Teddy Bear Case
Marketing HW1
Student ID: 2078825
Recommendation
Vermont Teddy Bear’s marketing team should increase their mass-media advertising to improve Calyx Flowers’ financial performance in order to reach its full potential gross margins of nearly 50%. At the same time, Vermont Teddy Bear should cancel delivering catalogs to flower recipients and the rented mailing list.
Explanation
Calyx Flowers promotes its offerings primarily through catalogs and the number of catalogs, yields and marketing expenses known, the operating profits of current customers, flower recipients and the rented mailing list can be calculated (please see Exhibit1). As Exhibit 1 shows, only catalogs offered to current customers yields a profit of approximately $5.6 million, while the operating profits from delivering offers to flower recipients and the rented mailing list are negative. With this being displayed, offering catalogs to flower recipients and the rented mailing list will not help the company its gross margin target.
As the report mentioned, Vermont Teddy Bear’s considers Calyx Flowers a diversified selection of the finest delivered gifts with delivery of fresh flowers direct from the growers. The company should work on market segmentation and put more focus on future customers as around areas such as longevity, speed of delivery and freshness instead of the simple demographics (please see Exhibit2). Due to the fact that more than half of Calyx Flower’s customers are women, ranging in age from thirty to fifty-five years old, it is unlikely increasing Internet advertising will achieve the profit increase since the target customers may not be the major Internet users. As Exhibit 3illustrates, the operating profits of the three strategies proposed by the marketing team, the profit of increasing Internet advertising is negative, while the profits from increasing the number of catalogs to current customers and mass-media advertising yields a profit. However, even though the profit of
Student ID: 2078825
Recommendation
Vermont Teddy Bear’s marketing team should increase their mass-media advertising to improve Calyx Flowers’ financial performance in order to reach its full potential gross margins of nearly 50%. At the same time, Vermont Teddy Bear should cancel delivering catalogs to flower recipients and the rented mailing list.
Explanation
Calyx Flowers promotes its offerings primarily through catalogs and the number of catalogs, yields and marketing expenses known, the operating profits of current customers, flower recipients and the rented mailing list can be calculated (please see Exhibit1). As Exhibit 1 shows, only catalogs offered to current customers yields a profit of approximately $5.6 million, while the operating profits from delivering offers to flower recipients and the rented mailing list are negative. With this being displayed, offering catalogs to flower recipients and the rented mailing list will not help the company its gross margin target.
As the report mentioned, Vermont Teddy Bear’s considers Calyx Flowers a diversified selection of the finest delivered gifts with delivery of fresh flowers direct from the growers. The company should work on market segmentation and put more focus on future customers as around areas such as longevity, speed of delivery and freshness instead of the simple demographics (please see Exhibit2). Due to the fact that more than half of Calyx Flower’s customers are women, ranging in age from thirty to fifty-five years old, it is unlikely increasing Internet advertising will achieve the profit increase since the target customers may not be the major Internet users. As Exhibit 3illustrates, the operating profits of the three strategies proposed by the marketing team, the profit of increasing Internet advertising is negative, while the profits from increasing the number of catalogs to current customers and mass-media advertising yields a profit. However, even though the profit of