Calyx And Corolla Essay

Hoang Le 1000704240 Prof. Dewan LEC02

Problem Statement

Calyx & Corolla has enjoyed its excellent value chain that sets it apart from traditional

companies. However, Calyx & Corolla should move forward in solidifying its position in the

market by examining its current marketing techniques and also its target customer segments that

will ensure the company’s long term prosperity and stability.

Company Analysis

Strengths

- Strong network with Fed Ex that helps

deliver flowers faster than other competitors

- Low distribution expense and high profit

due to efficient value chain

-Sophisticated customer database that keeps

track of customer preferences

-Strong relationship with growers that restrict

growers to provide service to other florists.

-Strong

customer service with trained
employees and online tracking system
- Continuity programs to balance seasonality
- Cost savings with just-in-time inventories
Weaknesses
- No checking intervention between growers
and customers
- Smaller market of consumers due to not
targeting walk-ins
- Dependable on growers and Fed Ex
- No opportunities for consumers to see the
actual products before making purchases
Opportunities
- B2B market
- Technology innovation with the use of
online marketing
Threats
- Seasonality
- Supermarkets and local florists that attract
consumer walk-ins
Hoang Le 1000704240 Prof.

Dewan LEC02

- Success of promotional tie-ins - Imitation of business structures

- Larger competitors such as FTD with large

advertising budget will reach more consumers

Consumer Analysis

Flowers are purchased for many reasons such as events like funerals and weddings, holidays and

corporate purposes. When buying flowers, the consumers take into consideration variety of

aspects such as the freshness, longevity and more importantly, the delivery time. By mastering

these three, Calyx & Corolla can certainly become very successful. In 1987, most customers

preferred to buy flowers in stores due to freshness. Owades realized that she could take the

consumer needs for fresh flowers to a new level by creating an opportunity for them to purchase

them through mail order with fast delivery. This service had helped the company grew to $10

million by 1991.

In particular, active buyers for Calyx and Corolla tend to buy flowers at least twice a year.

Eighty percent of them are women from 30 to 55 years old. Majority of these women have a

substantial income to spend. Corporate clients are also valuable to the company as they

