Calyx&Carolla Case Study
•Comment on C&C’s business model – how does it create value? What are its advantages? •How would you evaluate C’s catalog marketing efforts? Are they doing a good job? •C&C is contemplating whether they should start advertising on TV and are currently conducting tests in the Minnesota market. Should they start advertising on TV? What would you recommend C&C do, based on the results of the Minnesota test market? 1.
Mail order flower business. First company to relay customers orders directly to the florist suppliers so flowers were much fresher than those of competitors. Similar price to retailers. Don’t do any of their own production.Reverses the typical distribution channels of producer to local distrbutor to retailer. Calyx & Corolla linked consumers and growers directly via Federal Express.
Reduced substantially the amount of time it took for flowers to be delivered. Owades wanted only ‘the best growers’ and in Federal Express ‘the number one air carrier’. Owades built a strong partnership between these three groups. Communication between growers and Calyx was strong. Calyx sent demand forecasts while growers provided information about insufficient stocks so that substitutes could be found or excess stocks so that special offers could be made.Continuity monthly products helped reduce the effect of sesonal peaks and troughs.
2. 70% of business driven by catalog sales. However, cost of regular catalogues was high and only 5 to 10% of prior customers yielded return orders while 1-2% of recipients customers yielded orders. Selling flowers through the corporate partnerships. Eg. Bloomingdale’s and Smith Kline Beecham.
3. TV advertising in Minnesota. Consider the 4 Cs model – Consumer, Cost, Communication and Convenience Cost – C&C believed that the cost per household would not be greater than current methods using catalogues.Consumer – Targetting people who have not used mail order before. Customer buying power may not be so strong as the demographics of the population are too young to target for flower sales based on previous market research data claiming women between 30-55 are most likely to purchase.
Consider income… tricky to tell what cost of living was in 1991 Minneapolis. Communication – Emphasises how fresh the flowers are. Convenience – Ease of buying product is increased because people sat at home are given directly the telephone number to call to order delivery or a brochure.