Calyx and Corolla

Published: 2021-09-13 09:55:09
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Our analysis confirms that Calyx and Corolla’s (C&C) concept of eliminating the middleman in the supply chain, thereby enabling the delivery of fresh flowers is unique, potentially game changing and if executed correctly, extremely profitable. We believe C&C’s target market consists of middle to high income men and women as well as very high income women and in order to succeed, C&C must establish itself as the top of mind provider among its targeted segment.
Achieving this goal will require aggressive advertising and clever promotions that establish a luxury brand image while substantial new funding will be required in order to meet these goals. It is our recommendation that C&C implement market penetration strategy that includes both middle and high income adults in a concentrated effort to become the most recognized brand in its industry.
The detailed analysis and recommendations for marketing strategy constitute the remainder of the paper. The $9 billion fresh cut flower industry, which was growing at 7. % per year, was a mature and competitive market when C&C was first established. The fragmented industry is composed of individual florists (59%), supermarkets (18%), and other retailers including wire services, FTD, and 1-800 Flowers (23%). In order to continue to grow and protect its initial success, C&C must focus consistently on a brand strategy that demonstrates the customer benefits by leveraging its key differentiators—freshness and longevity, reliable delivery dates, competitive pricing, convenience, and personalized and knowledgeable customer service (see competitor profile appendix).
C&C has successfully gained an understanding of its customers, order recipients, and potential future customers through its extensive databases and must use this information to enhance its market segmentation efforts. First of all, it should continue to penetrate the 30-55 year old working female market because that segment (85% of the current customer base) has shown the greatest interest in the company. Through upscale brand positioning, C&C will also be able persuade affluent women who do not work.
Furthermore, C&C should begin targeting men, emphasizing the convenience of the service and knowledgeable staff that can assist with choosing the appropriate floral arrangements for various life events and occasions. Continuing to target corporate clients, who currently account for 20% of the revenues, is also important, as these clients have big budgets and often place large orders so it would be a quick way to increase revenues and extend its recipients database.
Recognizing that the fresh flower business is matured, competitive, and that its mail order business model is imitable, C&C should adopt a marketing strategy that has an equal allocation of resources across the four P’s: Product, Price, Place, and Promotion. In terms of the Ansoff growth matrix, there is significant potential for C&C to grow in its current market segment with its current products, fresh flowers.
C&C should continue to focus resources on maintaining both the quality of their existing products by maintaining popular flower arrangements and simultaneously presenting creative and new arrangements instead of launching product line extensions that would cost money and overextend the sales staff. In terms of pricing, C&C could use the catalog model to experiment with price elasticity in different geographic regions.
Nonetheless, it is important to note that the target market segment is less price sensitive and more brand sensitive so while C&C’s margins are very high at 80%, decreasing the price significantly in order to increase demand could negatively impact the perceived value of the product. However, it would be beneficial to the company to offer price discounts for first-time users as a means of hooking the people who have qualms about ordering flowers through a catalog. Offering a one-time discount to first-time users as a means of incentivizing would not have a detrimental impact on the brand image.
In terms of Place, C&C’s mail order distribution channel satisfies the customer needs better than the existing retail model. C&C should focus on further strengthening the existing distribution channel and mitigating the customer’s reluctance to embracing the mail order mode compared to bricks and mortar retail. An analysis of the distribution channel through the P. O. I. M. framework will demonstrate the strengths and potential weaknesses of the C&C distribution model and the best course of action for addressing these attributes.
Flower shoppers are in the habit of physically seeing and smelling the flowers in addition to customizing their flower arrangements prior to a purchase. To many, the notion of purchasing flowers without this physical interaction will seem risky, particularly because most users of this service will be purchasing the flowers as a gift for another recipient. C&C’s attempts to satisfy the need for physical interaction by diversifying into retail outlets could lead to potentially disastrous consequences on their value propositions of freshness and high quality.
