Born sustainable

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Bachelor in International Marketing BY

Mia Lid Ida Cecilie Etse Milly Lid Segertsen Lars-Jørgen Berge Larssen

“This paper is done as a part of the undergraduate program at BI Norwegian School of Management. This does not entail that BI Norwegian School of Management has cleared the methods applied, the results presented, or the conclusions drawn.”

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Executive Summary

This report presents the findings and recommendations based on an in-depth analysis of the hydroponic vegetable industry in Eastern Canada.

This project is carried out on behalf of Jiffy international, a leading supplier in plant propagation systems and substrates, with headquarters in Stange, Norway. Recently, Jiffy entered into the vegetable hydroponic industry with a line of products that includes the Jiffy growbag and growblock. Both these products are made from coconut coir and can be used to hydroponically grow vegetables in greenhouses. This report will focus on Jiffy‘s growbag and its business to business market potential in Eastern Canada.

The introduction to this report will provide the research objectives and problem, a company overview, and Jiffy‘s current situation in the hydroponic market in Canada. Further, the report offers an overview of the hydroponic industry, trends in society and the industry, political and legal factors, ethical considerations, competitors, customers, and Jiffy‘s market potential. The second part of the report involves developing a marketing plan based upon the prior analysis and research. The marketing plan includes recommendations and a proposal on how Jiffy can implement the marketing strategy to achieve its objectives.

Methodology

In order to obtain information about the hydroponic vegetable industry in general, the authors used an exploratory design, which was used to gain insight and ideas, and to increase

familiarity with the research problem. The secondary research collected in the report is from internet sources, reports, journal articles, newspapers and books.

In addition to secondary sources, it was necessary to conduct primary research because the secondary data was not specifically tailored to the research question at hand. Firstly, In-depth interviews with the trial growers were conducted during a research trip to Leamington, Ontario. The goal here was to gain a clear insight on how Jiffy‘s growbag performed, and the benefits it offered in relation to its competitors.

In addition to the trip to Leamington, two surveys were developed and distributed. One survey was distributed at the end-consumer level and was used to gain insight on the attitudes and behaviour involved in the vegetable buying process. The second survey was tailored towards

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Key findings

The results from secondary research show that Canadian greenhouse vegetable production has been growing continuously from 1990 to 2007 and that production of greenhouse vegetables is concentrated in Ontario, British Columbia, and Quebec. Leamington and neighbouring Kingsville have the largest concentration of greenhouses in North America. The trend towards using coconut coir in the hydroponic industry is rapidly growing and as the coir continues to decrease in price, more growers have changed to this growing medium. A critical finding from the Leamington trip is that this industry is relationship-oriented. Further it was found that quality, customized production ability, consistency, price competitiveness and after-sale service are the five most important attributes for the growers selecting a supplier. Jiffy has a satisfactory distribution system, however, it lacks knowledge and experience in the

hydroponic industry and promotion activity is at a minimum. Jiffy is currently the only Canadian hydroponic supplier to offer the RHP-certification, however, due to lack of awareness of its benefits, this is not yet a key selling point.

Recommendations

This report will outline the steps Jiffy must take to remain competitive. Jiffy needs to offer a disposal service at the end of the season, enhance its website, develop product catalogues, and increase sales time spent in the Leamington area. In addition, it needs to influence perceptions of the RHP-certification and reinforce positive attitudes towards it.

In support of these steps, it is recommended that Jiffy establish test markets, offer

introductory discounts to encourage trial and sales, promote through industry magazines and local media, attend trade shows, arrange theme nights, position itself as a high quality, competitively priced brand, and lastly, continue its distribution method of direct marketing.

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Acknowledgements

This thesis is written as a final project as part of the Bachelor in International Marketing studies at Simon Fraser University and BI school of Management. It is written for, and with full co-operation from Jiffy International. The purpose of the report is to offer a strategy of how Jiffy should introduce its fairly new product, the coconut growbag to the East Canadian market, more specifically Ontario and Québec.

The authors would like to offer our gratitude to the people that have helped us throughout this process. Firstly we would like to thank Roelof Drost, Director of marketing, Jiffy

international AS that showed an interest in letting us write the report for Jiffy. Secondly we would like to thank Rick Friedrich, General Manager of Jiffy‘s North America Division, for giving us information needed about the company .We would also like to thank our most important contact, the sales representative for Jiffy in Eastern Canada, Sylvain Helie. This report would not be nearly as good if it was not for all the help we have received from Sylvain. Thank you for showing us around Leamington, and introducing us for growers.

We would also like to express our gratitude to Gary Jones, for the information you and your class shared with us during our visit to Kwantlen University, Fred Van Dop for sharing valuable information about the BC greenhouse industry, and David Rogers for all your stories and great knowledge. Further the authors would like to thank Amandeep Bal from BC

Greenhouse Growers Association and Dr. Merle Jensen from University of Arizona for sharing your information about the industry. Lastly thanks to all the growers we met in Leamington for your time and co-operation.

Special thanks go to our mentor Bob Crockett for support, valuable help and insight

throughout the project. We would also like to thank Alastair Brownlow for editing the report.

Vancouver, April 23, 2010

Ida Cecilie Afi Etse Mia Lid

Lars Jørgen Berge Larssen Milly Lid Segersten

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The first part of the report presents an analysis of the demand and market potential for the Jiffy growbag, which is a part of the new line targeting the hydroponic market. The report follows Dr. Lindsay Meredith‘s model, discussed in ―A diagrammatical template for business market demand estimation‖ and other relevant theories associated with international

marketing (Lindsay, 2005). An overview of the hydroponic industry; trends in the society and the industry; political and legal factors; ethical dilemmas; competitors in the business to business segment; customers mainly in the business to business segment; and Jiffy`s market potential will be introduced.

The second part of the report provides a marketing plan, based on the previous analysis. The marketing plan includes recommendations and a proposal on how they can be implemented Research Problem

“How should Jiffy’s new product, the growbag, be introduced successfully to Eastern Canada?”

Research Objectives

Presented below is a list of necessary information required to solve the research problem:

 The product‘s competitive advantage and its growth potential

 The size of the market; and the degree to which Jiffy can penetrate the market

 Information about the industry as it looks today

 Knowledge about new trends and technologies in the industry and its environment

 Financial information and aspects regarding the industry and key players

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 Knowledge of the Canadian ad Sri Lankan political/legal system

 An understanding of Jiffy‘s competition and customers

 A broad academic literature review on relevant marketing topics

 First- hand information obtained through discussion with industry professionals

Company Background

Jiffy is a leading supplier in plant propagation systems and substrates, with headquarters in Stange, Norway. The company started its manufacturing in Oslo, Norway in the early 1950`s.

