

Producer � Retailer � Consumer


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 � Contractor � Retailer � 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 � Commission Agent � Retailer � Consumer

Producer � 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 Cost and returns in production and marketing

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 consumer’s price. Out of the total cost incurred by the retailers, Rs. 137.9 that is 6.88 per cent of consumer’s 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 consumer’s 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.


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.


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.


3.2 Sampling design





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 North-West; 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 twenty-two 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 2

nd 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

Fig.1: Map of Karnataka showing the study districts

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 15

0 50

1 north latitude and 75

0 40

1 to

770 11

1 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 12

1 to 17

0 14

1 north latitude and 76

0 04

1 to 77

0 42

1

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 Hubli-Dharwad, 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.


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.


In order to analyse the objectives of the study, the data collected were subjected to analysis through appropriate techniques as follows:

3.4.1 Tabular Analysis

Tabular analysis was exclusively used to interpret the results obtained from the investigation. The data collected were presented in tabular form to facilitate easy comparisons. The cost of procurement, inventory costs, value addition and problems faced by the retailers were presented in the form of tabular analysis. The data was summarized with the help of statistical tools like averages and percentages to obtain meaningful inferences.


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.

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 Procurement and inventory management of florists






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.

4.1.1 Procurement of cut flowers in North Karnataka

The results of the investigation on procurement of cut flowers in the study area are presented in Table 4.1

The study represents that the florists procure flowers in parcels consisting of different types of cut flowers ranging from roses, carnations, gladiolus and others. Usually, florists procure these parcels thrice in a week so as to avoid losses due to high perishability of cut flowers. The 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 per week), Dharwad (3.2 parcels per week) and lastly Bellary (3 parcels per week). The average number of parcels per year ranged from 144 parcels in Bellary to about 211 parcels in Belgaum.

4.1.2 Source of procurement of cut flowers by the florists

The florists in the study area procured cut flowers from two sources namely, wholesalers and local markets in the respective study areas, the results of which are presented in Table 4.2. All the respondents procured cut flowers through the wholesalers, wherein there was absence of any kind of intermediaries in the procurement of cut flowers. The florists also procured cut flowers from local markets depending on the availability in different months, which is comparatively less than procurement from the wholesalers. However, in case of Belgaum and Gulbarga florists opined that they also procured cut flowers from the local market. However, in Bellary majority of florists procured cut flowers from local market and in Dharwad only three florists procured cut flowers from local market.

4.1.3 Procurement costs of florists

It is observed that the total procurement cost of florists included the average quantity of each of the flower handled, its average purchase cost, and other marketing expenses like loading, unloading and transportation cost. The average total quantity of cut flower handled per parcel differed from one city to another, where as the purchase cost of each of the cut flowers was similar. In all selected cities the most common flowers that all the florists procured were selected and the costs for the quantity of flowers bought from the wholesalers

26

Table 4.1: Procurement of cut flowers in North Karnataka

Sl. No.

Location Avg. no. of

parcels/week Avg. no. of

parcels/month Avg. no. of

parcels/year

1. Dharwad 3.20 12.80 153.60

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

Location Wholesalers Local market

1. Dharwad 20 3

2. Belgaum 20 20

3. Bellary 20 13

4. Gulbarga 20 20

5. Total 80 56

Table 4.3: Procurement costs incurred by florists in Dharwad (Per parcel)

Other expenses (Rs) Sl. No.

Cut flowers Average quantity

handled (bunch/parcel)

Average price per

bunch

Average purchase cost (Rs)

(a)

Loading (b)

Unloading (c)

Transportation (d)

Total cost (Rs)

(a+b+c+d)

1. Anthurium 4.25 125.00 531.25 0.47 0.53 9.46 541.71

2. Aster 8.85 15.00 132.75 0.47 0.53 9.46 143.21

3. Rose 6.70 60.00 402.00 0.47 0.53 9.46 412.16

4. Tuberose 5.35 40.00 214.00 0.47 0.53 9.46 224.46

5. Carnation 5.60 75.00 420.00 0.47 0.53 9.46 430.46

6. Gladiolus 7.95 70.00 556.50 0.47 0.53 9.46 566.96

7. Gerbera 10.00 30.00 300.00 0.47 0.53 9.46 310.46

8. Chrysanthemum 2.85 25.00 71.25 0.47 0.53 9.46 81.71

9. Lily 1.90 50.00 95.00 0.47 0.53 9.46 105.46

10. Bird of paradise 1.65 100.00 165.00 0.47 0.53 9.46 175.46

11. Orchid 1.85 250.00 462.50 0.47 0.53 9.46 472.96

12. Daisy 6.60 30.00 198.00 0.47 0.53 9.46 208.46

13. Golden rod 7.10 12.00 85.20 0.47 0.53 9.46 95.66

14. Asparagus 6.15 20.00 123.00 0.47 0.53 9.46 133.46

15. Palm leaves 3.05 15.00 45.75 0.47 0.53 9.46 56.21

16. Total 79.85 3802.20 7 8 141.9 3958.85

Table 4.4: Procurement costs incurred by florists in Belgaum (Per parcel)




Average price per bunch

Average purchase price

(Rs) (a) Loading

(b) Unloading

(c) Transportation

(d)