We therefore recommend that C&C not open retail outlets and instead compensate for the lack of physical interaction (higher perceived risk from the customer’s stand point) by carefully cultivating a brand image of quality and luxury. Additionally, these perceived risks can be addressed by guaranteeing 100% satisfaction for quality and aesthetic standards by offering monetary refunds if expectations are not met. It is critical that the product delivered by C&C is consistent with the brand message.
Focusing resources on careful selection of the growers’ network as well as training the people who are packaging the flower arrangements is essential to ensuring the quality. We recommend that C&C explore the possibility of implanting a C&C employee at their largest growers operations, for customer service and packaging functions, in order to have a tighter control on quality and aesthetics. Furthermore, the growers and sales-force would have to be trained in providing high levels of service such as customization capabilities consistent with the luxury image.
Another consequence of using these direct channels would be the need to employ a pull marketing strategy versus a push strategy that would place greater emphasis on the communication strategy (discussed later in the paper). It can be argued that the catalog model provides better information flow to the company as it helps to measure quickly and quantitatively the customer reaction to changing marketing strategy (price changes) as well as external factors (popularity of a specific variety).
This enables C&C to respond to changing customer needs effectively and to stay away from price discounts by exercising control over the promotional strategies. The tighter control over the information flow helps C&C manage and protect its brand image. The primary drawbacks of direct mailing include the limited reach of catalogs to the potential target market (not all adults in middle to high income group receive catalogs), and the lack of flexibility in the product mix (since the catalogs will have to be printed so far in advance).
The flexibility to customize or create custom bouquets, advertising and promotional tie-ins to create awareness could allow C&C to overcome these shortcomings. In terms of Promotion, C&C’s key objective of the communication strategy should be to create awareness, knowledge and liking among the target segment and establish the brand image of ‘luxury’ and ‘high quality’. Firstly, C&C should continue to use catalog model as their key vehicle for their existing customers as well as extending to women with high disposable incomes.
With better segmentation and information, C&C can customize the catalogs for targeted segments such as more focus on continuity programs and high-end arrangements for very-high income target groups, and simpler selections for men. Secondly, C&C should focus resources on spreading awareness by extending promotional-tie-ins with high-end luxury brands (Nordstrom, SAK’s in addition to Bloomingdales). Mass-media advertising through specialized magazines catering to target segments such as WSJ, Economist and Vogue and a television campaign is necessary to create brand awareness and image as well as extending the customer mailing list.
Although, we do not recommend that C&C position itself as a direct competitor to FTD and try to outspend the much larger competitor with wider target audience. C&C’s value proposition and campaign must be tailored around high-quality products, upscale service. Thirdly, C&C should actively target men with disposable income by extending the promotional-tie-ins with both retailers where men buy expensive gifts for women as well as luxury men’s goods. The catalogs placed at these locations will have to be tailored to cater to the purchasing behavior and motivation of customer.
For example the catalogs with men as primary target audience must emphasize easy selection and ordering while targeting the motivation. On the other hand tie-ups with high–end clubs, luxury hotels, airline lounges on airports to place the catalogs and free floral arrangements for receptions can help capture impulse buyer behavior. Fourthly, direct selling to corporations for receptions and conferences is another strategy to create new customers with a focus on the continuity programs as well as increased publicity. Lastly, we recommend that any price-discounts be limited for first-time buyers and continuity programs.
However, we do not recommend extensive use of price-discounts or advertising in the local or Sunday newspapers papers because this strategy would not be consistent with the brand image and may not necessarily reach the target segment. In conclusion, based upon analysis of Calyx and Corolla’s portfolio, allocation of resources, competitor analysis and market positioning and segmentation we recommend that C&C positions itself as an ‘up-scale’ flower business targeting wealthy professionals seeking the benefits of high-quality.
C&C must devise a marketing strategy to focus on brand awareness and market penetration. Appendix Competitor profile for Calyx and Corolla Competitor| Target customer| Price| Promotion| Place (Distribution)| Product| Brand Image| Individual Florists| Wide population segment – all incomes| Variable pricing is dependent on where they are located. Price promotions, discounts| Limited geographic reachAllows for last-minute purchaseUse FTD for delivery outside their geographical limits| Not very fresh| Personalized serviceCustom bouquets.

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