Jiffy International AS operates as a subsidiary of the Johan G. Olsen Group, which is a family owned company, established in 1912. In 1998 the shareholders agreed to accept a few

selected institutional investors as new shareholders of the company. The shareholders today hold about 35% of the shares (Jiffy Products, 2010).

Jiffy International AS is the parent company of the Jiffy Group, and consists of: Jiffy, which offers propagation medium; the recently acquired (2005-2008) companies Ferry- Morse and McKenzie, which provide seeds; and Tref, who manufactures substrates. Combined, the Jiffy Group has knowledge and experience in almost all phases of growing, and provides growers with quality products and services in the horticultural, forestry, nursery, and hydroponic industries. Recently, in 2009, the group has been divided into two main globally operating divisions, a Home Gardening Division and a Professional Grower Division (PGD). As of today the company operates in 11 countries worldwide. Manufacturing plants are located in Holland, Norway, Denmark, Spain, the US, Canada and Sri Lanka. Jiffy also operates with sales offices in Germany, UK, Kenya and France outside/beside Norway (Jiffy Products, 2010).

Mission and Values

Jiffy‘s mission is ―to provide growers (whether agricultural, horticultural, sivicultural or home) with the highest quality growing medium , medium containers, seeds and other supporting products or services with enhance the successful propagation or cultivation of plants and Jiffy will achieve this through continuous innovation and constant compliance to high standards of quality and environmental awareness‖ (Born Sustainable, 2010).

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Jiffy Products of America Inc.

Jiffy Products of America Inc handles the Global PGD division in the American continent, where the main business is located in the US and Canada.

This report will focus on the PGD division in Eastern Canada and analyse the potential market and strategies for introduction of the Jiffy growbag in the business to business segment. The recommendations and analysis provided will be targeted towards Jiffy Products of America Inc; henceforth referred to as Jiffy.

Products

Since 1950, Jiffy been most active and known in the horticulture, forestry and nursery industries, as its speciality has been supplying the flower industry. The present portfolio and main products consists of pellets and pots for the flower industry, using peat moss, wood fibre, and also more recently coconut (Jiffy Catalogue, 2010).

Jiffy pots, developed in 1950, were Jiffy‘s first product and have carried the success of the company. One of the essential characteristics of the Jiffy pots has been the development of the

―open wall principle‖ – which allows the roots to grow through the container walls,

eliminating the need to remove the container and increasing convenience for consumers. The first Jiffy pots were manufactured out of the same materials as those of today, showing consistency and support for the sustainability and eco-friendly image Jiffy proudly wears. All of Jiffy‘s products proudly carry the ―Born Sustainable‖ logo, indicating the organization‘s commitment towards sustainability at all points throughout the manufacturing process. Being green is more than just a market trend for Jiffy; it has been green from the very beginning in the 1950s (Jiffy Products, 2010).

New products are always under development as Jiffy strives to continue adding value through innovative growing solutions. Recently, in 2008, Jiffy entered into the vegetable hydroponic industry. Jiffy offers the hydroponic industry a line of products that is ―geared toward changing the industry into sustainable hydroponic vegetable growing‖ (Jiffy Hydroponic, 2010). Currently this product line includes the Jiffy growbag and growblock, both made from coconut coir. The products are at this time only offered to the PGD division.

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Jiffy- Growbag

Jiffy‘s growbag is a product developed for use in the hydroponic industry and is made entirely out of coconut. Since coconut is a living organism, it contains a higher level of nutrients compared to non-living media such as rockwool. It also offers top performance in hydroponic systems because of its large air filled porosity, eco-friendly material, superior water holding capabilities, and high root stimulating hormones that provide protection against root disease.

The new product also fits Jiffy‘s image perfectly when it comes to the sustainable image. The growbag are created out of a bi-product of coconut production, reducing waste and promoting sustainable ideologies. The material also naturally decomposes within ten years, making this one of the most environmentally-friendly materials ever used in hydroponics (Jensen, 2010).

Jiffy also manufactures another product that can be used in the production of vegetables. The Jiffy growblock is also made of coconut substrate, resulting in the same advantages and benefits as the growbag. The product is delivered as a dry plate enclosed in netting to be expanded into a block. Offering the Jiffy ‗container and medium in one‘ provides logistical benefits such as reduced shipping and storage costs. After rapid expansion with a water and fertilizer solution, the Jiffy ‗growblock‘ is ready for propagation or cultivating of plants. The growblock will be mentioned throughout this report; however the focus will be on the

growbag. All of Jiffy‘s coconut coir products are currently manufactured at its Sri Lankan plant.

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bi-product of the coconut production process, and Sri Lanka is one of the world‘s biggest exporters of coconuts.

Although, Sri Lanka is ranked eighth on the list of all coconut exporters in the world, it has focused on other parts of the production such as coconut coir growbags. A majority of the producers of coconut coir growbags are located in Sri Lanka (Coir Board, n.d)

Jiffy‘s factory in Sri Lanka is located in Mirigama, which is 65 kilometers from the

commercial capital, Colombo. At this point of time, the factory has 67 regular employees and 159 casual workers, and has production all year round. The factory also consists of two raw material processing plants 25 and 60 km away from the main factory. Jiffy purchases coconut coir from the same plantation each time in order to get consistency in the growbag.

Market profile

The greenhouse industry today is distinguished as a relationship focused market. The growers are business men with great knowledge about their facilities and their trade, and often drive a hard bargain.

Current Situation in Canada- Hydroponic Industry

Today, Jiffy has 14 trial facilities in the Leamington area. Jiffy has provided each trial grower with around one or two rows of its product in the greenhouses. However, providing such a limited supply of its product makes it nearly impossible to see the real results of using Jiffy‘s product. The disadvantage of providing only one or two rows is that the growers need to use the same water and fertilizer volumes as on the other products in the same area in the facility, and cannot adapt to the needs of Jiffy‘s product exclusively.

Since beginning production for the hydroponic industry in 2009, Jiffy has had one sale in Quebec as of 2010. This transaction is valued at approximately CAD $ 200 000, and includes both growblocks and growbags. This sale represents 50 acres of a total of 2324 acres. The total market is divided into three areas in East Canada; Ontario (1824 acres), Maritimes (400 acres), and Quebec (500 acres). In the hydroponic industry, Jiffy‘s market share in Quebec is 10%, representing a total of 1.8% of the Eastern Canadian market (Helie, 2010).

