Calyx And Corolla Case Study Analysis

The bouquets range in price from about $30 to $100, which includes shipping by Federal Express. A dozen long-stemmed red roses for Valentine's Day cost $65, similar to the price charged by a regular florist.

The much bigger and more widely known telephone floral services like FTD and 1-800-FLOWERS are Calyx and Corolla's main competition. But Mrs. Owades insists that these rivals, which deal with local florists, cannot match her company's service and the freshness of her flowers.

Calyx and Corolla's sales grew to $10 million last year, more than double the $4 million in 1990. Mrs. Owades believes sales will top $13 million this year.

The Harvard Business School, which Mrs. Owades attended, found the company interesting enough to build a case study around it. But perhaps the biggest compliment has come from retailers like Bloomingdale's and Spiegel that have asked Calyx and Corolla to participate in some of their special promotions.

"It's the kind of company we like to associate ourselves with," said Robert Longendyke, a spokesman for Spiegel Inc., which is mailing out a catalogue this month that has a Calyx and Corolla catalogue inserted in it.

Mrs. Owades (pronounced oh-WADE-ees) describes Calyx and Corolla as a three-legged stool. One leg is the catlogue operation, another is the growers and the third is the Federal Express Corporation. The company's operation is a retailer's dream because Calyx and Corolla never actually takes possession of the inventory, eliminating a huge drain on the bottom line.

When Mrs. Owades was starting up her company, Calyx and Corolla was on the "A" list of proposed names. But she and her business partners worried that no one would know what it meant. The calyx are the leaves that protect the bud, and the corolla is the flower itself.

With the first catalogue ready for the printer, they settled on the First Flower Company, only to discover a consortium of South American flower growers called the First Flower Corporation.

So Calyx and Corolla stuck, despite what Mrs. Owades had learned at Harvard about names and marketing.

Mrs. Owades's genius lies in her use of computerized information systems to connect the catalogue operation directly to its suppliers and insure delivery on a specified date.

Orders then go via computer to the eight main growers that provide more than 80 percent of the company's products and by fax or Federal Express to 13 others. The growers then snip the products from their bulbs, roots or vines and package them up.

"It represents a marvelous example of how changes in technology and a revolution in transportation can potentially alter channels of distribution in consumer goods," said Walter J. Salmon, professor of retailing at the Harvard Business School. "You get flowers which may have double the house life of flowers that you receive from the florist and at a competitive price."

Retail sales of fresh flowers and plants in the United States totaled almost $9 billion in 1990, according to the Harvard Business School case study on Calyx and Corolla, written by David Wylie, a Harvard research associate, under Professor Salmon's supervision. The extremely fragmented market is dominated by about 25,000 florists that held 59 percent of the market in 1987, the last year the Federal Government published statistics.

Supermarkets, the most recent arrival to the retail floral business, account for about 18 percent of sales. But the fresh fruits beside which most flowers are displayed in supermarkets emit ethylene gas, which hastens the deterioration of blossoms.

By eliminating the wholesalers and distributors that provide most retail florists with their inventory, Mrs. Owades has cut a week to 10 days out of the distribution channel for fresh flowers and plants. Freshness Guarantee

Her company is confident enough about the freshness of its flowers to guarantee that they will remain vibrant twice as long as flowers from a florist.

Calyx and Corolla has coaxed its growers, accustomed to packing thousands of stems into a box and tossing some ice cubes on top, into pulling net caps around the rainbow petals of gerbera daisies, resting the heads of roses on tiny pillows of iced gel and inserting water vials on the stems of especially thirsty flowers.

Handwritten notes and cards with care instructions and snippets of information about the gift are enclosed.

"What you see in the catalogue is really what you get -- great flowers delivered in wonderful condition," said Lisa Caugherty, an official of the Direct Marketing Association, a trade group that Calyx and Corolla does not belong to. "I sent my sister the irises for her birthday, and she went wild over them." Training Sessions

The company seems to work hard on service, giving part-time order takers a two-week training session, for example, even though they typically only spend a week on the job at peak times like Mother's Day and Christmas. Recipients of Calyx and Corolla flowers and plants can talk to the company's "Plant Doctor" if they have problems.

