As of 1995, we believe that Calyx & Corolla should adopt a high premium pricing strategy and have also identified tactics it should implement in order to improve on its product, price, place, and promotional activities. We arrived at our conclusion by analyzing Calyx’s marketing strategy, perceived value or willingness to pay, competitors’ prices, and the company’s costs.
First of all Calyx & Corolla is in the floral industry, a multi-billion dollar business comprised of growers, wholesalers, and retailers. It started when founder Ruth Owades created a mail order business selling garden implements and accessories. After selling the business to Williams-Sonoma, a direct mail and retail seller of cookware and other kitchen merchandise, Owades continued working there for 4.5 years, gaining a substantial understanding of business operation models. After resigning from Williams-Sonoma, Owades started Calyx & Corolla. She recruited the VP of Operations, Fran Wilson, from her old employer to design the operations system and to be in charge of operating issues. Also, she hired a marketing specialist with 20+ years of experience, a former creative director at Roger Horchow, to oversee all the marketing activities.
Fast forward to the present, Calyx’s currently operates by buying flowers from growers in Florida, California, and Hawaii, and then delivering the flowers directly to customers via FedEx. This success in designing its distribution channel was the key to the company’s success up until now. In the floral industry, customers want to get fresh and long lasting flowers. These demands have determined the company's choice of distribution channels. By linking growers directly to end-users and successfully bypassing middle layer distributors, Calyx & Corolla provided not only longer-lasting flowers, but also lower costs because multiple mark-ups were avoided. The keys that allowed it to carry out the abovementioned business model are the following: i) A strong relationship with the grower and ii. A strong relationship with FedEx.
However, the retail floristry industry has been facing numerous changes within the past few years. The supply of flowers has shifted to developing countries. New technology poses as both threats and opportunities. Customer tastes have changed, and the threats of new substitutes are increasing. For starters, suppliers in the industry have power over the prices of flowers sold to retailers. Depending on the season and the demand for particular flowers, suppliers are able to adjust the prices accordingly. In order to counter this and to neutralize supplier power, Calyx & Corolla should not be dependent on just a few suppliers. What has worked for Calyx was that it signed exclusive contracts with them and then educated the growers on how to execute the order accurately and efficiently; Calyx also provided them with additional support such as giving them shipping boxes, vases etc. This had the double benefit of providing value for both the grower and Calyx. The grower got training and a guaranteed customer while Calyx received the cream of the crop from an exclusive vendor.
Communications between the company and growers were also very key and necessary. Calyx & Corolla gave demand forecasts to its suppliers, and in turn suppliers notified the company of any low yields or excessive yields. As a result, Calyx could plan ahead by either using other suppliers or making special promotions to its customer base. Therefore because the company can predict what will be in heavy demand, it was possible to implement economies of scale. However, we propose that in addition to the company’s suppliers concentrated mainly in Florida, California, and Hawaii, Calyx & Corolla should consider other sources of growers/suppliers, like growers in Mexico. It can give the Mexican growers the same sort of mutually beneficial relationship it has with its American growers and also possibly receive the same (if not better)...
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