Calyx & Corolla 1)What is the gap in market structure for Calyx and Corolla’s business model? The traditional distribution chain for the fresh flower market is: grower, distributor, wholesaler, retailer and finally the consumer. As a result of the number of participants in this structure, a flower may be as much as seven to ten days old before it is available for sale in a retail store. Additionally, the industry participants do not confine themselves to a single role.
For example, most growers distribute some flowers directly to local or more distant wholesalers, and many distributors and wholesalers engage in some of their own production.
The fragmentation within the channels of distribution results in a rather inefficient distribution system. This gap in the fresh flower market structure was noticed by Ruth Owades who capitalized by creating Calyx & Corolla (C), which is a true departure from traditional channels of distribution.
The business model of C is as follows: orders from customers are received by telephone, fax, or mail at the central office in San Francisco and then sent via fax or computer to the thirty flower growers who supply C.
The growers, in turn, pack and ship individual orders and send them directly to consumers by Federal Express. As a result, C is able to substantially reduce the time it takes to deliver flowers to the consumer’s door, typically only a few days after the flowers have been cut. 2) Evaluate the strengths and weaknesses of C&C versus a conventional business retailer?
What market segments is C&C most suited to take advantage of? Strengths of Calyx & Corolla compared to a conventional flower retailer: 1)The most obvious strength and the greatest competitive advantage that C&C has when compared to a conventional flower retailer is the ability to deliver fresher longer lasting flowers.
As a result of pairing growers with Federal Express, C&C is able to deliver flowers within a couple of days of being cut as opposed to retailers that sell flowers that have already spent a lifetime in warehouses, trucks and storerooms. )C&C not only sells a superior product compared to flower retailers, it also attempts to educate and inform its consumers. Among the product, cost and color choices in its catalogs, C&C includes trivia, consumer information and arrangement suggestions to make the flower purchasing experience more enjoyable for the consumer. 3)As a result of its partnership with Federal Express, C&C has the ability to distribute flowers to people all over the world. Retailers, however, are generally located only in areas where flower demand is high and thus cannot reach as many consumers as C&C. )The case states that C&C is comparable to flower retailers in terms of flower prices charged to consumers. As such, flower consumers get more flower value (freshness and longevity) for their money when purchasing from C&C. Weaknesses of Calyx & Corolla compared to a conventional flower retailer: 1)Flower retailers offer consumers the ability to purchase and enjoy flowers real time, as opposed to C&C which takes days to deliver flowers. 2)Although C&C has six annual catalogues that allow consumers to see pictures of products, conventional retailers allow consumers to select from on-hand inventory. )Consumers who order from C&C are required to pay a delivery fee, whereas consumers who purchase flowers from a retailer do not have to pay extra fees. As a result of C&C’s strengths, it is suited to take advantage of a couple market segments. The first is the segment of flower consumers who value quality fresh flowers that will last long after purchase. The other segment that C is suited to take advantage of is the group of flower consumers who live in geographic locations where retailers are unavailable. ) What should Owades and her team do to fully develop the potential of the C business model? What would you recommend? In my opinion, C has a strong business plan that has not been fully developed. Strategically increasing advertising, pairing up with a credible brand name and allowing consumers to customize floral arrangements are a few recommendations to grow the C business model. Reaching out to consumers via television commercials, magazine and newspaper ads, radio spots and billboards are all new advertising options for C.
Currently 70% of C’s revenue is derived from its catalog, 20% from corporate clients and 10% from outgoing telemarketing to previous flower recipients and existing customers. By informing consumers about C&C via these new advertising strategies, C&C would increase brand awareness and revenue. Another recommendation for C&C is to couple its distribution leadership with brand recognition. For example, C&C could team up with Martha Stewart, Williams-Sonoma or Smith & Hawken to sell brand specific floral arrangements.
Additionally, since these brands are internationally recognized, this recommendation will attract a wide range of consumers. Finally, C&C could set up a website that would allow consumers to customize floral arrangements. Based on the inventory of the 30 contracted growers, consumers could mix and match different flowers to create virtual floral arrangements. Once pleased with their arrangement, the consumer would place the order online and C&C could use its distribution strengths to deliver the product.