Total cost (Rs) (a+b+c+

d)

1. Anthurium 4.90 125.00 612.50 0.47 0.53 10.70 624.38

2. Aster 7.35 15.00 110.25 0.47 0.53 10.70 122.13

3. Rose 8.15 60.00 489.00 0.47 0.53 10.70 500.88

4. Tuberose 4.75 40.00 190.00 0.47 0.53 10.70 201.88

5. Carnation 7.85 75.00 549.50 0.47 0.53 10.70 561.38

6. Gladiolus 6.75 70.00 506.25 0.47 0.53 10.70 518.13

7. Gerbera 10.70 30.00 321.00 0.47 0.53 10.70 332.88

8. Chrysanthemum 2.70 25.00 67.50 0.47 0.53 10.70 79.38

9. Lily 5.60 50.00 252.00 0.47 0.53 10.70 263.88

10. Bird of paradise 3.10 100.00 279.00 0.47 0.53 10.70 290.88

11. Orchid 2.80 250.00 700.00 0.47 0.53 10.70 711.88

12. Daisy 7.10 30.00 177.50 0.47 0.53 10.70 189.38

13. Golden rod 7.40 12.00 88.80 0.47 0.53 10.70 100.68

14. Asparagus 5.60 20.00 112.00 0.47 0.53 10.70 123.88

15. Palm leaves 3.80 15.00 57.00 0.47 0.53 10.70 68.88

16. Total 88.55 4512.30 7 8 160.50 4690.5

Table 4.5: Procurement costs incurred by florists in Bellary (Per parcel)

Other expenses (Rs)

Sl. No.



Average price per bunch

Average purchase price

(Rs) (a) Loading

(b) Unloading

(c) Transportation

(d)

Total cost (Rs)

(a+b+c+d)

1. Anthurium 3.00 125.00 375.00 0.42 0.48 10.01 385.91

2. Aster 4.95 15.00 74.25 0.42 0.48 10.01 85.16

3. Rose 5.50 60.00 330.00 0.42 0.48 10.01 340.91

4. Tuberose 4.40 40.00 176.00 0.42 0.48 10.01 186.91

5. Carnation 5.05 75.00 353.50 0.42 0.48 10.01 364.41

6. Gladiolus 4.70 70.00 352.50 0.42 0.48 10.01 363.41

7. Gerbera 5.90 30.00 177.00 0.42 0.48 10.01 187.91

8. Chrysanthemum 3.15 25.00 78.75 0.42 0.48 10.01 89.66

9. Lily 2.35 50.00 105.75 0.42 0.48 10.01 116.66

10. Bird of paradise 2.20 100.00 198.00 0.42 0.48 10.01 208.91

11. Orchid 1.90 250.00 475.00 0.42 0.48 10.01 485.91

12. Daisy 4.70 30.00 117.50 0.42 0.48 10.01 128.41

13. Golden rod 4.70 12.00 56.40 0.42 0.48 10.01 67.31

14. Asparagus 4.95 20.00 99.00 0.42 0.48 10.01 109.91

15. Palm leaves 2.55 15.00 38.25 0.42 0.48 10.01 49.16

16. Total 60 3006.90 6.25 7.25 150.15 3170.55

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.

4.1.4 Inventory management

The study was conducted on the inventory management of florists in which the florists maintained the cut flowers at different stages of inventories. These different stages of inventories are raw material inventory (RMI), work in process inventory (WPI), finished product inventory (FPI) and work in sales inventory (WSI).

4.1.4.1 Cost of inventory at various stages by florists in Dharwad

The study in Dharwad revealed that more quantity of flowers (30.5 bunches) was kept in work in process inventory than other inventories by the florists with an average value of Rs. 1452.41 out of the total inventory. The least quantity of flowers was stored in the work in sales inventory (10.25 bunches). Totally on an average about 79.85 bunches of flowers were kept in different inventories out of one parcel of cut flowers obtained by the florists as shown in results presented in Table 4.7. An average total quantity of cut flowers valued at Rs. 3802.45 was kept in all the inventories. But the average number of days stored was more in case of raw material inventory when compared to the other inventories. The storage cost accounted for about Rs. 16.3 for all the inventories. The florists maintained the inventory for about 2.58 days on an average. It was observed that the material loss was more in case of the work in process inventory compared to other inventories and the total material loss from all the inventories was about 23.70 per cent. The cost of material loss was calculated and it was found to be Rs. 251.04. The total cost in the inventory management of cut flowers by the florists was about Rs. 4, 069.78.

4.1.4.2 Costs of inventory at various stages by florists in Belgaum

In Belgaum, more quantity of cut flowers (34.2 bunches per parcel) was kept in the work in process inventory than other inventories. Here also, less quantity of flowers were stored in case of work in sales inventory (11.95 bunches per parcel). On an average totally 88.55 bunches of flowers were kept by a florist in different stages of inventories. The value of inventory was also high in case of work in process inventory which was about Rs. 1, 742.83. A total valve of Rs. 4, 512.50 was stored by the florists in different stages of inventories. The florists maintained the inventory for 1.98 days on an average (Table 4.8). The average total storage and maintenance cost accounted for Rs. 17.10 by the florists. The material loss was high in case of work in process inventory (8 per cent) and the total material loss accounted to 22.53 per cent of the total quantity of inventory. The cost of the material loss was worked out and it was found to be Rs. 282.58 which is added to the average total cost of inventories. On an average the total cost of all the inventories maintained by the florists accounted for Rs. 4, 812.17.