This leads us further to an internal analysis of the North American division, to evaluate Jiffy‘s

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current development, operation methods, and vision.

Internal analysis

The ACE-model (Solberg, 2009) can be used to analyze Jiffy‘s attitudes towards

internationalization, and competence and the embodiment of these throughout the company.

This analysis provides insight into Jiffy Products America Inc. capacity to continue expansion into the Canadian market by introducing the growbags.

Attitudes

Jiffy currently operates as a global leading supplier of plant propagation systems and

substrates. The Jiffy Group consist of four companies which combined have knowledge and experience in the horticultural, forestry, and nursery industries. Jiffy has relatively strong financial standing, allowing it a certain amount of leverage to tackle risky decisions and trials.

Further, the level of learning and experience in the different markets offers Jiffy a better information foundation for decision making. Jiffy started its international expansion in 1959 with a new factory in Denmark, and since then it has expanded rapidly to all world continents (Jiffy Products, 2010).

These factors contribute to relatively positive attitudes towards expansion in Canada, however, the hydroponic Jiffy line ‗growbags and growblock‘ have not yet achieved high market share in Canada.

Competence

Jiffy‘s competence in the flower industry is supported by 25 years of experience in the industry and a continuous focus on development, research and innovation in this field. Jiffy places a high emphasis on research and development (R&D) and strives to provide its customers with innovative and quality products. Aside from this, Jiffy values its customers highly and follows up its customers through local sales representatives. However, in the hydroponic industry, there is considerable room to develop on this vision. Knowledge and experience in this industry is minimal as the entry was spontaneous and abrupt. Planning and searching for opportunities is under development, but has not yet reached the desired stage.

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certified by both OMRI and RHP- certifications, which are industry standards that will be elaborated on later in the report (Jiffy Products, 2010).

Marketing to the hydroponic industry has also been at a low level. Jiffy has one active agent working with this project in East Canada. At the moment only 20% of his time is used to generate sales for growbags due to priority of other products and travel time (Helie, 2010).

The product is also slowly being introduced on the webpage and the online catalogue.

At this point, Jiffy has provided little money and few resources to develop the hydroponic market. Although it is apparent that Jiffy is beginning to place a higher emphasis on this industry, the planning process is developing slowly.

Embodiment

Jiffy operates in a global market and is dependent on employees that work towards the same goals and have the same attitudes of expanding in Canada. There seems to be a clear

alignment of values throughout the organization and strong communication between divisions; both factors that are vital to the Jiffy‘s success in the hydroponic industry.

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1. Total Market

Greenhouse Industry Eastern Canada

Ontario and Quebec are the largest producers of hydroponically-grown vegetables in Canada;

consequently, Eastern Canada is the primary concern of this report.

Canadian greenhouse vegetable production has evolved into a rapidly growing business with a farm gate value of USD$ 735 million in 2008 (Hickman, 2010). Production of greenhouse vegetables occurs in every province but is concentrated in Ontario, British Columbia, and Quebec due to climatic and energy advantages as well as the proximity to large domestic and U.S. markets. British Columbia, Ontario, and Quebec have also been able to develop niche markets in nearby U.S. states with the decrease of tariffs since 1989 (Agriculture and Agri- Food Canada- 1, 2009)

Greenhouse Industry Ontario

Ontario greenhouse vegetable growers are located throughout Ontario, from Windsor to Niagara, and as far north as Ottawa. In particular, South-western Ontario‘s ideal growing conditions can be attributed to location; it is the most southern point in Canada; it lies in the 42nd parallel (shared with Rome, Italy and Northern California); is further south than 13 U.S.

States; and the southern part of Essex County has a greater acreage than the whole North American greenhouse industry (Municipality of Leamington, 2010).

Ontario greenhouse produce is grown using hydroponics. Ontario has 1824 acres of

greenhouse tomatoes, cucumbers and sweet peppers. On each of those acres Ontario growers can yield 64 times more than other conventionally grown commodities. This allows Ontario to represent over 60% of total greenhouse vegetable acreage in Canada, see appendix 1 for key figures. Because Ontario producers are less than one day‘s drive from the majority of markets they serve in Canada and the U.S, more than 70% of Ontario greenhouse production is

exported to the US (Appendix 1). The majority of growers distribute their products using intermediaries that, in turn, sell to retailers. Approximately 44 different marketers sell produce to retailers throughout North America. The ten largest marketers account for over 60% of all

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Ontario greenhouse growers have their own association; Ontario Greenhouse Vegetable Growers (OGVG) was formed in 1967 and represents more than 230 members that produce greenhouse tomatoes, cucumbers and sweet peppers. OGVG lobbies for, and conducts research on behalf of, Ontario-based greenhouse vegetable growers. OGVG also promotes greenhouse vegetables through various media and tradeshows (Ontario Greenhouse Vegetable Growers, 2010).

Leamington Greenhouse Industry

In recent years, Leamington, Ontario has established itself as the greenhouse capital of North America. The increased activity has caught the attention of Jiffy, who uses trial-growers in the region to test its products. Consequently, further examination of the city is required.

Developed in Leamington by immigrants following the Second World War, greenhouse production has shown considerable growth and become a lucrative multi-billion dollar industry. Principal crops include tomatoes, cucumbers and peppers; see appendix 1 for acreage by location and commodity. Leamington and neighbouring Kingsville have the largest concentration of greenhouses in North America with over 1500 acres "under cover"

(The Municipality of Leamington, n.d.).

Greenhouse Industry Quebec

Quebec has 500 acres of greenhouse tomatoes, cucumbers and sweet peppers. As mentioned earlier Quebec is a great place for the greenhouse industry due to the climate and energy advantages as well as the proximity to large domestic and U.S. markets.

Figure 1

Greenhouse vegetables sector cultivated area (hectares):

(Syndicat Des Producteurs En Serre Du Quebec, 2010)

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Quebec greenhouse growers are passionate about their work and they intend to make a living of it for many years to come. As in Ontario, Québec growers invest in their professional association to ensure proper recognition for their production and better support for its development. The challenges facing the Syndicat des producteurs en serre du Québec are many. For example, producers want to have access to energy sources (a major factor in greenhouse growing) for the same price as their Ontario and British Columbia competitors.

Producers also want their businesses to be able to grow their products according to demand.

The Syndicat des producteurs en serre du Québec was set up in 1983 (Syndicat Des Producteurs En Serre Du Quebec, 2010).

2. Environmental Scan

This section contains an analysis of the external factors in the industry.