The company even uses specially designed software to protect the identities of people like a certain Army private stationed in the Persian Gulf last year who ordered the same five flower arrangements with the same message -- "You're my one and only" -- for five different women.

Order takers cannot trace the sender if a recipient calls for more information.

Mrs. Owades had little difficulty persuading the growers to sign up. Some had experimented with mail-order sales themselves, and although they failed, she convinced them it could be done.

But it was a little more difficult to get the attention of Federal Express, which Mrs. Owades wanted as a partner not only because of its vaunted record of service but also because it would provide the fledgling company with a sort of Good Housekeeping seal of approval.

"I knew if we were associated with Federal Express, it would go a long way toward establishing credibility," she said.

Before she started Calyx and Corolla, Mrs. Owades ran another operation that ultimately became a Harvard Business School case study. In 1978, she started Gardener's Eden, a mail-order catalogue that whetted the appetites of affluent gardeners with tools, lawn furniture, shrubs, soil and even a gazebo. Gardener's Eden spawned a slew of copycat catalogues like Smith & Hawken and White Flower Farms.

In 1982, Mrs. Owades sold Gardener's Eden to Williams-Sonoma for $1 million, slightly more than its sales, and continued to head the business for almost five more years.

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The Purpose and content of a marketing plan

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.

The role of research

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 consideration the skills, values, and aspirations of the entrepreneurs and the investors, and the external elements which confront them, MarCo is prepared to present a plan to fully develop the Calyx & Corolla model.

The role of relationships

Calyx & Corolla have an excellent relationship with the growers. Calyx & Corolla uses

30 quality growers to supply their flowers. The top eight of these growers supply close to 80% of their orders, however no one grower supplies more than 25% of its products to Calyx & Corolla (Wylie and Salmon, 1999). Calyx & Corolla has exclusivity agreements with all growers they do business with. The management of Calyx & Corolla works very closely with the growers on a continual basis to ensure that quality arrangements and packaging are achieved.

Growers are paid wholesale prices and an extra surcharge to provide the extra services of

arranging and packaging the flowers. To accomplish these extra services or retail

responsibilities, the growers employ additional people. Calyx & Corolla senior managers stay in close contact with representatives from each grower they do business with to collaborate on availability of flowers, arrangements, schedules, accessories and packaging supplies.

Calyx & Corolla's relationship with their shipper, Federal Express, is just as strong and

critical as their relationship with the suppliers. They have a special contract with Federal

Express that includes special handling of the packaged flowers. During peak periods, Federal

Express provides trailers to the growers to expedite the shipping process. During adverse

conditions, such as extreme weather, Federal Express provides extra delivery services by not

leaving packages in situations where the flowers could be damaged or ruined. To help track

shipments and provide better customer service, Federal Express provides computer terminals to

both Calyx & Corolla and the suppliers.

Because the majority of their business is realized during peak periods, around holidays,

Calyx & Corolla is working to help alleviate the peaks. By offering continuity programs,

promotional tie-ins and corporate client business, they can offset slow periods and lessen the

impact of sudden demand during peak periods.

The management team at Calyx & Corolla works very closely with their own staff.

Realizing the importance of a high quality sales and customer service staff, they hire serviceoriented

people with a genuine interest in flowers and plants. Senior managers are personally

involved in the training and daily working environment of their employees.

Calyx & Corolla had nearly an 80% margin of flower sales (Wylie and Salmon, 1991),

and possessed an experienced and dedicated management team and a sophisticated information

system and customer database to analyze sales. Calyx & Corolla appears to have a strong

potential for a bright future, but the company also had some apparent weaknesses in their

business.

The role of relationships

Executive Summary

Calyx and Corolla is a start-up venture company started in 1989 which demonstrated the advantages of incorporating value chain in its process. It stood out from the rest of the industry in a way where a unique delivery system was introduced where the customers received their flowers directly from the growers, a setting which is rare, cost-effective and customer conscious. The company is placed in the flowers industry and it has some serious competition in the FTD, and other retail florists. The company generates more than half of its revenues from the 3 months of the year, February, May and December while summer resembles slow business. The company has healthy relationship with its grower suppliers and its delivery partner, Federal Express. Due to high operating and marketing costs, the company seeks to improve the losses reported on its financial statements. They have been using myriad marketing

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