Carlyx & Corolla

Only available on StudyMode
  • Download(s) : 7
  • Published : May 2, 2013
Open Document
Text Preview
Calyx & Corolla

1

2

3

4

7

The Product: Fresh Flowers
• May need arrangement, especially for weddings and funerals; • Many varieties and combination possibilities. • Highly perishable for both sellers and end users; – Delivery and logistics are particularly challenging.

8

10

FTD’s Channel
Customers Florist Customers Florist FTD Florist Florist Customers Florist Florist

This channel is useful for flowers sent as gifts remotely.

11

13

C&C Strengths and Weaknesses
• Strengths:
– Long house life. – Freshness and full bloom. – Competitive price with a more direct channel. – More info with a catalog. – Accessories (vases). – More variety with 30 growers geographically dispersed. – Long-term relationship with customers.

• Weaknesses:
– No Sunday delivery. – Delivery system is vulnerable to bad weather, especially during the peak Christmas season. – No consultation services and flower arrangement for weddings and funerals.

14

C&C Strengths and Customer Preferences
Gift C&C Strengths Freshness Full bloom Longevity Good information Greater variety Greater ability to personalize C&C Weaknesses Unarranged No consultation No Sunday delivery Bad weather problems I I VI ? I VI UI UI I UI VI VI I UI VI VI UI VI VI VI VI Wedding/Funeral Commercial Use Personal Use

I VI I VI

VI VI I VI

VI I UI VI

UI UI UI I 15

Value of a Catalog Customer
• • • • • Price range: $23-$70. Average price: $45. Gross margin: 80%. Gross contribution: $45x0.80=$36. Other variable costs: – Freight out (shipping) and processing: $9+$5=$14.

• Net contribution: $36-$14=$22 per order.
16

Value of a Catalog Customer (Continued)
• Assume a response rate of 1% of firsttime customers.
– Net contribution/prospect = $22x0.01=$0.22.

• Cost/catalog = production & mailing ($0.32) + name list rental ($0.08) = $0.40. • Loss/catalog = 0.40 – 0.22 = $0.18. 17

Value of a Catalog Customer (Continued)
• Assume a response rate of 5% of repeat customers. • Contribution/catalog = $22x0.05 = $1.10. • Less mailing cost of $0.32. • Net contribution/customer = $1.10-0.32 = $0.78. • With 12 mailings a year, annual net contribution/customer = $0.78 x 12 = $9.36. • The cumulative losses over the first three years —$3.63M—should be considered as an investment. 18

C&C’s Advertising Campaign
• Response rate from the mass TV campaign would be even lower than the response rates of more targeted catalog mailings. – TV viewers will either (a) do nothing; (b) order the catalog; or (c) order flowers. – With a similar economic analysis, TV advertising is unlikely to be as good an investment as mailing catalogs.

• Print ads can be more effective because.
– It is better suited to explaining C&C’s messages; – It can be bettered targeted via upscale magazines.

23

Promotion With Bloomingdale’s
• This promotion is more consistent with C&C’s positioning. – People who buy vases at Bloomingdale’s are exactly C&C’s target.

24

Sustainability of C&C’s Advantages
• Two types of potential entrants:
– Existing mail-order companies like Spiegel diversifying to include flowers; – Retail flower stores or FTD getting into mail-order operations.

• Entry barriers:
– Initial investment in acquiring customers:
• Small and fragmented flower stores are unlikely to make such investment.

– C&C’s strategic relationship with growers and Fedex to a lesser extent. – C&C’s experience in dealing with perishables: • Other mail-order companies lack such experience.
25

Sustainability of C&C’s Advantages
• The strategic fit between:
– C&C’s product advantages of freshness and longevity and – C&C’s more direct distribution channel and – C&C’s target customers.

• In order to maintain its advantages, C&C should
– Stay focused on the mail-order business and – Maintaining its positioning as a “high-end longerlasting fresh flowers” supplier.

26

27

Takeaways
• A brand supported by the entire...
tracking img