Sales During Peak Period Calyx And Corolla example essay topic

Executive Summary Calyx & Corolla is a young company that offers a very unique choice for customers who are interested in buying fresh flowers. Fresh flowers industry valued approximately $9 Billion in the United States in 1990 with steady market growth rate of 7.7% since 1985. However, the market potential did not reach the top yet. US fresh flowers market still has more room to grow. Per capita consumption of flowers and plants in the US was $36 per year, while the average in Europe was $60. Since a flower diminished its value everyday due to lacking of freshness, efficient distribution is the key to the flower industry.

Calyx & Corolla has a distinctive way of delivering flowers to the consumers. Calyx & Corolla links its customers directly to the growers via the reliable delivery service of FedEx, whereas other companies rely on the traditional distribution channel which contains at least four layers: growers to regional distributors, regional distributors to wholesalers, wholesalers to retailers / florists, and florists to end-users. Thus, Calyx and Corolla can deliver fresher flowers to its customers bypassing those distribution processes. Calyx and Corolla also earns higher profit margin than its competitors due to its uncomplicated cost structure.

For instance, Calyx and Corolla does not have to spread its profit to distributors and wholesalers. FTD was the biggest player in the fresh flowers market. FTD was a member-owned, worldwide cooperative of 25,000 florists. Florists usually used FTD to provide delivery service beyond their service area. The florists who originated the order received 20%, the florists who delivered the order 73%, and FTD 7%. The powerful network of 25,000 florists was the main advantage of FTD to penetrate the fresh flowers market.

However, its price structure was not so flexible. "800-Flowers" was the largest member of FTD network and it was becoming more and more popular. 800-Flowers received 25% fee of the flower order from the delivering florist. Its revenues were about $16 Million in 1990. Another channel that we need to keep our eyes on was supermarkets. Supermarkets were becoming more popular and more powerful in the fresh flowers market.

The average annual sales for supermarket floral departments were $104,950, having grown almost four times in the past ten years. However, supermarkets had two major disadvantages. First, supermarket employees lacked the sensitivity and expertise required to sell flowers. Second, the location of flower departments in supermarkets was usually near produce departments and ethylene gas might hasten the deterioration of flowers.

Stepping into the growth stage of the business life cycle, Calyx and Corolla was looking for organizational and financial implications to support a more aggressive long term growth strategies. This report suggests both short term and long term strategies that align with Calyx and Corolla's long term goals. First of all, Calyx and Corolla should further stimulate sales during the peak period and increase the off-peak sales amount in order to stabilize its income and gain more capital to invest in the long term plan. In order to achieve in the long run, Calyx and Corolla needs to change its organizational structure to be more competitive in the fresh flower market. Calyx and Corolla has to be more customer intimated. Calyx and Corolla has to understand more about the fresh flower consumer buying behavior in order to expand its market base.

We would suggest Calyx and Corolla to open its direct shops in strategic areas. Calyx and Corolla should set up at least three new internal departments: formal internal marketing department, a database management team, and a corporate account team. Customer Relation Management (CRM) is another management aspect that Calyx and Corolla would want to consider. Last but not least, we would suggest Calyx and Corolla to fund research for the development of flowers growing techniques for its growers in order to ensure the highest quality for its customers and gain competitive edge with new products in the long run. Calyx and Corolla's Business Calyx and Corolla offers a unique business model by connect growers to buyers directly. Calyx and Corolla sell fresh flowers by mail using reliable carrier like FedEx to deliver flowers to end users.

Relationship between Calyx and Corolla to the growers and FedEx is very important. Calyx and Corolla is currently moving toward growth stage of business life cycles since the its growth rate has been increasing exponentially and it started to attract more competitors with the same business concept. This is a very critical stage for Calyx and Corolla to think about more aggressive growth strategy. Calyx and Corolla's Product Lines Calyx and Corolla offers variety of flowers products to consumers.

Its product lines include fresh and dried flowers, bouquets, selection of plants (e.g. Bonsai), vases, and also special product such as its continuity programs. Calyx and Corolla's Customers base 85% of Calyx and Corolla customers are women whose age in between 30-55 and also have substantial disposable income. Calyx and Corolla views its active customers as those who buy at least 2 times a year. However, its potential customers are those who are unaccustomed to mail order buying.