Table 4.6: Procurement costs incurred by florists in Gulbarga

(Per parcel)




Average price per

bunch

Average purchase price (Rs) Loading Unloading Transportation

Total

cost (Rs)

1. Anthurium 0.70 125.00 87.50 0.40 0.45 10.85 99.20

2. Aster 5.45 15.00 81.75 0.40 0.45 10.85 93.45

3. Rose 5.95 60.00 357.00 0.40 0.45 10.85 368.70

4. Tuberose 3.85 40.00 154.00 0.40 0.45 10.85 165.70

5. Carnation 5.40 75.00 378.00 0.40 0.45 10.85 389.70

6. Gladiolus 4.95 70.00 371.25 0.40 0.45 10.85 382.95

7. Gerbera 8.20 30.00 246.00 0.40 0.45 10.85 257.70

8. Chrysanthemum 5.05 25.00 126.25 0.40 0.45 10.85 137.95

9. Lily 1.60 50.00 72.00 0.40 0.45 10.85 83.70

10. Bird of paradise 0.45 100.00 40.50 0.40 0.45 10.85 52.20

11. Orchid 0.55 250.00 137.50 0.40 0.45 10.85 149.20

12. Daisy 4.40 30.00 110.00 0.40 0.45 10.85 121.70

13. Golden rod 3.95 12.00 47.40 0.40 0.45 10.85 59.10

14. Asparagus 3.45 20.00 69.00 0.40 0.45 10.85 80.70

15. Palm leaves 3.25 15.00 48.75 0.40 0.45 10.85 60.45

16. Total 57.20 2326.9 6.05 6.80 162.75 2502.50

Table 4.7: Cost of inventory at various stages by florists in Dharwad

(Per parcel)

Cost components (Rs/parcel)

Sl. No.

Inventories Average quantity (bunch/parcel)

Average value (Rs)

(a)

No. of days

stored Storage &

maintenance (b)

Material loss (in percentage)

(c)

Cost of material loss

(d)

Total (a+b+d)

1. RMI 22.75 1083.35 0.91 4.35 6.25 67.70 1155.40

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 florist’s 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.


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


4.3.1 Cost of production of floral products incurred by florists

After procurement of the cut flowers, the florists prepare different types of products such as singles, bouquets, pot arrangement, basket arrangement, garlands and others. For production of these products the florists incur some costs and the average cost are taken for the production of these products.

In Dharwad, it was observed that on an average each florist incurred a cost of Rs. 3.00 for production of a single cut flower, Rs. 25.00 for a bouquet, Rs. 50.00 for pot arrangement, Rs. 60.00 for basket arrangement and Rs. 20.00 for garlands. The cost incurred by florists in Belgaum was Rs. 3.00, Rs. 35.00, Rs. 65.00, Rs. 80.00 and Rs. 30.00 each for production of singles, bouquets, pot arrangements, basket arrangements and garlands respectively as obtained from the results shown in the Table.4.11. Florists in Bellary incurred Rs. 3.00, Rs. 20.00, Rs. 50.00, Rs. 60.00 and Rs. 20.00 for the production of singles, bouquets, pot arrangements, basket arrangements and garlands respectively. Where as, in Gulbarga, the costs incurred by florists for production of each unit of singles, bouquets, pot arrangements, basket arrangements and garlands was Rs. 3.00, Rs 25.00, Rs. 40.00, Rs. 60.00 and Rs. 20.00.

Table 4.8: Cost of inventory at various stages by florists in Belgaum (Per parcel)

Cost components (Rs/parcel) Sl. No.


Average value (Rs)

(a)

No. of days

stored

Storage & maintenance

(b)


(c)

Cost of material loss (d)

Total (a+b+d)

1. RMI 26.05 1327.50 0.65 4.70 6.05 80.31 1412.51

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)



Average value (Rs)

(a)

No. of days

stored Storage &

maintenance (b)

Material loss (in percentage) (c)

Cost of material loss

(d)

Total (a+b+d)

1. RMI 17.70 887.12 0.79 5.05 5.80 51.45 943.62

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)

No. of days

stored Storage &

maintenance (b)


(c)

Cost of material loss (d)

Total (a+b+d)

1. RMI 16.70 679.36 0.71 4.45 5.65 38.38 722.19

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

Table 4.11: Costs of production of floral products incurred by florists

(Rs/unit of product)

Sl. No. Products Dharwad Belgaum Bellary Gulbarga

1. Singles 3.00 3.00 3.00 3.00

2. Bouquets 25.00 35.00 20.00 25.00

3. Pot arrangement 50.00 65.00 50.00 40.00

4. Basket arrangement 60.00 80.00 60.00 60.00

5. Garlands 20.00 30.00 20.00 20.00

4.3.2 Returns to florists in Dharwad

The returns are obtained by the florists by selling different products like singles, bouquets, pot arrangement, basket arrangement and garlands. The returns were computed for the floral products sold per month. In Dharwad, the florists obtained maximum returns by the sale of bouquets valued at Rs.32, 500.00 which is having a maximum share of 37.42 per cent to the total value of all the products presented in the Table 4.12. 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. 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.

