S05 - Session O3 - Valuation of floral products through experimental auctions

Authors: Melinda Knuth *, Xuan Wu, Charlie Hall, Marco Palma

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? Using eye-tracking technology, a single round second-price auction and two rounds of double auction 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 TAMU Human Behavior Lab with 131 community members ranging in age from 18 to 87 years old. The floral design that the subjects were bidding for was present at the front of the room and also displayed on each of the computer screens for the subjects to easily view. Subjects were allowed to touch, interact, and examine the design during the experiment if they wished. Results indicate that American 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. Education and marketing (including digital engagement) are key to appeal to consumers and expanding demand by shifting the demand curve into new consumer categories.