2.1 Macro-Determinants (PEST) 2.1.1 Socio Cultural Factors

As mentioned in the introduction, the Jiffy pot has been a sustainable pot from its very first day. According to the article, Sustainability: Its Impact on Global Consumption to 2010 from Euromonitor international, governments, companies and consumers are becoming

increasingly concerned about the need for sustainability, defined as meeting the economic and social needs of the current generation while working to preserve biodiversity and natural ecosystems for future generations. Some of the main arguments from the article show that in Western countries, ethical consumerism is at an all-time high. As business becomes

increasingly global, concern is rising about the way companies operate and the origins of products. A 2007 survey by Information Resources Inc revealed that as many as 48% of American consumers take into account "sustainability" when choosing a brand, product, or service. In the US, the lifestyles of health and sustainability sector are estimated by the Natural Marketing Institute to be worth US$ 209 billion. This shows that there is a market for sustainability at the moment. Consumers are also realizing that their actions can force

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with how production affects the environment, growers are likely to seize the opportunity to grow with sustainable technologies (Appendix 2).

The Green Consumer:

In 2007, Reader‘s Digest published the results of a survey of 141 countries to determine which the greenest place to live is. Norway ranked 3^rd, Canada ranked 11^th, and the US 23^rd. It is difficult to determine a specific set of characteristics that categorize an individual as a green consumer. However, the younger, female, and middle class populations tend to be more willing to make financial and personal commitments towards sustainable living. A 2007 survey by the UK's Department for Environment, Food and Rural Affairs found that

consumers in higher social or income groups and those living in rural areas are more likely to both be aware of and purchase certain products with environmental, animal welfare or other sustainable benefits.

Although throughout the 2009 recession consumers placed less emphasis on sustainability in purchasing decisions, over the long-term, the future remains bright, and sales of

environmentally-friendly products are expected to quickly accelerate with the first signs of economic recovery.

The Health and Wellness Consumer An Ageing population

As is the case in the rest of the developed world, Canada is undergoing major socio- demographic changes that are leading to changing habits and lifestyles. Canada is

characterized by an increasing proportion of seniors. This demographic shift is among the factors behind the growing tendency of Canadians to seek ways to improve their quality of life, which includes a shift on the part of some Canadians towards a healthier diet rich in nutrients that can help battle such age-related ailments as osteoporosis. Concern about physical wellbeing is another emerging trend (Statistic Canada, 2009)

Encouraged by health authorities, ageing baby boomers are turning towards food products that contain vitamins and minerals, such as calcium, and attempt to cut consumption of products high in salt and trans fats. Rising costs of prescription drugs, not all of which are covered

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under the Canadian public healthcare system, also tend to push people to prevent disease by making the right food choices. There is a trend towards healthier eating in Canada as

evidenced by Euromonitor‘s table of vegetable consumption:

Figure 2

(Passport 2, 2010)

The Most Important Trends and Attitudes towards Coconut Coir Growing Bags:

According to ―A review of the future prospects for the world coconut industry and past research in coconut production and product‖ (2007) by the Australian Government, Center for International Agriculture Research, coconut production appears to have been growing at around 2 per cent a year since the early 1960s. Around ninety per cent of total world coconut production occurs in the Asia Pacific region. Sri Lanka, the source of Jiffy‘s coconut coir, is the 8th largest producer of coconut in the world. The trend for the larger producers is upwards with generally little variability in yields from year-to-year. Sri Lanka, however, provides an exception as reported yield per hectare has dropped off substantially over the past 3 years;

possibly a result of rapid cost increases and the continuing effects of civil war (Chapman, 2007). Sri Lanka has been a significant exporter of value added products particularly desiccated coconut and coconut oil.

100 105 110 115 120

1998 2000 2002 2004 2006 2008

Vegetables Per Capita consumption, Kg, Canada

Vegetables

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hydroponics industry. Exports of coir textiles from India grew on average 53 per cent per year between 1995 and 2000. Although India is the largest producer and exporter of coconut products, Sri Lanka is the largest exporter of coir products. This industry is made possible by access to a segment of workers, within a narrow age and ethnic profile, whose wage rates reflect a low reservation price for labour. A substantial risk to these industries is that as economic development and education change labour force attitudes over time, processing costs will increase dramatically as labour becomes scarce. Producers in Sri Lanka are reported to be looking to mechanize production in the face of rapidly rising labour costs (Chapman, 2007).

2.1.2 Economic Analysis

Impact of the Economic Recession

The US Commercial service has analyzed the Canadian agricultural industry in 2009 and concluded that there is significant demand for agricultural greenhouses and associated

products in the Canadian market. Industry experts have touted the greenhouse industry a silent engine of growth for various sectors of the Canadian economy. In Canada, greenhouses are utilized for three main industries: horticulture, agricultural/vegetable production and nursery industries. A recent report prepared by Statistics Canada states that these industries have experienced expansive and continuous growth from 1990 to 2007. While this growth has recently declined due to the economic recession, the rising Canadian dollar, and increased labour, energy and heating costs, it is expected to steadily grow in upcoming years. The demand for greenhouses and associated accessories in Canada is regionally-specific. The greatest demand exists in the provinces of Ontario, British Columbia, Quebec, and Alberta, as a result of their climactic and energy advantages and their proximity to central domestic and U.S. markets. The Ontario Ministry of Agriculture, Food and Rural Affairs released a chart detailing the demand for greenhouses and affiliated products in Canada (Appendix 3) As demonstrated by the chart, the total number greenhouses, sales, and investments have all steadily increased from 2006-2008.

2.1.3 Political and Legal Trends

Political and legal trends that can affect Jiffy‘s operation in Canada may include

environmental laws, trading blocks, or laws and regulations affecting the production and import of the growbag from Sri Lanka.

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In terms of exporting growbags from Sri Lanka, there are several steps that need to be taken before companies are allowed to ship the products. Several authorities are involved in this process, such as the Department of Agriculture of Sri Lanka, which provides the

Phytosanitary certificate and the Ceylon Chamber of Commerce, which issues a Certificate of Origin. In addition the companies need to show proof that the products have been fumigated for 24 hours before departure (Helie, 2010).

Since the majority of the production plants are located in Sri Lanka, political factors also need to be taken into consideration, as well as other aspects distinguishing the Sri Lankan culture.