4.3.3 Returns to florists in Belgaum

In Belgaum, the florists obtained maximum returns by the sale of bouquets valued at Rs. 42, 000.00 with a total share of 35.87 per cent. The sale of garlands was valued at Rs. 22, 980.00 with a share of 19.62 per cent as presented in the Table 4.13. This was followed by the sale of pot arrangement, basket arrangement and singles with a valve of Rs.18, 000.00; Rs. 17, 250.00 and Rs. 16, 859.00 respectively with a share of 15.37, 14.73 and 14.39 per cent respectively per month.

4.3.4 Returns to florists in Bellary

The florists in Bellary also obtained a maximum returns by the sale of bouquets valued at Rs. 21, 000.00 per month with a total share of 34.17 per cent. The sale of singles was valued at Rs. 13, 758.41 with a total share of 22.39 per cent. It is followed by the returns obtained from the sale of basket arrangement, pot arrangement and garlands with a value of Rs.9, 990.00, Rs. 8, 550.00 and Rs. 8, 330.00 respectively with a share of 16.25, 13.91 and 13.55 per cent respectively (Table 4.14).

4.3.5 Returns to florists in Gulbarga

It was observed that in case of Gulbarga, florists obtained maximum returns by the sale of bouquets valued at Rs. 24, 300.00 with a total share of 41.10 per cent per month. The returns obtained from the sale of singles were valued at Rs. 11, 728.00 with a total share of 19.83 per cent (Table 4.15). This was followed by the sale of pot arrangement, garlands, and basket arrangement valued at Rs. 8, 272.00, Rs. 7, 735.00 and Rs.7, 080.00 respectively with a total share of 13.99, 13.08 and 11.97 per cent respectively.

4.3.6 Costs and returns structure of florists in North Karnataka

Table 4.16 reveals that total costs include fixed costs and variable costs. Fixed costs include the costs of fixtures such as stands, buckets, furniture, glass, and others, it also includes the interest on fixed costs at 12 per cent and depreciation value of the fixtures. The variable costs include the raw material procurement cost, inventory and maintenance cost of which only the material loss and maintenance cost is taken, rent of the shop is also calculated, packaging material costs include floral foam, plastic papers, thermocol and others, also lastly promotional costs are considered. The total costs are calculated by summing up the total fixed costs and total variable costs. The total costs are taken away from the total returns to obtain the net returns. From the table 4.16 it was observed that florists in Dharwad incurred a total fixed cost of Rs. 1, 342.05 per year; total variable costs of Rs. 7, 46, 375.28 per year. The net returns obtained by florists in Dharwad were Rs. 2, 14, 208.67 per year. In Belgaum, the florists incurred more costs and also obtain more returns when compared to other cities. The florists in Belgaum incurred a total fixed cost of Rs. 1, 818.73 per year; total variable costs of Rs. 11, 18, 447.41 per year. The net returns obtained by florists in Belgaum were Rs. 2, 84, 801.86 per year. In Bellary, the florists incurred a total fixed cost of Rs. 1, 256.95 per year; total variable costs of Rs 5, 36, 587.60 per year and net returns of Rs. 1, 99, 536.37 per year. The florists in Gulbarga incurred a total fixed cost of Rs. 1, 022.35 per year; total variable costs of Rs. 5, 10, 326.54 per year. The net returns obtained by florists in Gulbarga were Rs. 1, 98, 031.11 per year.

Table 4.12: Returns to florists in Dharwad

Sl. No.

Sale type (per month)

Average sale price per unit

(Rs)

Average total quantity sold per

month

Total value (Rs per month)

1. Singles 7.33 1850

(61.80) 13560.50 (16.91)

2. Bouquets 50.00 600

(20.60) 30000.00 (37.42)

3. Pot arrangement 100.00 130

(4.40) 13000.00 (16.21)

4. Basket arrangement

120.00 90

(3.01) 10800.00 (13.47)

5. Garlands 40.00 320

(10.15) 12800.00 (15.96)

6. Total - 3155 80160.50 (100.00)

Note: Figures in the parenthesis indicate the percentages to the total value

Table 4.13: Returns to florists in Belgaum


Sl. No.


Average sale price per unit (Rs)


month


1. Singles 7.33 2300

(63.63) 16859.00 (14.39)

2. Bouquets 60.00 650

(19.44) 42000.00 (35.87)


(4.30) 18000.00 (15.37)

4. Basket arrangement 150.00 115

(3.42) 17250.00 (14.73)

5. Garlands 50.00 383

(9.92) 22980.00 (19.62)

6. Total - 3858 1,17,089.00

(100.00)

Table 4.14: Returns to florists in Bellary

Sl. No.




month


1. Singles 7.33 1877

(65.21)

13758.41 (22.39)

2. Bouquets 40.00 525

(19.60)

21000.00 (34.17)


(4.03)

8550.00 (13.91)

4. Basket arrangement 120.00 83.25 (2.90)

9990.00 (16.25)

5. Garlands 35.00 238

(8.26)

8330.00 (13.55)

6. Total - 2878.25 61448.41 (100.00)



4.4.1 Promotional expenses of florists in North Karnataka

The study indicates that the florists used different promotional measures like pamphlets, boards/banners, visiting cards and print media. The florists used these promotional measures to increase their sales and in turn increase their returns. The results of this are presented in the Table 4.17.

