Calyx And Corolla

Executive Summary

Calyx and Corolla is a start-up venture company started in 1989 which demonstrated the advantages of incorporating value chain in its process. It stood out from the rest of the industry in a way where a unique delivery system was introduced where the customers received their flowers directly from the growers, a setting which is rare, cost-effective and customer conscious. The company is placed in the flowers industry and it has some serious competition in the FTD, and other retail florists. The company generates more than half of its revenues from the 3 months of the year, February, May and December while summer resembles slow business. The company has healthy relationship with its grower suppliers and its delivery partner, Federal Express. Due to high operating and marketing costs, the company seeks to improve the losses reported on its financial statements. They have been using myriad marketing strategies suck catalogs distribution, continuing programs, product mix and co-branding, etc. In addition to this, it plans a nationwide campaign that would nearly cost it $24 million to boost its sales. It would be extremely difficult to do such a campaign since its expected cash flows for the coming year is not as high. To see itself in profits, C&C should consider alternative strategies to record profits like cutting costs on catalog marketing, finding cheaper delivery options, insuring growers to maintain a good rapport and not lose them, use information systems to deduce size and type of demands in a particular geographical area and position itself aggressively there, create and appeal a brand image not only in front of women and corporates but also for general masses like professionals and executives, students, etc. It should also possess flexible pricing strategies to cater a wide variety of masses. If it did not take requisite measures to boost sales and make profits, it might not be able to sustain itself in the competition thereby losing value in the form of an organization as well as in terms of the entrepreneurial aspirations of the management. вЂÑ"

Objective

Calyx and Corolla is one of the striking examples of successful ventures with innovation and quality service being the key driving forces backed by vast experience and excellent entrepreneurial skills of Ruth Owades and her management team. Calyx and Corolla was primarily set up with an exceptional direct mail concept with excellent distribution and transportation mechanisms so that customers could receive fresh flowers and in the least possible time. Hence, it had a unique distribution setting in which customers received their orders from the growers directly, hence reducing the overall delivery time and also maintaining the freshness and the quality of the flowers . One of the prime objectives of Calyx and Corolla was to maintain cordial relations with the growers and the Federal Express in order to survive in the industry and retain their clientele.

Calyx and Corolla also aimed at adding value to its customers through offering flowers for different occasions such as Weddings, Funeral, Mother’s Day, etc. Also, Calyx and Corolla sought to engage itself with the Corporates and several other promotional tie-ins. Their long term goal was indeed to attract attention of a large number of potential customers who were not accustomed to buy anything by mail order . It therefore developed strategies to excessively spend on catalog marketing which was the major revenue generator, and other advertisings in the newspapers and televisions. It also aimed at understanding and forecasting the demands of the customers through analyzing the large database that it maintained to target its mailings.

In the long run, Calyx and Corolla’s objective is to maintain healthy relations with the growers and the Federal express in order to continue with its unique distribution system thereby savings costs and passing those savings as low costs to their customers.

Central Problems

One of the key issues with Calyx and Corolla was to convince growers to support its business. Traditionally, the growers were always used to packing stems in large cartons and shipping them in trucks. However, Calyx and Corolla had a huge task in hand in trying to persuade the growers to do it their way by not only adding aestheticism to the packing but also preserving the quality of the flowers in it. Besides this, Calyx and Corolla also had to pay additional surcharge to the growers for the additional retail functions and extra labor costs. This meant that they had to pay the growers wholesale prices .

On its relationship with the federal express, Pricing was an important issue which needed to be addressed. Also, another important issue that needed to be addressed was to deliver flowers on freezing days when customers were not home. With federal express, the problem that remained unsolved was the order delivery on Sundays and holidays.

Calyx and Corolla had to compete hard against florists and retailers who were luring customers with huge advertising campaigns in the supermarkets and malls. Most of the customers who did not believe in mail orders used to buy from these florists.

Other issue was the seasonality of the demand. During summer, business would not pick up while during holidays, it would . From the financial statements of the fiscal years ending 1989, 1990 and 1991, it showed that it suffered losses. These losses can be attributed to high marketing and advertising costs which were $1223, $4466 and $7021 (in thousands) respectively (Exhibit #1). Also, catalog advertising was the prime form of marketing. However, the increase in postage costs also added to the costs. Hence, market effectiveness is a problem.

Options:

There are numerous options available for the firm to increase its sales and gain significant market share. C&C can try and expand their business to the same category of clients such as women who form 85% of their customers mostly in the age bracket of 30-55, and corporate clients .

As an alternative to this, they can broaden their marketing campaigns and try and target additional categories in the masses in order to boost sales. In addition to catalog advertising, they could advertise in newspapers and magazines by giving out discount coupons. In addition to their marketing strategy, they could also heavily advertise on TV and Radio.

Distribution and delivery has many options too. C&C could try and look for cheaper alternatives for carriers to deliver the orders to its customers. However, the irony is that this could not turn out too well for them for the sole reason that FedEx knew much about the working of the C&C and their will towards