The government in Sri Lanka is a mixture of the presidential system and the parliamentary system. The President is the head of state and government, the commander in chief of the armed forces, and is elected for a six-year term (Wikipedia, 2010). Sri Lanka has enjoyed considerable stability, in spite of high levels of political violence throughout the course of its 26-year civil conflict. However, the presidential election in January of this year has caused instability. While the official result was announced declaring the incumbent president, Mahinda Rajapakse, as the winner the common candidate for the opposition, retired general, Sarath Fonseka, rejected the result. He stated to the media that the election was rigged,

violence was used throughout the election, and there was heavy corruption evident throughout the election (Sri Lanka Guardian, 2010).

With the challenge to the presidential election, there will be a continuing decrease in

confidence of governance in Sri Lanka. The allegation of political corruption has surfaced as a major issue in Sri Lanka and extremely high levels of abuse have been exposed at all levels of government, potentially threatening the use of state resources. According to Sri Lanka

Guardian, this matter is no longer possible to deal with within the present political climate.

Thus a situation of suspicion and tension have once again has resurfaced in Sri Lanka and corruption will likely remain a major problem within the state for years to come. All in all, the ultimate result of the election seems to have generated a situation which is likely to ignite continuous political instability within the country (Sri Lanka Guardian, 2010).

Corruption-Related Costs

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pointed out that fees and charges imposed by authorities were large in number and amount.

One of the most common complaints was the bureaucratic practices in the customs, especially related to unofficial fees paid to speed up the clearing process, which can be from 25-50 % of the total cost of clearing a 20 ft. container. According to Sandeeptha Gamalath, the manager at Jiffy‘s factory in Sri Lanka, this level of corruption is not affecting the coconut industry at the moment. However, all these factors can have adverse affects on production and export from Sri Lanka in the future.

The economic situation in Sri Lanka is generally stable, with an annual average growth of 4.5%, but has recently been hampered by hostilities between the government and the

Liberation Tigers of Tamil Eelam (LTTE), high government expenditure, and high inflation and interest rates (US Department of State, 2008).

The government‘s involvement in the coconut industry in Sri Lanka is pervasive; it is heavily involved in the entire value chain as producers, processors, and also regulators of the sector.

In line with the liberalization of its economy in 1977, the Government of Sri Lanka undertook several measures to facilitate trade and integrate its economy with the rest of the world, however, administrative procedures associated with laws, formalities and procedures are still complex and irrational (Wijayasiri, 2009).

Companies exporting from Sri Lanka have to monitor the laws and regulations that come along with exporting and importing. As an example, even the pallets the coconut bags are shipped in needs to be certified, and the products themselves has to be free of insects and diseases (Helie, 2010). For instance, if new laws and standards are developed in Canada regarding requirements for importing coconut products, production processes in Sri Lanka may have to be adjusted.

The industry also has to take into consideration that the US is Canada‘s biggest export destination; therefore new regulations and custom fees at the American boarder can directly affect Canadian growers (Appendix 4). As an example, in May 2002 when American authorities raised the duties on softwood lumber by 27%, the Canadian lumber industry was negatively affected (CBC, 2006). An increase in export fees in the horticulture industry, would not only affect the horticulturists, but also the suppliers.

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2.1.4 Technological Trends

Hydroponic technology has shown considerable development over the course of the last century. In the early 20^th century, it was primarily scientists that had shared interest in this form of growing method. The primary reason was to develop a way to grow vegetables in non- arable land, such as deserts or in cold areas. Since the hydroponic growing method is a soil-less method, it may be used anywhere as long as it has light, water, and air. In the 1970s, traditional farmers and eager hobbyists started to pay attention to this soil-less growing method. After years of extensive research by scientists, and confirmed proof of a more effective growing method, more growers started using hydroponics (Planet Natural, n.d.).

Several medium types have been used as a hydroponic growing medium. Media such as rockwool, sawdust, perlite, and different types of peat have been used since 1970. However, in the last decade the price of coconut coir has dropped and has become competitive with the other hydroponic media mentioned above (Appendix 5). As seen from the field trip to

Leamington, growers either use coconut or rockwool growbags. Coconut, however, is the most commonly used medium, due to high disposal fees on rockwool (Appendix 6).

According to Sylvain Helie, rockwool is more commonly used in Europe, because it has a better disposal program.

According to Dr. Merle Jensen, coconut coir with all its benefits compared to the other media is the best technology to use at this point (Appendix 7). One of the most important factors for the change is primarily price reduction which is at this point approximately USD $290 per M.ton FOB (Appendix 8).

2.2 Industry Determinants

2.2.1 Risk Management

Risk management is the attempt to identify and then manage threats that could severely impact or bring down the organization. A firm with sales spread over a number of different markets may achieve better risk control than a firm with all sales concentrated in a single

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also provides to those organizations and individuals who practice hydroponics and organic growing.

As mentioned earlier, Jiffy international has acquired 3 other companies. Ferry-Morse (based in Kentucky, USA) and McKenzie (Manitoba, Canada) are specialized in flower and

vegetable seeds, while Tref VB is one of the leading substrate and potting soil companies in Europe, with its headquarters in Moerdijk, The Netherlands.

As seen above in the report Jiffy has production facilities and sales departments in Norway, Denmark, The Netherlands, Sri Lanka, Canada, and the USA, as well as sales offices in France, the UK, Germany, Kenya, Colombia and Japan. Since Jiffy is a horizontally

integrated company with sales spread over a number of different markets, and with production facilities spread all over the world it can achieve an optimal level of risk control. For instance, if some dramatic change were to happen in one market or at one production plant, potential losses could be mitigated because of other plants. However, it is important for Jiffy to realize the risk of only having one plant that produces specifically hydroponic products. An event with a significant effect on the Sri Lankan manufacturing plant could result in severe losses in hydroponic sales because it is Jiffy‘s only source of the product.

2.2.2 R&D

Research and Development (R&D) is an important division for horticulture suppliers.

According to Amandeep Bal of the BC Greenhouse Growers Association, greenhouse growers pay a great deal of attention to their competitors (Appendix 5). The research trip to Leamington also supports this statement. It is important that growers stay competitive and maintain a high standard of quality, in order to remain in business. Personal interviews conducted in Leamington revealed that some growers did not earn profits this season because costs increased while revenues remained the same.

When growers use a new and better growing method, it is quickly detected and adapted by other growers (Appendix 6). With this in mind suppliers need to remain vigilant of the growers and their preferred techniques. Not only must growers be aware of changes in growing methods, but also of other components of growing, such as innovations in glass houses, fertilizes, and growblocks. It is evident from the field trip to Leamington that certain

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growers were innovative. One grower attempted to use foam growbags, while another tried insulation attached to the roof to decrease the Sun‘s intensity. Although coconut coir may be the best medium to use now, further developments in light, fertilizer, or greenhouses may result in a decline in its use. Hypothetically, a new and better fertilizer may affect the use of coconut coir, if they cannot be used together. An example of this is EnviroGrow, Ontario which has developed a new growing medium which is supposed to compete with rockwool.