The study made in Dharwad revealed that the florists spent more on the visiting cards as a means of promotional measure when compared with others. On an average the florists in Dharwad incurred a total cost of Rs. 1, 982.50 as promotional cost.

In Belgaum, about 46.38 per cent of the total promotional cost is spent on the visiting cards followed by boards/banners, pamphlets and print media. Most of the florists in Bellary also spend more on visiting cards (41.07%) followed by boards/banners, pamphlets and print media. Florists in Gulbarga spent more on visiting cards, Rs.825.00 followed by boards, pamphlets and print media.

4.4.2 Sale pattern of cut flowers by florists

The floral products of the florists are being sold to variety of customers like family, hotels, government offices, private business organizations, decorators and hospitals. The products that are sold mainly include singles, bouquets, pot arrangements and basket arrangements. The results obtained are presented in Table 4.18 show that families, hotels and decorators usually bought more of flowers compared to other types of customers. Bouquets were mostly purchased by families and government offices which represent an extent of about 27-35 per month. Families also bought pots and basket types of product among the type of products sold by the florists in different cities under consideration.

4.4.3 Month wise demand for floral products

The study was made to identify the demand for floral products in different months in a year. The demand for floral products varied across different months (Table 4.19). In general

Table 4.15: Returns to florists in Gulbarga

Sl. No.




month


1. Singles 7.33 1600.00 (62.98)

11728.00 (19.83)

2. Bouquets 45.00 540.00 (21.23)

24300.00 (41.10)

3. Pot arrangement

80.00 103.40 (4.26)

8272.00 (13.99)

4. Basket arrangement

100.00 70.80 (2.81)

7080.00 (11.97)

5. Garlands 35.00 221.00 (8.69)

7735.00 (13.08)

6. Total - 2656.20 59115.00 (100.00)


Table 4.16 Costs and returns structure of florists in North Karnataka

(Rs/year

. 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.

Sl. No.

Item of cost Dharwad Belgaum Bellary Gulbarga

1. Fixed Costs

Fixtures 5,835.00 7,907.50 5,465.00 4445.00

Interest on FC @ 12% 700.20 948.90 655.80 533.40

Depreciation 641.85 869.83 601.15 488.95

Total Fixed Cost 1,342.05 1,818.73 1,256.95 1022.35

2. Variable costs

Raw material procurement cost 6,08,079.36 9,53,040.00 4,33,036.80 3,90,919.20

Inventory and maintenance cost 41,063.42 63,292.41 29620.80 27,489.84

Rent 25,980.00 27,780.00 17,700.00 24,300.00

Labour 32,400.00 33,300.00 27,000.00 36,000.00

Packaging Material 36,870.00 39,030.00 27,270.00 29,220.00

Promotion costs 1,982.50 2,005.00 1,960.00 2397.50

Total Variable Costs 7,46,375.28 11,18,447.41 5,36,587.60 5,10,326.54

3. Total Costs (1+2) 7,47,717.33 11,20,266.14 5,37,844.55 5,11,348.89

4. Total returns 9,61,926.00 14,05,068.00 7,37,380.92 7,09,380.00

5. Net returns (4-3) 2,14,208.67 2,84,801.86 1,99,536.37 1,98,031.11

Table 4.17: Promotional expenses of florists in North Karnataka

(Rs per year)

Sl. No.

Promotional measures Dharwad Belgaum Bellary Gulbarga

1. Pamphlets 260.00 (13.11)

305.00 (15.21)

390.00 (19.9)

582.50 (24.3)

2. Boards/banners 512.50 (25.85)

485.00 (24.18)

440.00 (22.44)

632.50 (26.38)

3. Visiting cards 985.00 (49.68)

930.00 (46.38)

805.00 (41.07)

825.00 (34.41)

4. Print media 225.00 (11.34)

285.00 (14.21)

325.00 (16.58)

357.50 (14.91)

5. Total 1982.50 (100.00)

2005.00 (100.00)

1960.00 (100.00)

2397.50 (100.00)


Table 4.18: Sale pattern of finished products to the customers

(Per month)

Products

Singles Bouquets Pot Basket Sl. No

Customers

Average quantity sold



Average quantity

sold

1. Family 189.81 34.50 20.87 17.31

2. Hotels 149.06 17.87 9.15 7.72

3. Govt. offices 56.06 27.00 15.56 9.31

4. Private business

organizations 34.06 14.62 9.50 8.16

5. Decorators 129.62 26.75 12.75 10.81

6. Hospitals 45.87 15.21 9.43 7.56

7. Total 604.48 135.95 77.26 60.87

Table 4.19: Month wise Demand for floral products

Months Sl. no.

