Articles
Exploring the market penetration of floral arrangements using second-price and double auctions
Article number
1368_25
Pages
185 – 194
Language
English
Abstract
Cut flower products are priced in the market competitively to gain the most profit margin.
But, do consumers value floral products at their market value? A single round second-price auction and two rounds of double auctions with buyers and sellers were utilized to gain a true representation of the value placed on a standard hand-tied bouquet priced at $15-$20. Input for the design used in the experiment was solicited from the Benz School of Floral Design Director and two American Institute of Floral Design (AIFD) members.
The flowers used in the designs were valued at the actual prices paid for flowers and hardgoods purchased from floral wholesalers in Houston, Texas.
The experiment was conducted at Texas A&M University (TAMU) Human Behavior Lab with 124 community members ranging from 18 to 87 years old.
The floral design that the participants were bidding for was physically placed at the front of the room and was also displayed on each of the computer screens for the participants to easily view.
Participants were allowed to touch, interact, and examine the design during the experiment if they wished to do so.
The results indicate that some consumers value floral products at a much lower price point than the real market value.
Floral firms should consider value propositions other than price that would enhance the product or the experience of the product to increase market penetration.
Education and marketing (including digital engagement) are key to appealing to consumers and expanding demand by shifting the demand curve into new consumer categories.
But, do consumers value floral products at their market value? A single round second-price auction and two rounds of double auctions with buyers and sellers were utilized to gain a true representation of the value placed on a standard hand-tied bouquet priced at $15-$20. Input for the design used in the experiment was solicited from the Benz School of Floral Design Director and two American Institute of Floral Design (AIFD) members.
The flowers used in the designs were valued at the actual prices paid for flowers and hardgoods purchased from floral wholesalers in Houston, Texas.
The experiment was conducted at Texas A&M University (TAMU) Human Behavior Lab with 124 community members ranging from 18 to 87 years old.
The floral design that the participants were bidding for was physically placed at the front of the room and was also displayed on each of the computer screens for the participants to easily view.
Participants were allowed to touch, interact, and examine the design during the experiment if they wished to do so.
The results indicate that some consumers value floral products at a much lower price point than the real market value.
Floral firms should consider value propositions other than price that would enhance the product or the experience of the product to increase market penetration.
Education and marketing (including digital engagement) are key to appealing to consumers and expanding demand by shifting the demand curve into new consumer categories.
Authors
M.J. Knuth, X. Wu, C.R. Hall, M.A. Palma
Keywords
second-price auction, double auctions, cut flowers, consumers
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