This product is still too expensive, to compete with rockwool, and coconut coir, but similar inventions, might threat coconut coir as a leading substrate (EnviroGrow, 2010).

To sum it up, focusing on other parts of the industry may work as a buffer or as security against technological developments that may be bad for coconut. One way of remaining on the forefront of research is to cooperate with universities and other institutions that do

research in horticulture. According to Dr. Merle Jensen, Universities are ahead of the industry with regards to technological developments by as much as 20 years.

3. Certifications

3.1. RHP- Certification

“The RHP quality mark was developed by the RHP Foundation to guarantee the products' quality throughout the entire production chain, from extraction from their source to

processing by the buyer. The quality mark guarantees certainty, safety and quality.” (RHP- Certification, 2010).

RHP-Certification is a quality label that provides greenhouse growers with assurance that the growbags are consistent in quality and free of diseases and insects. RHP-Certificated products have to lie between a minimum and maximum level of Electronic Conductivity (EC) and pH.

EC is supposed to be around 1.8 while pH levels should to be between 5.5 and 5.8.

Since coconut is a biological product, its quality may vary depending on the season.

Consistency in the quality coconut coir is noted as one of the greatest shortfalls of this medium versus other growing media by greenhouse growers. RHP-certification guarantees

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An independent organization does all the control checking, making sure that the growers can rely completely on the certification. The RHP-foundation controls the entire supply chain, and frequently sample each part of the supply chain, leaving nothing to chance.

3.2 OMRI -Certification

The Jiffy growbag and growblock were recently (03.10.2010) certified by the Organic Materials Review Institute (OMRI) making its products available to organic growers looking for a high-quality, sustainable option to grow vegetables hydroponically (Organic Materials Review Institute, 2009). Unfortunately, this certification provides little advantage for Jiffy in Canada at the moment, as OMRI is an American based company, and there are differences in organic standards regulations in the US and Canada. The permissibility of hydroponics in organic agriculture is a source of on-going debate in Canada, and under current standards, soil-less culture is not permitted (Jannasch, 2009). The National Organic Program in the US on the other hand, permits hydroponics. A considerable volume of literature on the Internet, mostly American in origin, accepts, without question, that soil-less culture is simply a variant of organic farming. In 2009 The Organic Trade Association in Canada (OTA) and the United States signed an equivalency agreement allowing organic products to be traded between the two countries. The agreement will allow farmers in each country to certify to their domestic organic standards, but they will be able to sell their products as organic in both markets (Canadian Business, 2009). It is possible that this agreement and the States‘ readiness to use hydroponics in the organic industry will have an influence on the Canadian Organic Industry, yet as of right now the OMRI certification is not a benefit Jiffy can exploit in Canada.

4. Ethical Dilemmas

Many people associate hydroponics with the growth of Marijuana. This association may potentially affect the suppliers of products used for this method.

The marijuana industry in Canada

Canada has a $20 billion marijuana industry that has reached a violent crossroads between crime and commerce. It is said that ―the cannabis industry is now so vast and vital to Canada‘s national economy that it can no longer be ignored‖ (CBC News Network, 2010).

According to the TV documentary at CBC January 2010, most of the marijuana in Canada is destined for the US market, where a pound of premium cannabis sells for a street price of

$4,500. Some questions have been raised, such as whether ―the staggering profits from the

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cannabis industry are better off in the pockets of hard-core smugglers and criminal gangs, or would the Canadian economy benefit from taxing this exploding industry?‖ (CBC News Network, 2010). The documentary also stated that marijuana is still gaining public acceptance, and people have seen the market potential in legal situations as well, as there currently are more than 2,800 people licensed to grow medical marijuana in Canada.

As established above, the marijuana industry is large, and there is clearly a market potential for suppliers in the hydroponic industry to enter the industry of medical marijuana. However, this may lead to an ethical dilemma. If Jiffy were to sell its growbags through retail stores, it is likely that licensed medical growers and vegetable growers would not be the only

purchasers. In fact, many consumers may be purchasing for illegal grow-operations, which clearly has adverse effects on society and threatens the lives and safety of those within it. This raises the question of whether large corporations should take advantage of an industry that affects many innocent lives. Although the answer is clearly no, when using small retail stores as a distribution channel, one cannot be a hundred percent sure who purchases the products and how they are used. However, this ethical dilemma only applies to the business-to- consumer segment, and does not present considerable threat to the business-to-business market.

5. Derived Demand

In this case, derived demand refers to the extent to which end consumer demand in the

greenhouse industry results in demand for Jiffy‘s products at a business-to-business level. For the purposes of this study, it refers to the effects that end users can have on the greenhouse industry and for the sale of Jiffy‘s products, and is an important factor that deserves

consideration (Lindsay, 2005). For instance the demand for hydroponic products occurs as a result of demand for vegetables. It would be a fatal error for Jiffy to only concentrate on its direct customers, greenhouse growers, and neglect to realize the importance of its customer‘s customers. For instance, if the public were to lower their intake of tomatoes, cucumbers, and peppers (or processed foods made from these vegetables) this would influence the number of greenhouses producing these products and would likely have an effect on the companies that sell greenhouse products such as Jiffy. Fortunately for Jiffy, as mentioned in the socio-cultural

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This increasing growth in vegetable consumption signals positive derived demand for Jiffy‘s products and suggests that there is little concern about reduced consumption in the short-term future. However, it is important that the company continues to monitor the consumption of both fresh vegetables and processed vegetables in the long term to ensure it will have sufficient customers to drive demand for its products.

6. Product Life Cycle

A company‘s positioning and differentiation strategy must change as the product, market and competitors change over the Product Life Cycle (PLC); therefore it is important for Jiffy to be aware of what stage of the PLC the coconut growbags are in. The Jiffy growbags are a new member of Jiffy‘s product line. It takes time to roll out a new product, work out technical problems, fill dealer pipelines, and gain consumer acceptance. Therefore sales growth tends to be slow at this stage. However, coconut growbags in general are not in the introduction phase;

Jiffy was just a bit late to get onboard while this stage was under development.

Of the four stages of the PLC, coconut growbags are placed between the growth phase and the mature phase. At this stage, Jiffy faces a great deal of competition; the strongest ones,

Forteco, CoirTastic and Millennium have been in the industry much longer than Jiffy. Jiffy‘s task in this stage is to gain and increase market share. The only possible way for Jiffy to do so in this phase will be to steal market share from competitors.