Products Jan-May Jun-Aug & Dec Sep-Nov

1. Singles High Medium Low

2. Bouquets High Medium Low

3. Pot arrangement High Medium Low

4. Basket arrangement High Medium Low

5. Garlands High Medium 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.


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)

Retailers Sl. No.

Particulars Number

Percentage to the total sample size

A. Problems

I. Procurement of cut flowers

1. Price fluctuation in market 80 100.00

2. Quick deterioration in quality 80 100.00

3. Lack of new varieties 22 27.50

4. Lack of continuity in supply 15 18.75

5. Availability of all varieties & quantity 5 6.25

II. Selling of finished products

1. Wastage of cut flowers 75 93.75

2. Lack of awareness among consumers 52 65.00

3. Lack of regular consumers 26 32.50

B. Suggestions for improvement

1. Generic promotions 80 100.00

2. Development of more contacts 48 60.00

3. Stabilization of prices 80 100.00

4. Encourage local cut flower growers 50 62.50

5. DISCUSSION

The results of the study presented in the previous chapter are discussed in this chapter under the following heads:







5.1.1 Procurement of flowers in North Karnataka

The procurement of flowers is an important aspect in the study made. The result of the procurement of cut flowers in Table 4.1 reveals that all the florists obtain flowers through parcels on a daily or weekly basis depending on the flower demand. Belgaum city was found to procure highest number of parcels per week to the extent of 4.40 parcels per week followed by Gulbarga 3.50, Dharwad 3.20 and Bellary 3. The average number of parcels per year ranged from 211 parcels in Belgaum to 150 parcels in Dharwad. The procurement of cut flowers varies form one florist to another as each of the florists has a different quantum of business. The florists also vary the procurement of cut flowers depending on the demand for cut flowers in different seasons. In Dharwad and Hubli the procurement of cut flowers is only about 3 parcels per week as the business is still in the initial stages of development when compared with Belgaum. The procurement of cut flowers in Hubli is more than that in Dharwad as there is more demand for cut flowers in Hubli when compared to Dharwad. Belgaum has the highest procurement frequency of cut flowers at about 5 parcels per week. The demand for cut flowers is more in Belgaum when compared to other cities as the city is more commercial oriented than other cities in study area and has high standard of living. In case of Bellary, only about 3 parcels per week are procured as there is a less demand for cut flowers. There is a less demand for cut flowers and also lack of awareness among the people about the cut flowers. In Gulbarga, about 3.50 parcels are procured per week as there is a considerable demand for the cut flowers in this city.

5.1.2 Source of procurement of cut flowers by florists

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.

5.1.3 Procurement costs of cut flowers in Dharwad

The results from the Table 4.3 indicated that most of the florists procure common cut flowers available in the market. It was observed that on an average each florist procured 79.85 bunches of cut flowers per parcel. The average total transportation cost per parcel procured was 141.90 rupees paid for the bus by which the transportation is made. On an average the total cost incurred by the florists for each parcel appeared to be 3,958.85 rupees. The procurement costs vary in different months depending upon the demand in the market for the cut flowers. The price differences are also observed for different cut flowers also differences in transportation cost led to the changes in the procurement costs.

5.1.4 Procurement costs of cut flowers in Belgaum

It was observed from results of the Table 4.4 that each florist procured 88.55 bunches of cut flowers per parcel. The quantity procured by the florists in Belgaum is highest when compared to other cities as there is more demand for floral products in Belgaum. The average total transportation cost per parcel procured was 160.50 rupees. The transportation cost is little more here because it covers more distance for transportation of the parcel. The differences in prices of cut flowers were observed and there was a difference in transportation cost as well which resulted in the changes in procurement costs. On an average the total cost incurred by the florists for each parcel appeared to be 4,690.50 rupees, as the florists procure more quantity of cut flowers than other selected cities due to higher demand for cut flowers in this city.

5.1.5 Procurement costs of cut flowers in Bellary

The results in the Table 4.5 depicted that most of the florists procured common cut flowers and it was observed that on an average each florist procured 60.00 bunches of cut flowers per parcel. The procurement of cut flowers is less in Bellary compared to other cities because the demand for the cut flowers is less in this area. The average total transportation cost per parcel procured was 150.15 rupees. The average total cost incurred by the florists for each parcel appeared to be 3,170.55 rupees; it is less when compared with other cities as the quantity of cut flowers procured is less. The prices of cut flowers were same as that of other cities as most of the florists procure cut flowers from wholesalers.

5.1.6 Procurement costs of cut flowers in Gulbarga

The procurement costs vary mainly due to the seasonality in the procurement of cut flowers as revealed from the results from 4.6. The average total quantity of cut flowers handled by florists in Gulbarga was 57.20 bunches which was less when compared with Bellary because the procurement frequency in Gulbarga is higher than Bellary and Dharwad and it is less than Belgaum because the demand of flowers is less. As the cut flowers are procured from various sources and the price differentials observed for different cut flowers and consequently the differences in costs of transportation largely to the changes in procurement costs.

