Calyx and Corolla
Analysis and Recommendations
Our analysis confirms that Calyx and Corolla's (C&C) concept of eliminating the middleman in the supply chain, thereby enabling the delivery of fresh flowers is unique, potentially game changing and if executed correctly, extremely profitable. We believe C&C’s target market consists of middle to high income men and women as well as very high income women and in order to succeed, C&C must establish itself as the top of mind provider among its targeted segment. Achieving this goal will require aggressive advertising and clever promotions that establish a luxury brand image while substantial new funding will be required in order to meet these goals. It is our recommendation that C&C implement market penetration strategy that includes both middle and high income adults in a concentrated effort to become the most recognized brand in its industry. The detailed analysis and recommendations for marketing strategy constitute the remainder of the paper. The $9 billion fresh cut flower industry, which was growing at 7.7% per year, was a mature and competitive market when C&C was first established. The fragmented industry is composed of individual florists (59%), supermarkets (18%), and other retailers including wire services, FTD, and 1-800 Flowers (23%). In order to continue to grow and protect its initial success, C&C must focus consistently on a brand strategy that demonstrates the customer benefits by leveraging its key differentiators—freshness and longevity, reliable delivery dates, competitive pricing, convenience, and personalized and knowledgeable customer service (see competitor profile appendix). C&C has successfully gained an understanding of its customers, order recipients, and potential future customers through its extensive databases and must use this information to enhance its market segmentation efforts. First of all, it should continue to penetrate the 30-55 year old working female market because that segment (85% of the current customer base) has shown the greatest interest in the company. Through upscale brand positioning, C&C will also be able persuade affluent women who do not work. Furthermore, C&C should begin targeting men, emphasizing the convenience of the service and knowledgeable staff that can assist with choosing the appropriate floral arrangements for various life events and occasions. Continuing to target corporate clients, who currently account for 20% of the revenues, is also important, as these clients have big budgets and often place large orders so it would be a quick way to increase revenues and extend its recipients database. Recognizing that the fresh flower business is matured, competitive, and that its mail order business model is imitable, C&C should adopt a marketing strategy that has an equal allocation of resources across the four P’s: Product, Price, Place, and Promotion. In terms of the Ansoff growth matrix, there is significant potential for C&C to grow in its current market segment with its current products, fresh flowers. C&C should continue to focus resources on maintaining both the quality of their existing products by maintaining popular flower arrangements and simultaneously presenting creative and new arrangements instead of launching product line extensions that would cost money and overextend the sales staff. In terms of pricing, C&C could use the catalog model to experiment with price elasticity in different geographic regions. Nonetheless, it is important to note that the target market segment is less price sensitive and more brand sensitive so while C&C’s margins are very high at 80%, decreasing the price significantly in order to increase demand could negatively impact the perceived value of the product. However, it would be beneficial to the company to offer price discounts for first-time users as a means of hooking the people who have qualms about ordering flowers...
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