7. Market Complementary

Complementary products must be granted serious consideration when sales of company‘s output is dependent on sales of the complementary product (Lindsay, 2005). For Jiffy, these products include growblocks, seeds, water, and fertilizer; all components required to make the fruit grow. All of these products are almost equally important for the grower and for the suppliers and an effect to demand of any of these products will likely have an effect on the demand of the growbags. The growblock and the seeds come directly from a propagator that has already planted the seed in the growblock before it gets to the grower. When the grower get the two products from the propagator the plant has already started to grow, and there is a small stem. reaching out of the growblock (Appendix 6). Further, the need for water and fertilizer is needed to make the plant grow further. There could be more products involved in

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the production, however, these are the only complementary products, since a grower needs all to grow vegetables.

One interesting aspect is that the growers buy these different components from different suppliers that specialize in the specific area. This raises the question of whether the industry could take advantage of a more efficient and price-effective system where a company could provide the grower with all required items in one package. During research a new approach was discussed among some of the interview subjects. This was whether the grower could ignore the growblock and grow the plant directly into the growbag. If a new system is developed where growers do not need all of the components, some essential products and companies would be affected, including Jiffy, as it provides growblocks.

8. Porters Five Forces

Porter‘s five forces are used to gain an overview of the competitive environment within the hydroponic industry in Canada. The analysis presents information and insight on what factors might influence the product‘s success in the market, and also provide an indication of Jiffy‘s position in the industry.

8.1 Threat of Substitute Products

Most companies are aware of direct competitors who deliver the same products and services, but fail to look beyond their own industry and observe the external threats from other

industries (Lindsay, 2005).

8.2 Direct Substitutes

Direct substitutes for Jiffy are those growing media that are similar to, and can satisfy the same needs as, the growbag that Jiffy supplies. There are hundreds of different kinds of hydroponic growing media, but the most familiar types are: rockwool, clay pellets, perlite, oasis cubes, vermiculite, sand, sphagnum moss, fibreglass insulation, lava rock, gravel, peat, sawdust and coconut fibre (Simply hydroponics and organics:1, 2010).

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large air filled porosity, eco-friendly material, superior water holding capabilities, and high root stimulating hormones that provide protection against root disease. However, a lower grade of coconut fibre that is high in sea-salt and finely grained, will lead to disappointing results (Simply hydroponics and organics:1, 2010). Rockwool has been among one of the most used growing medium for a long time, but its price continues to rise, mainly because of the disposal expenses related to the material. It is made by melting a combination of rock and sand, then spinning the mixture to make fibres (Simply hydroponics and organics:2, 2010).

Rockwool has many of the same qualities as coconut fibres, however, the material is not organic while coconut fibre is, and this results in a lower content of nutrients. It will also last indefinitely if buried; in other words, it is not an eco-friendly material.

By studying these examples it is clear that most of the growing media share similar qualities and characteristics, but as trends in society and the industry change, and new technologies are developed, some will appear more attractive than others.

8.3 Indirect Substitutes

Jiffy may not have any external threats as of today, but it is still important to keep an eye on potential threats from other industries as new technologies may appear and new systems may develop. Soil is one of Jiffy‘s indirect substitutes. Soil is nowhere to be found in a hydroponic garden; it is replaced by different types of growing medium (Guide Hydroponics, 2010).

However, it is not considered to be a major threat to Jiffy because hydroponic methods have been proven to be more efficient and convenient.

8.4 Bargaining Power of Suppliers

In the hydroponic industry there are a large number of suppliers, both internationally and locally. Switching costs are generally quite low because the products are similar in function so switching brands does not require a major overhaul of the growing system. However, if this was not the case and the product had to be specifically tailored to the hydroponic system, the switching costs could be prohibitively high. Lately, some growers have installed automated systems that fit specific products from specific suppliers to make the system more efficient (Appendix 6). The industry also provides hydroponic buyers with customized products, a service that seems to be growing in popularity. Suppliers in the hydroponic industry may

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currently be defined as weak because of low switching costs. At this time the product itself is not that differentiated, however, the service the suppliers provide is. This includes for

example, more tailored systems, customized products, after sale service like pick up, and the relationship between the grower and supplier.

8.5 Bargaining Power of Customers

The power of buyers is the impact that customers have on the industry. In the hydroponic industry, buyers are quite concentrated as there are relatively few buyers with significant market share. The buyers in the hydroponic industry at present have relatively high power, as they are few, there are relatively low costs in switching supplier, and the growers purchase large volumes (approximately 3000 growbags per acre) on an infrequent basis.

8.6 Threats from New Entrants

The hydroponic industry is a relationship focused market. According to Jiffy‘s sales representative, Sylvain Helie, breaking into the market has been a difficult task. Most

hydroponic customers have personal, long, and loyal relationships with their current suppliers, and in some cases the suppliers have even worked for the growers (Appendix 6).

Due to this fact, there is not a high risk of new entrants entering this market, even though it is growing. This is mainly because the growers want to maintain their relationship with their current supplier. However, as previously alluded to, new development in growing

technologies may introduce new competitors. In other words, new growing methods or media may out-compete Jiffy‘s growbags. To sum it up, new entrants will find it hard to survive in this market, unless they have an extraordinary product.

Since Jiffy‘s growbags are in the introduction phase of the product life cycle, competitors will see them as new entrants.

8.7 Competitors

When Jiffy decided to enter the hydroponic market in Canada, it made the decision to enter a tough market with strong competitors. There are several dominant competitors that have

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competitors have their main offices located either in the US or the Netherlands (Appendix 9) All the competitive products are quite similar; therefore it is hard to differentiate a new growbag. All the competitive products are made out of coconut from Sri Lanka, and all the competitors wash the coconut coir thoroughly to ensure high quality products (Appendix 10).

Of all competitors, only Van Der Knaap is RHP-certificated (Appendix 9), however, Van Der Knaap is not directly located in Canada. Only its sister company Forteco distributes products here, and it is not RHP-certified. The lack of availability of RHP-certified products in Eastern Canada is one of Jiffy‘s strongest competitive advantages. At the same time, however, not all growers in Eastern Canada are informed about RHP-certification and growers continue to wash Jiffy supplied growbags.

Since Jiffy‘s growbags are in the introduction phase of the product life cycle, competitors will see them as new entrants. Taking market share from the already existing competitors will not be easy, especially since many growers have a good personal relationship with their suppliers (Appendix 6).