5.1.7 Cost of inventory at various stages by florists in Dharwad

The inventory levels in which the cut flowers are maintained by florists in different quantities are indicated in the Table 4.7. The study revealed that more quantity of flowers were stored in work in process inventory than other inventories. The least quantity of flowers was stored in the work in sales inventory. Totally on an average about 79.85 bunches of flowers were stored in different inventories out of one parcel of cut flowers obtained by the retailers. The quantity of flowers stored was more in work in process inventory because the florists used to process the flowers by cleaning it, cutting it giving any required shape for the cut flowers. An average total quantity of flowers valued at Rs. 3,802.45 was stored in all the inventories. But the average number of days stored was more in case of raw material inventory when compared to the other inventories because the flowers after it is processed cannot be stored for long time. The storage and maintenance cost accounted for about Rs. 16.30 for all the inventories. It was observed that the material loss was more in case of the work in process inventory compared to other inventories and the total material loss from all the inventories was about 23.70 per cent. As the cut flowers were to under go processing, there would be more loss in work in process inventory than other inventories. The total cost in the inventory management of flowers by the florists was about Rs.4,069.78.

5.1.8 Cost of inventory at various stages by florists in Belgaum

The results from the Table 4.3 indicate the inventory levels of cut flowers maintained by florists in Belgaum. More quantity of cut flowers was present in the work in process inventory than other inventories as the cut flowers will be processed in this. Less quantity of flowers were stored in case of work in sales inventory because to avoid loss if the floral products are not sold. On an average totally 88.55 bunches of flowers were stored by a florist in different stages of inventories. The value was also high in case of work in process inventory

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.

5.1.9 Cost of inventory at various stages by florists in Bellary

The results from the Table 4.4 reveal that more of the quantity of cut flowers is stored in work in process inventory because of the processing work of the flowers in this stage. 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 day’s florist’s maintained inventory was about 2.35 days because the procurement frequency of cut flowers in less in Bellary. 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 and the total material loss in all the inventories accounted for 22.55 per cent. The average total cost incurred by the florists for inventory management was about Rs. 3,212.90.

5.1.10 Cost of inventory at various stages by florists in Gulbarga

The results from the Table 4.5 indicate that more of the quantity of cut flowers is stored in work in process inventory because of the processing work of the flowers in this stage. 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 because here also the procurement frequency of cut flowers was less. 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 because of the processing activity and the total material loss from all the inventories accounted for 22.45 per cent. On an average the total cost of all the inventories maintained by the florists accounted for Rs. 2420.02.


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 Costs and returns of florists.

5.3.1 Cost of production of floral products incurred by florists

The results from the Table 4.11 revealed that on an average each florist incurred a cost of Rs. 3.00 for production of a single cut flower which included the cost of cut flower, cost of other materials used for preparing it. Florists incurred Rs. 20.00 to Rs. 35.00 for a 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. The difference in prices of floral products in different cities was found to differ because of the differences in procurement costs of cut flowers.

5.3.2 Returns of florists in Dharwad

The returns for the florists are obtained from the sale of cut flowers as singles, bouquets, pots, baskets and garlands to the customers. The results from the Table 4.12 shows that florists obtained maximum returns by the sale of bouquets valued at Rs.30,000.00 which is having a maximum share of 37.42 per cent of the total value of products. Because most of the customers prefer for bouquets as it is most commonly known for all. Bouquets

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.

5.3.3 Returns of florists in Belgaum

The florists obtained maximum returns by the sale of bouquets valued at Rs. 42,000.00 with a total share of 35.87 per cent as obtained by the results from the Table 4.13. The sale of bouquets is more than other floral products as it is the most preferred floral product by the customers. The sale of singles was valued at Rs. 16, 859.00 with a share of 14.39 per cent because singles are used in more quantity for decoration in functions by the florists. This was followed by the sale of garlands, pot arrangement and basket arrangement with a valve of Rs.22, 980.00, Rs. 18, 000.00 and Rs.17,250.00 respectively with a share of 19.62, 15.37 and 14.73 per cent respectively. The pots and baskets are preferred by only few customers when compared to bouquets as they are more costly than other floral products.

5.3.4 Returns of florists in Bellary

The results obtained from the Table 4.14 indicates that in Bellary also the florists obtained a maximum returns by the sale of bouquets valued at Rs. 21, 000.00 with a total share of 34.17 per cent because of more fondness of customers towards bouquets. The sale of singles was valued at Rs. 13, 758.41 with a total share of 22.39 per cent. The singles are used commonly everywhere for decorative purposes. It is followed by the returns obtained from the sale of basket arrangement, pot arrangement and garlands with a value of Rs.9, 990.00, Rs. 8, 550.00 and Rs. 8, 330.00 respectively with a share of 16.25, 13.91 and 13.55 per cent respectively. The basket arrangements, pot arrangement and garlands are mostly used in functions which are made especially for those purposes and the price range of these also varies depending on the order from the customer.

5.3.5 Returns of florists in Gulbarga

Table 4.15 reveals that in case of Gulbarga, florists obtained maximum returns by the sale of bouquets valued at Rs. 24, 300.00 with a total share of 41.10 per cent because of the more frequent use of bouquets in all functions than other floral products. The returns obtained from the sale of singles was valued at Rs. 11, 728.00 with a total share of 19.83 per cent as these are mostly used for decorative and aesthetic purposes. This was followed by the sale of pot arrangement, garlands and basket arrangement valued at Rs. 8, 272.00, Rs. 7, 735.00 and Rs.7, 080.00 respectively with a total share of 13.99, 13.08 and 11.97 per cent respectively. The pot and basket arrangement are used less frequently and only by few customers and so the quantity of sale of these are less compared to others.