don’t
rely much on occasions and provide bulk volume sales for the company. On the other hand,
Calyx & Corolla’s market research found that the potential buyers are those who patronize
florists and retailers and are unaccustomed to mail orders. Therefore, Calyx & Corolla should reevaluate
the best customer segments to reach the full potential growth for the company.
Competitor Analysis – Porter’s Five Forces model
Threats of the new entrants:
Hoang Le 1000704240 Prof. Dewan LEC02
The barriers to entry for new entrants could be that Calyx & Corolla has a large customer
database where it can control and identify the potential buyers, thus, beneficial to its selling
process. Also, Calyx & Corolla has a strong relationship with its delivery partner Fed Ex and
growers which helps them deliver flowers to customers more efficiently. Therefore, it is
challenging for new companies to compete within the value chain domain. Since this relationship
build-up is a process, new entrant needs time and investment to catch up with Calyx & Corolla
Threats of substitute products:
Threat of substitute products for Calyx & Corolla is low as it is able to compete with local
florists and retails with regards to freshness and quality with its fast delivery service. However,
with fast –paced changing in customer tastes, Calyx & Corolla could face threats of innovated
products.
The bargaining power of suppliers
With a current network of 30 suppliers, Calyx & Corolla could enjoy the low bargaining power
of suppliers. However, there are eight suppliers that have majority supply for Calyx & Corolla,
specifically. Therefore, we can say these eight suppliers enjoy high bargaining power. They may
control the rules and policy of supply over Calyx & Corolla.
The bargaining power of buyers
The bargaining power of buyers is low as not many companies adapt to the innovated business
models like Calyx & Corolla. Buyers enjoy the same or even better flowers without having to go
to the stores. Therefore, it is hard for individual customers to switch to other companies.
Intensity of Rivalry
Hoang Le 1000704240 Prof. Dewan LEC02
Degree of differentiation: Calyx & Corolla differentiates from other companies with regards to
its efficient value chain which delivers flowers faster with no additional fees. However, in term
pf product differentiation, Calyx & Corolla has not been able to possess strong position.
Structure of competition: There are several competitors on the market such as 25,000 nationwide
florists, nurseries, mail order companies, retailers and supermarkets. However, the biggest
competitor is FTD that works closely with other 25,000 florists to deliver flowers to local
customers. By comparison, Calyx & Corolla’s value chain helps reduce the “middle men” which
results in higher profit. Besides, while FTD retains relationship with florists, Calyx & Corolla
has strong relationship with its growers and Fed Ex who guarantee bringing fresh flowers to
customers. We can see that traditional retail stores and even FTD follow the traditional business
model than that of Calyx & Corolla. On the other hand, while they can rely on customer walkins,
Calyx & Corolla has to rely strongly on mailed catalogs and telemarketing of prior
customers. This can be considered as a disadvantage for Calyx & Corolla.
Marketing Mix
Product
Calyx & Corolla is famous for fresh and quality flowers with the help of fat delivery from Fed
Ex. This results in many happy and satisfied consumers. With the existing fresh and dried
flowers as well as vases and accessories, the management team is working on creating new
flower bouquets and catalogs to reach more customers.
Price
Calyx & Corolla has competitive or even lower price compared to tradition stores who need high
markup (100-200%). Also, by benefiting from strong relationship with Fed Ex, the company is
able to negotiate low shipping fees.
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Place
Customers call to order Calyx & Corolla Growers Fed Ex Customers
This value chain decreases the costs and delivery time for consumers. Also, Calyx & Corolla
receives higher profit from this value chain with 80% of the flower price while the rest goes to
growers. By building strong relationships with both parties, Calyx & Corolla can keep track of
problems and resolve them in time. For example, Calyx & Corolla is informed about the excess
or low stock of growers to generate immediate solutions. This means Calyx & Corolla developed
a strong communication for supply and demand information. Besides, Fed Ex provides on-line
tracking system so that Calyx & Corolla can control the customer inquiries more easily. Also, it
knows it is not a good idea to leave a delivery at the front door if nobody is home in the winter.
Promotion
Calyx & Corolla relies on prior customers and mailed catalogs to determine how to generate new
sales and attract new customers. This is where the company loses money. In fact, the previous
customers showed a 5-10% response rate while rental mailing lists only has 1-2% response rate.
The low return shows that it is unwise to continue with mailing lists. Calyx & Corolla has been
successful with promotional tie-ins such as Bloomingdale’s vase purchase with free orchids.
Also, study showed a success in Contact flower discount program. The company has also
reduced seasonality through its continuity program.
STP
Segmentation
Calyx & Corolla’s customer segments include retail shoppers through B2B option such as
Bloomingdale and SB who use Calyx & Corolla as a type of promotion. Other group is corporate
clients who buy flowers for reception events, conference rooms, incentive programs etc. This
Hoang Le 1000704240 Prof. Dewan LEC02
group is also valuable because of bulk sales, off seasonality and long term relationship.
However, in the present context, Calyx & Corolla focuses mainly on individual customers who
buy flowers occasionally such as birthdays, Valentine’s Day, Mother’s Day or just for regular
decorating at home. In specific, active buyers fall in this group with mostly women from 30 to 50
years old with substantial income who make purchases at least twice per year.
Targeting
Calyx & Corolla should continue to target individual customers, mainly active buyers to
guarantee continuous and stable growth. On the other and, B2B companies are a good target
customer segment not only because it can offset seasonality but also provide upscale promotion
to attract point of sale customers.
Positioning
Calyx & Corolla now position its products as fresh and long lasting and focus on regular
customers. This is considered to be a good position as they care about freshness as opposed to
corporate clients which Calyx & Corolla’s image lies on.
Recommendations
After analyzing Calyx & Corolla weaknesses, it is recommended that the company should pay
more attention to promotion tie-ins rather than mailed catalogs and rental mailing lists cause a
significant loss. After testing promotion with Bloomingdale and SB, it is evident that this type of
promotion will certainly provide a more profitable growth for Calyx & Corolla.
Calyx & Corolla must also address the problem with regards to peak season with Fed Ex. The
company should plan to prevent inadequate service due to busy period which results in lower
delivery service, thus affect the company’s image.
Hoang Le 1000704240 Prof. Dewan LEC02
Also, with the weakness of no control over quality check of flowers from growers, Calyx &
Corolla should consider policy to make sure quality products will get to customers’ hands to
minimize dissatisfaction as Calyx & Corolla partially relies on previous customers as a type of
marketing.

Action Plan

In the short term, the company should consider target retail customers through

promotional tie-ins. First of all, the company should negotiate a price with the stores and

promote products in-store. Calyx & Corolla can set a 25% – 30% sales from retails to attract last

minute shoppers and potential buyers who are unaccustomed to mail orders. For the next two to

three years, Calyx & Corolla should acquire around 300 – 500 stores around U.S. Also, the

company should limit the mailed catalogs as well as mailing lists and focus more on other media

advertising such as television and print ads. These are good to capture broader customers as

opposed to individual mailed catalogs. These will help Calyx & Corolla reduce the cost for

advertising.

With medium term, Calyx & Corolla should build up relationship with more delivery

companies to be less dependable on Federal Express, due to its vulnerable situation in the peak

season. However, to reduce the bargaining power of these new shipping couriers, they should be

treated as alternate options when needed as opposed to regular basis. Also, Calyx & Corolla

should renew the contract with 30 growers by adding policies such as financial penalties

or
ratings with regards to poor quality products sent out to customers. This plan might take around
one or two year to be put into place.
The long term goal for Calyx & Corolla is brand building. The company should continue
to promote in store and provide visual mediums to reach customers at selected locations. This
Hoang Le 1000704240 Prof. Dewan LEC02
will provoke customers to know more about Calyx & Corolla and establish a strong brand value
for the company’s products. Also, with fast-paced changing in customer’s tastes, the company
should also work on designing better flower bouquets and other related products to make it more
competitive in term of product differentiation.