Delivering superior quality of service has been recognized as the most effective means of ensuring that a company’s offerings stand out from a crowd of look-alike competitive offerings (Kandampully, 1998).

9. Current Marketing Mix

9.1 Promotion

At the moment Jiffy is not promoting its coconut growbag to a large extent. Some of its hydroponic products are mentioned briefly on the Jiffy website, however, it does not make mention of the growbags. Consequently, at this time, the growbags are only being promoted by Jiffy‘s sales representatives who are physically handing out samples for trial, or for show.

9.2 Product

The purpose of the bag is to grow hydroponically in greenhouses. The bags are designed after the systems that are being used in greenhouses and Jiffy customizes all of its growbags to the

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growers needs. Customization allows Jiffy to offer products ranging from small bags with coarse content and three pre-cut holes to large bags with fine content, high levels of coconut peat, and pre-cut drainage holes. The customer decides everything, except the price. The quality of the growbag is assured by RHP-certification, which provides credibility by being independent of Jiffy. With RHP- certification, customers are guaranteed to receive the highest quality products; pH and EC levels are to be within approved levels, and all bags are disease and bug free. The growers receive the bags dry, wrapped in white plastic bags. The main part of the grow bag is its environmental friendliness as coconut coir gets broken down by the earth within 10 years. The only non-environmental friendly part is the plastic wrapping, but further advances in biodegradability will one day result in a more sustainable package. The growbags are mainly designed for peppers, cucumber, and tomatoes, but may also be used for growing eggplant and lettuce. The brand name is printed on the packaging together with Jiffy‘s brand image, ―Born Sustainable‖. The logo is placed on the bottom left corner of the bag. There are no pre-packaged guidelines referring to proper use and treatment of the growbags; however, since most of the sales are done B2B, Jiffy representatives are available to provide support and instruction.

9.3 Distribution

The growbags are sold directly from the sales representatives to the greenhouses; there are no fixed retailers. When a sale is completed, the representative sends the order to Jiffy‘s head office in Lorraine, Ohio, which in turn forwards the request to the manufacturer in Sri Lanka.

After the products have been produced, the bags get shipped from Colombo, in 40 foot containers or are shipped by pallet loads (David Rogers) In the 40 foot containers, the growbag can either be free stacked or pallet loaded. When shipped by pallet, each pallet is shrink-wrapped and banded for safe delivery. The price for shipping in 2009 was CAD $ 3000, but has risen to CAD $ 4000 in 2010, caused by the recession‘s lower traffic. The transportation takes approximately 30 days from Sri Lanka, however if the customers want the products quicker they can pay an extra CAD $ 1000 to get it in 20 days. The price of the shipping is included in the product price. The ports in eastern Canada are found Toronto, Montreal and Halifax and the products are transported directly to consumers straight from there.

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Figure 3

Jiffy’s Order Process:

Supply Chain:

9.4 Price

The hydroponic market does not have established price points for products or services in Eastern Canada; the market is relationship-based and so are the prices. Jiffy currently does not have a single set of prices set for its growbags, nor does it anticipate on using one in the future. (Helie, 2010).

The growbags are usually measured in litres and the average price per litre is between 7 and 15 cents. However, the pricing is also set by the size of the order, the size, shape and design of the growbags, the competitors‘ actions, and also the production costs in Sri Lanka, which includes the price of buying the coconut, and the manufacturing expenses (Appendix 8). As mentioned earlier the shipping price is included in the final growbag price. The growers are individual and they all have different preferences of how big the pieces of the coconut should be and how much coconut each bag should have. Even if they grow the same vegetables, the

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preferences will be different.

The value of the product or service to the grower is vital; failure of the growbags to perform as expected could be detrimental to the success of operations and could negatively affect a grower‘s profit margin. Buyers are also dependent on Jiffy‘s service, relying on delivery well in advance of the growing season and technical support if something were to go wrong. The growers are extremely price sensitive and have a lot of other expenses to cover such as the pricing on the propagation or the pricing on the growblocks, seeds, strings, electricity, labour, and heating. Consequently, a small decrease in price could gain Jiffy extra market share.

Jiffy‘s competition includes the companies with similar quality growbags. Low quality growbag companies are able to set a much lower cost on their products, but the bags do not perform nearly as well as the Jiffy bags. Consequently, the grower that is only concerned solely with price is not really within Jiffy‘s target. During interviews in Leamington it was discovered that the costs of growbags actually represent a small percentage of the growers total production cost (1,9 %, table 1), but the growers are generally price sensitive due to their concerns on their total cost.

Table 1

Prism Farms, Leamington, Ontario Average cost of 18 acres farm

Grower costs CAD %

growbags $ 65,000.00 1.9

heat $ 1,000,000.00 29.3

water $ 80,000.00 2.3

labour $ 1,800,000.00 52.8

seeds $ 200,000.00 5.9

growblocks $ 15,000.00 0.4

propagation $ 250,000.00 7.3

total costs $ 3,410,000.00 100.00

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10. Company Portfolio Congruency

Entering into the hydroponic vegetable industry is a relatively new venture for Jiffy, as it only happened about two years ago. Jiffy did not have any products designed for this industry in its present portfolio as its main products consist of pellets and pots for the flower industry, using both peat and coconut. Because the new products under consideration are designed for a different industry than the existing products, there should not be any impact on the

performance of other products in Jiffy‘s product portfolio. Jiffy‘s experience in the flower industry has resulted in a positive reputation as reliable supplier for its products, which could prove to be beneficial when introducing new products. At the same time, however, it is unlikely that Jiffy will be offering its hydroponic products to its current target market, and will therefore have to build rapport with growers who may be unfamiliar with the Jiffy brand- name.

Further, a BCG matrix is used to evaluate how to position, and the required investment towards the new product based on the growth of the industry and the relative market share relative to the largest competitors. At this time Jiffy‘ s growbag can be classified as a

‗question mark‘, because the industry is growing rapidly and thus requires a large capital outflow, but Jiffy has yet to generate a significant portion of the market share. A question mark has the potential to become a star, and eventually a cash cow when the market growth slows down. If the growbag does not succeed in becoming a market leader, then after perhaps years of capital consumption, it will degenerate to a dog when the market growth declines.

These kind of products need to be analyzed carefully in order to determine whether they are worth the investment required to grow market share. This gives Jiffy the options of either invest heavily, sell off, or invest nothing and generate whatever profit it can.

Figure 4

Source: BCG matrix, retrieved from: http://www.maxi-pedia.com/web_files/images/BCG_Matrix.png

Born sustainable

Table of Contents

Vegetables Per Capita consumption, Kg, Canada