Calyx And Corolla

Calyx & Corolla (C&C)'s key issue is to revise and reassess its long term growth strategy, that will allow the company a sustainable differential advantage within the flower industry. As a pioneer in the mailing of fresh flower market, the company now faces a critical moment as it moves into the growth stage of the business cycle and needs to redefine its strategy, build upon its success and maintain its profitability as competition arises.

Under these circumstances, we have defined a short term plan, whose objective is to increase sales and generate the necessary cash flow to fund the long term strategy. In a second instance, the long term strategy will be presented, aiming to fully develop a "Relationship customer" approach, with an emphasis on CRM tools.

Short term measures:

The company faces several obstacles to consolidate a strong growth pattern: seasonality of sales, high dependence to catalogue mailing and response rate/cost efficiency of its marketing approach. Additionally, a huge male segment has not been targeted by the company, leaving this gap to other competitors.

On one hand, short term measures will aim to strengthen and further explore Continuity programmes, which have proven to be good revenue stabilizers.

Secondly, a thorough analysis of the Catalogue tool needs to be assesed. FTD's advertisement spending is $0.21 per household, yielding a 2.04 return/expense. C&C successfully gets a 4.9 return from existing customer base; however its results with recipients and rented mailing lists are significantly low (refer to table below).

Markets of catalogues Catalogue Expense Avg. Revenue Revenue/

Catalogue Expense

Prior Customers 384.000 1.882.587 4,9

Recipients/Inquires 960.000 941.293 0,98

Rented Mailing-List 3.142.000 2.464.620 0,78

TOTAL 4.486.000 5.288.500 1,18

Calculations are explained in appendix

Therefore, instead of spending a total of $4.1M in such mailings, C&C can better reassign its marketing budget to maximize efficiency and target new segments. Such is the case of the male market segment, where the convenience of the service becomes a strong advantage to target the working, upper class segment. Online services such as personal shoppers and chat ordering can be powerful tools to gain the trust and loyalty of these customers. Targeted communication to men should aim at men magazines, advertised links in male visited websites (newspapers, sport sections, etc).

Another important segment is Corporate clients, where from 20% of revenues derive. Increasing this channel will help to stabilize revenues and secure alternative sales channels.

Finally, C&C should explore further its cross-promotion model, in view of its success with Bloomingdale's. New strategic partners should be recognized to increase sales channels and reach.

Long Term Strategy

The main goal is to maximize market share potential, and ensure significant and sustained growth rate over the years. The umbrella concept is to develop a focus on Customer Relationship Management (CRM), taking advantage of the already existing close contact with its customer base.

* Set up a database management team and determine the Lifetime Customer Value (LCV): Customer background and information is crucial to C&C's transformation into a customer-intimate company. Opposite to other florist channels, C&C already counts with detailed information of its clients, such as basic customer description, purchase history, contact history and response information. Therefore, the next step is to estimate the monetary value of its customers, and the profitability of each segment. Information could be utilized to develop new products, closer to customers' preferences and tastes.

* Target selected customers and expand reach: C&C needs to become a virtual