5.3.6 Costs and returns structure of florists in North Karnataka

Usually the florists incurred more costs as variable costs than fixed costs because the procurement cost of cut flowers, inventory and maintenance cost, rent, labour, packing material all were included in it. In Belgaum, the florists incurred a total fixed cost of Rs. 1, 818.73; total variable costs of Rs. 11, 18, 447.41 and the net returns were about Rs. 2, 84, 801.86 which was highest when compared to all other cities because the demand for floral products is more here and also more customers prefer for floral products. The florists in Dharwad-Hubli obtained net profit of Rs. 2, 14, 208.67 which was due to the growing demand for floral products in Dharwad and Hubli. The florists in Bellary and Gulbarga also received a good amount of returns from the sale of floral products though there is a need for their business improvement.


5.4.1 Promotional expenses of florists in North Karnataka

Results from the Table 4.21 revealed that in all the four cities florists were incurring more costs in printing visiting cards because it was the means of contact that most of the florists are keeping with their customers. Most of the florists improve their contacts at some functions and ceremonies where they distribute visiting cards to customers so that they can promote their business. This was followed by the costs incurred on boards/banners which were advertised in some important places in the city. The pamphlets and the print media was least used by most of the florists and it was used only occasionally and so the cost incurred on it is less.

5.4.2 Sale pattern of cut flowers by florists

The results from the Table 4.22 indicates the florists sale pattern of cut flowers to different types of customers like, family, hotels, government offices, private business organizations, decorators and hospitals etc. On an average, the florists sell about 604.48 numbers of singles per month to all these different customers. They are the regular customers of florists for whom they sell these products. Florists sell an average of 136 bouquets to these customers followed by 77 pots and 60 baskets. Most of the florists sell the floral products to the permanent customers in maximum quantity than to other customers as they will be receiving an order for floral products before itself from them.

5.4.3 Demand for cut flowers in different months

The demand for cut flowers varied across different months as shown by results from the Table 4.19. In general three classifications were made for the months as there were similar results obtained from all the retail florists in the study area. According to the classification made, the months between January to May have high demand for all the flowers because this is the peak period of demand for cut flowers. These results are on par with the results of Nagendra (1998). The months between June to August and December have a medium demand for all the cut flowers because the rainy season starts so the demand for cut flowers also becomes constant. The months between September to November have a low demand for all the cut flowers because in that period more demand will be there for traditional flowers. Some of the flowers like gerbera, carnation and rose will have a uniform/more demand throughout the year as they will be preferred most by the customers


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).

6. SUMMARY AND POLICY IMPLICATIONS

India is blessed with a diversity of agro-climatic conditions prevailing in the different regions in the country. 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. 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.

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. 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.

Majority of the customers are casual buyers. India represents a large untapped prospective consumer base. Well organized and planned marketing efforts will be required to break the inertia. The frequency of customers buying flowers for presentation (as bouquet) is not very high. 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. Florists continue to hold specialty floral markets, but find it increasingly difficult to advertise flowers in mass media. Retail florist shops average gross sales are better and it is being operated small businesses.

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. India’s 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). 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. 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 an appropriate policy measures that is needed to boost the retail cut flower business. 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.

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.

Nature and sources of data 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.

Analytical techniques employed

The data collected were presented in tabular form to facilitate easy comparisons. The cost of procurement, inventory costs, value addition and problems faced by the retailers were presented in the form of tabular analysis. The data was summarized with the help of statistical tools like averages and percentages to obtain meaningful inferences.

Major findings of the study

1. The florists on an average procured 3.5 parcels per week as revealed from the procurement of cut flowers and the florists in Belgaum procured more parcels per week compared to other cities.

2. All the florists in the study area procured cut flowers from wholesalers and in case of Belgaum and Gulbarga, florists opined that they also procured cut flowers from local market depending on the availability of cut flowers in different months.

3. The procurement costs varied in all the cities as the quantity procured was different and the maximum procurement cost was incurred in case of florists in Belgaum. The procurement cost included the average quantity purchased and average price per bunch of cut flowers, it also included the costs in transportation.

4. All the florists in the study area maintained more quantity of inventory in the work in process inventory stage when compared to other inventories. The processing activity of cut flowers was involved in this stage by the florists and also more material loss and more storage and maintenance cost was incurred in this stage. The number of days florists stored cut flowers was also more in case of work in process inventory as depicted in the inventory management.

5. Only one marketing channel was identified for the marketing of floral products in North Karnataka.

Retailers � Consumers

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. Florist’s 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. Florist’s major problem in selling of cut flowers was wastage of cut flowers (93.75 per cent) and lack of awareness among the consumers (65 per cent).

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 non-traditional 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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BUSINESS MANAGEMENT OF FLORISTS IN NORTH

KARNATAKA A PROFITABILITY ANALYSIS

RAVI SHANKAR. M 2007 Dr. R. A. YELEDHALLI Major Advisor

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, Hubli-Dharwad, 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.

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