A Case Analysis of Calyx and Corolla
This analysis focuses on the case study of Calyx & Corolla, a mail order flower company.
Calyx & Corolla is a relatively new company that utilizes a different distribution channel than conventional companies for fresh flowers. Calyx & Corolla mails flowers direct from the growers to the customers via Federal Express and eliminates the middleman (Appendix A). This permits Calyx & Corolla to provide fresher, longer-lasting flowers to consumers. The management of Calyx & Corolla is contemplating a change in their long-term business strategy as they examine their ability to compete with more traditional outlets such as retail flower shops and wire services like FTD. Ruth Owades, the founder of Calyx & Corolla, has hired Marketing Consultants (MarCo) to assess the strengths and weaknesses of her business and make recommendations on how her company can fully develop their mail order concept.
Background:
Calyx & Corolla is a small mail order flower company that was founded in 1988 by Ruth
Owades. Ms. Owades secured $2 million in capital from approximately 18 different investors in order to launch the company. By 1991, Calyx & Corolla exceeded $10 million in annual sales and Owades and her associates were reassessing the firm's long-term growth strategy (Wylie and Salmon, 1991). Up to this point, Calyx & Corolla was primarily a mail order company, but management is now considering expanding their market and is unsure of how they should proceed. Recently, a well-financed venture capital-backed start-up failed and Calyx & Corolla acquired some of its assets. Another unproven competitor recently entered the market, financed by a large Japanese conglomerate.
The company's success is primarily due to a few key employees. Ruth Owades plays a
major part in the selection and pricing of flowers and other merchandise that appears in the catalog. Fran Wilson, the vice president of operations, is responsible for customer orders and service, day-to-day communications with growers, systems development, and finance. Ann Hayes Lee is responsible for merchandise development and catalog creation and production. She is also responsible for non-direct mail initiatives that are aimed at accelerating the growth of the business. Calyx & Corolla espouses the values and creativity of these individuals and their employees. Taking into consi...
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...ists will cost $20
C&C could find (1000) floral shops interested in selling C&C products at a substantial profit.
C&C would allow floral shops to keep 30% of the sale
Particpating floral shops would sell (1) C&C product per week
The average sale at the florist shop would be $47.63 (from Appendix B)
The average COGS at the florist shop would be $10.95 (from Appendix B)
Sales Revenue
Estimated C&C Estimated Floral Shop
Number of Rate of Number of Sales Revenue Sales Revenue
Catalogs Customer Orders per Order @ per Order @
Distributed Response Received $47.63 x 0.7 Average Sale $47.63 x 0.3 Average Sale
1000 52 52000 $1,733,732 $743,028
Costs of Goods Sold (COGS)
Number of Rate of Number of Estimated
Catalogs Customer Orders Cost of goods sold
Distributed Response Received @ $10.95/sale
1000 52 52000 $569,400
Florist Derived Catalog Business Sales and Marking Costs (SMC)
Number of Production & Number of Costs for Costs for Total Sales &
Catalogs Mail Costs @Order Shipping Handling Marketing Costs
Distributed $20/Catalog Received Orders Orders per Group
1000 $20,000 52000 $468,000 $260,000 $748,000
Sales Revenue - COGS - SMC for Catalog Sales for C&C = $416,332
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