Calyx & Corolla Report

Problem Statement

Calyx & Corolla, as a company, has enjoyed considerable success since its humble beginnings in 1988. As we move forward, our goal is to solidify our presence in the flower market by evolving our current business model. By examining our current marketing techniques and market environment, our aim is to develop a new and successful business approach which will ensure long-term financial growth and stability. Our foundation on the creativity of Ruth Owades has set us apart from traditional retailers, and our greatest asset has been our ability to be there for our clients for the simple and meaningful moments in their lives. Our long-term prosperity will entail engaging in a new and different marketing campaign, which will takes us a long way in ensuring that Calyx & Corolla become synonymous with those special moments.

Consumer and Demand Analysis

Fresh flowers are purchased for a variety of reasons. The majority of purchases have traditionally been for special days such as Valentine's Day, Mother's Day and birthdays. Whatever the reason for buying fresh flowers, the consumer considers a number of variables before making a choice. The most important of these variables are price, the freshness and quality of the flowers, and in the case of Calyx & Corolla, the delivery period. Achieving the best balance of these variables is key to being successful in our business. To understand where the best balance lies, we must look closely at the preferences and actions of our consumers.

The success of our company can be attributed to one key factor. Up until 1988, the freshest flowers that most consumers could purchase would be in a local florist or retail store, which generally offers flowers between one and three weeks old. By their very nature, flowers begin to decrease sharply in quality once they have been cut. Owades understood that should she be able to offer the consumer flowers that were much fresher, she would be entering a lucrative market which had few mainstream players. She believed that she could take the demand for fresh flowers to a new level, by offering consumers the chance to purchase flowers that were only one to four days old.

Wire services such as FTD were already available, but worked in a vastly different way than the model that Owades had in mind. The market she was aiming for was largely the same people type of consumers that would traditionally go into a retail florist or store to purchase fresh flowers. Introducing six catalogs a year with different flower arrangements which the consumer could order by mail or by phone proved to be a success, as the company grew to $10 million in annual sales by 1991. As a company moving forward, we must once again look at our intended consumers to re-evaluate the best approach to reaching the largest portion of them as possible. The breakdown of our annual sales shows us clearly that most of our demand comes from catalogs.

For Calyx & Corolla, active buyers are defined as consumers who purchase flowers from their company at least twice a year. Eighty five percent of these consumers are women ranging from the age of 30 to 55. Most of these women work and have a substantial amount of income to spend. Calyx & Corolla's CRM (Customer Relationship Management) database keeps a record of these people and their preferences, so they may better understand their customers to better target the mailing of their advertisements more effectively and efficiently. Our market research has indicated that while our current target market has sustained steady growth, we must look into new target markets to accelerate growth and to increase our market share in the overall fresh flower market.

Competitor Analysis

Calyx and Corolla's biggest competitors are the 25,000 nationwide florists who together make up 59% of the floriculture products market. Supermarkets make up 18% of this market, while nurseries, mail order companies and other retailers made up the rest.

FTD, the most serious competition to Calyx & Corolla, is a worldwide cooperative of 50,000 florists in 154 countries. The FTD business model is based on receiving orders at an originating florist, and transmitting the order to a florist local to the delivery address. There are several key differences between FTD and Calyx & Corolla. FTD retains about 7% of the final sale price, with the majority going to the receiving and delivering florists. By comparison, Calyx & Corolla retains 80% of the price of the flowers, with 20% going directly to the grower. However, the principle difference between Calyx & Corolla is that while FTD retains over 20,000 florists within the United States, Calyx & Corolla is not directly affiliated with florists, but has strong ties to the fresh flower growers themselves. Calyx & Corolla have decided to go the other way from the traditional model of selling fresh flowers, somewhat side-stepping direct competition with major retail players.

Traditional retail stores cannot strictly be classified as competitors, because of their different operating methods. While retailers rely on consumers setting foot into their stores, Calyx & Corolla reaches out to its target market by way of catalogs, telemarketing, and in some cases, promotional tie-ins with selected retail stores. Even the approach of FTD follows more closely the traditional retail model than that of Calyx & Corolla. It is precisely for this reason that Ruth Owades saw an opportunity to delve into an unexplored market. However, while Calyx & Corolla enjoy a much higher operating gross per sale, the basis for that advantage is also the most serious disadvantage to the company. While traditional retailers and FTD can rely on customer walk-ins and retail florist brands attracting customers, Calyx & Corolla relies heavily on mailed out catalogs and telemarketing towards previous clients.

Company Strengths and Weaknesses

Our biggest strength has been our ability to deliver fresher flowers to our consumers, usually delivered between one and four days after being cut, opposed to between one and three weeks for traditional retailers. The overall quality of the flowers delivered is therefore much higher, and is a direct result of our arrangement with Calyx & Corolla affiliated growers. By eliminating the need for flowers to travel from growers to distributors and finally to retailers, we provide the optimum channel of delivery of fresh flowers. Our strong relationship with Federal Express ensures that flowers are delivered in a timely manner, especially during peak sales periods.

Our direct grower-to-customer business model allows Calyx & Corolla to retain