Calyx and Corolla's Strengths- Operation Excellence by fast delivery though FedEx so its customers get fresh flowers- Excellent relationship with growers and FedEx- Lower cost compared with other retailers by eliminating the layers of middleman leads to higher profit margin (~80%) - Good brand image (gain good feedback from customers and media) Calyx and Corolla's Weaknesses- Supply and Delivery situation during cold season- Does not offer Sunday / holidays service (while customers can buy from other florists) - Limited customer base Short Term Strategy Objective: To increase sales amount in order to gain more capital for further investment in long term strategy (i) Further stimulate sales during peak period Calyx and Corolla should continue its cross promotion with Bloomingdale's since the previous campaign was so successful. Calyx and Corolla should also look for new strategic partners such as Hallmark to give the impression that when customers think of Holiday, they should also think of Calyx and Corolla. Calyx and Corolla should also allocate more advertising and promotion budget during the peak period which is in May, November, and December (ii) Increase off-peak sales amount Continuity program, such as Year of Orchids program, is a very good idea to stabilize the revenues. We suggest Calyx and Corolla to come up with more variety of continuity programs to meet the various needs of its customers. Calyx and Corolla should also try to increase flower buying habit among the consumers. We suggest Calyx and Corolla apply the "Solution Oriented" scheme to increase flowers usage since some customers use fresh flowers to decorate their home / office.

Calyx and Corolla may offer a demonstrating program on how to decorate your home with flowers to its potential customers in order to get them to be more familiar with the brand. Calyx and Corolla can also add instruction VDO to its product line exclusively for its customers. Long Term Strategy Objective: To reach for the most competitive position in fresh flowers market To ensure at least double digit annual growth rate (i) Open Calyx and Corolla direct shops in strategic locations Direct shops allow Calyx and Corolla to display their products to potential customers. Customers can have touch and feel experience through the direct shops. Customers can also get more service from the direct shops. Customers can order flowers by catalog and pick up their flowers at the direct shops on Sunday or holidays.

This eliminates the constraint that FedEx does not offer the Sunday and Holiday service. Customers can also be confident because they know that their flowers are in good hands. Direct shops can also help diversify customer base from catalog sales. Moreover, direct shops function as a strategic customer touch point where Calyx and Corolla can receive invaluable feedback directly from their customers. (ii) Set up a formal marketing team In order to expand its business at a faster pace, Calyx and Corolla needs to set up a formal marketing department in their organization to take care of all aspects of marketing (not just direct sales). With an internal marketing team, Calyx and Corolla can be more aggressive in the market place and also it allow them to react faster to any change that would happen in the market. Within the marketing department, Calyx and Corolla should also adopt Customer Relation Management (CRM) in order to retain its current customers and also attract new customers by word of mouth.

Calyx and Corolla may provide its customers tours to flower growers to give more confidence to its customers in term of flower quality. Calyx and Corolla may also offer a training program in the direct shops, for instance, on how to keep flowers fresh, or on how to use flowers in decoration. This also keeps customers coming to the direct shops and customers also expose to new products that Calyx and Corolla might offer. Thus, it creates repeat purchase. (ii) Set up a database management team Customer background and information is very crucial to Calyx and Corolla to transform itself to a more customer intimacy company.

Calyx and Corolla needs such information to tailor products or service according to the needs of its current and potential customers. Having a good database management team and system will help Calyx and Corolla succeed in its further steps. ( ) Set a special team to take care of corporate customers Business customers are very important in term of the dollars they spend each time. Getting sufficient business customers can offset the sales of off-peak period.

Business customers are more predictable with a special care. Calyx and Corolla has to build a long term relationship with them to ensure the steady sales, thus corporate account team is very important to ensure the long term growth. (i ) Fund research for development of flowers growing techniques Differentiation point is very important especially in the business like flowers where many customers perceive that all flowers are the same. Funding research for new growing techniques, for instance, how to grow more durable flowers in cold weather can help Calyx and Corolla develop a closer relationship with its growers and also help Calyx and Corolla gain competitive advantage over others once the research is successful. Calyx and Corolla can also ensure its flowers quality to the customers and it also gives the image that Calyx and Corolla really cares about their products. Moreover Calyx and Corolla can also gain a positive image to the brand to the fact that they give something back to the community by funding research to universities. (especially in the town / state that the funded universities located).