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Calyx & Corolla Case Solution

Solution Id Length Case Author Case Publisher
588 1729 Words (5 Pages) Walter J. Salmon, David Wylie Harvard Business School : 502S15
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Ms Owades runs the company, Calyx and Corolla, in a successfully innovative way. The company sells flowers to the end customers without any retail outlet or vendor. Customers select their favorite set of flowers, order them on service centers/online and the flowers are delivered through Fed Ex, efficiently. Formula of the company is based upon the delivery of fresher flowers as compared to the flowers delivered by its competitors. Freshness and quick service are the mission statement of the company. However, high dependence on particular parties may place the company at a high risk in the long term. Relationship with distributors and growers is strong in nature strengthening the company’s market structure. Some channel conflicts might arise due to the disinter mediation of distribution channels by the company. A customer oriented approach requires estimation and acknowledgement of the lifetime value of customer. Thus, the company should exploit other markets in order to sustain and expand in the long run.

Following questions are answered in this case study solution:

  1. What are the strengths and weaknesses of the Calyx & Corolla formula?

  2. Why has Calyx & Corolla been successful?

  3. What are the potential sources of channel conflict in the Calyx & Corolla system?

  4. What steps should Ms. Owades and her associates take next to more fully develop Calyx & Corolla?

  5. How would you determine the life-time value of a customer?

  6. Visit their web-site. How has this helped Calyx & Corolla?

  7. What is the value of a C&C customer using their current direct marketing approach? 

  8. Should C&C use a TV ad approach to acquire new customers?

  9. Is Calyx’s system only a system for gifts? What markets are being missed?

Calyx Corolla Case Analysis

1. What are the strengths and weaknesses of the Calyx & Corolla formula?

Calyx and Corolla formula works on efficient delivery of fresh flowers throughout the network of its distributors. This formula helps the company to deliver fresher flowers as compared to the flowers delivered by its competitors. Freshness of the flowers is ensured by the fact that they delivered within a range of one to four days after cutting. The company is showing an increase in sales as compared to the cost of goods sold, and sale projections are on an increasing trend. Focus on creativity and attractive catalogs have been additional strength. Most of the current customers have shown a high level of satisfaction from the services of the company.

Weaknesses include high dependence on Fed ex delivery service, and information technology. A disruption or discontinuity in any of the foresaid service can cause a huge damage to the company and its future progress. Furthermore, growers of the company are mainly centralized in some particular areas lacking diversification. This results in high risk pertaining to weather changes in the areas. C & C formula depends upon luxury spending of the customers, which might be affected when the economy slows down.

2. Why has Calyx & Corolla been successful?

Innovation and creativity are the two features of Calyx and Corolla, making it a successful venture in the fresh flower industry. The direct mail service of the company made it easier for customers to select their favorite flowers online and had them delivered on their doorsteps as fresh as the flowers available at any local vendor. C & C has focused on designing attractive catalogs for its customers, through which they can exactly see what is being ordered. High level of customer satisfaction is achieved when the customers are offered a money back guarantee if the product is not up to the standard.

The relationship of the company with its growers is very close in nature, providing the quality of the flowers to remain top of the market. The relations with its distributor i.e. Federal Express is strong and long lasting resulting in an efficient and timely delivery of the flowers without any sort of damage to them.

3. What are the potential sources of channel conflict in the Calyx & Corolla system?

Channel conflict refers to the phenomenon of competition among the channel partners with each other or the internal department of sales and distribution. Partners may try to undersell the products in order to have a competitive advantage over their own partners, resulting in a negative effect on both parties. There are two types of conflict, horizontal conflict and vertical conflict. The formula of Calyx and Corolla is based upon direct delivery of flowers to the customers disinter mediating the dealers and direct sales personnel.  Some of the sources of channel conflict at Calyx and Corolla are:

Management may desire long term profits as compared to the desire of short term profitability by the retailers. Management may raise the issue that customer service centers and order collection units are not providing adequate attention to the customers. Growers may want the packaging to be done in the most cost effective way and may compromise on the attractiveness, whereas the management wants the best appearance for their flowers.

4. What steps should Ms. Owades and her associates take next to more fully develop Calyx & Corolla?

Calyx and Corolla has a strong relationship with its present shipper i.e. Federal Express. A high dependence on a single shipper may prove to be a risk due to the fact that any type of problem in Fed Ex might cause hindrance in the delivery process of C & C. Ms Owades should extend the relationship of the company with other express delivery agents to develop the company deeply and make it risk averse.

Calyx and Corolla has its strength in the customer service area. A high customer satisfaction level is maintained at every possible cost. This type of customer satisfaction should be maintained through proper quality control departments. Currently the quality is being controlled by the farmers/growers, risking the brand image of C & C.

Calyx and Corolla is lacking the facility of providing flowers at the point of sale. Super stores are responsible for 77 percent of the floral sales due to their ability to provide flowers on the spot. Ms Owades should design a strategy to avail the on-spot floral market of US.

5. How would you determine the life-time value of a customer?

Calyx and Corolla works according to the principles of customer oriented approach. It tries to build a long term relationship with every customer and provide adequate customer service to strengthen the relationship. A single purchase by any customer does not necessarily mean one-time profit; it may turn into a lifelong series of purchase from the same customer at different points in time. So, it is necessary for the company to calculate the lifetime value of the customer which will help in estimating the minimum investment to be done in order to acquire a new customer, and it will also help to gauge the level of customer loyalty and brand power of Calyx and Corolla.

Calculation of life-time value of a customer can be done by multiplying Average sale per customer, No. of repeat purchases, and Average keeping time of the customer (in years, months or days).

6. Visit their web-site. How has this helped Calyx & Corolla?

Calyx and Corolla has built an attractive and interactive website for their customers to search for their favorite flower options and book their orders online. The website is designed to capture the attention of customers by the use of different colors and designs. Distribution of products in categories has made the selection procedure easier, and customers can choose their favorite option without any confusion.

C & C’s website has helped the company by providing a flexible and cheaper source of advertisement and promotion. The company has a lot more space to use and capture the attention of its potential customers. It has played its role in the expansion of the company’s market to almost every corner of US. The ease of taking orders and increasing the customer base has made the company’s website an important feature. Calyx and Corolla has improved their credibility in the market due to an efficiently maintained website.

7. What is the value of a C&C customer using their current direct marketing approach?

Direct marketing is a form of advertising in which the typical channels of promotion are not being implemented; for example, radio, TV, and newspapers. This approach advertises the product straight to the customer and is highly successful if implemented properly.

There are two types of customer values, desired value and perceived value. The former refers to the value desired in the product of the company, and the latter refers to the value which the customer believes to receive after the purchase.

Current direct marketing technique has helped the company to achieve seventy percent of the total sales of the company. According to the management, the definition of an active buyer is the person who guys the company’s products more than two times in a year. Frequent buyers of flowers form the company are women, ranging between ages of 30 to 55 years. These women mostly belong to working class having a high disposable income level.

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