Calyx and Corolla - Case Study

Calyx and Corolla

About Calyx and Corolla:

In the year of 1983, Calyx and Corolla entered the fresh flower industry and was established by Ruth Owades. Calyx and Corolla was one of the many companies in the mail order business. Mail order companies, nurseries, and other retailers accounted for almost 23% of the flower industry (Salmon & Wylie, 1995, p. 3). By the 1990, Calyx and Corolla  accumulated more than 150,000 transactions which resulted in $10 million revenue(Salmon & Wylie, 1995, p. 1). Calyx and Corolla marketed their products through colour catalogs. The company created six catalogs every year and promoted products a month before special occasions such as  mother's day, valentines or other special holidays. In the year of 1991, 100000 prior customers received monthly catalogs, while recipients and others interested in buying their products received six catalogs every year(Salmon & Wylie, 1995, p. 1).   The product line for Calyx and Corolla included fresh and dried flowers, variety of cases and other floral accessories (Salmon & Wylie, 1995, p. 9).  On average single items sold by Calyx and Corolla were between the range of $30 to $40. Prices of flowers depended on whether the order was a single stems or bouquet of flowers. Calyx and Corolla also offered continuity program, where the company would deliver orchids  to customers on the first week of every month(Salmon & Wylie, 1995, p. 1). Orders were placed through the companies 800 telephone number, fax or mail. Approximately 70% of all sales were from catalogs shipped to customers (Salmon & Wylie, 1995, p. 9). Compared to all the competitors, Calyx and Corolla had a completely unique arrangements for transportation. Once Calyx and Corolla, received orders from customer via mail, telephone or fax, Calyx and Corolla would forward the order to their flower growers who would directly send it to customers by federal express (Salmon & Wylie, 1995, p. 2). Calyx and Corolla were appreciated for the quality and long lasting life of the flowers.

The Fresh Flower Industry:

The Fresh Flower industry was divided into multiple segments: Retail, Supermarkets, nurseries and mail orders companies . "The retail Flower and plant sales were almost a $9 billion business in the United Sates in 1990, having frown at a rate of 7.7% since 1985" (Salmon & Wylie, 1995, p. 3). The success of the industry was spread at all levels, including family-operated companies, distributors, wholesale and retail florists. Retailers, which included the 25000 florists, had the largest market share in this industry with a total of 59% of the total products. Supermarkets were the second largest with almost 18% of all sales. Lastly, the remainder 23% of the market was split between nurseries, mail order companies and other miscellaneous retailers. (Salmon & Wylie, 1995, p. 3). The margins for retail florists were between 150% to 200% of cost. "A flower that a grower would sell for approximately for $5, would thus cost the ultimate consumer about $40" (Salmon & Wylie, 1995, p. 3). Flowers were an important symbol for many major events such as wedding, mother's day, birthdays, valentine's day and others. Out of the many competitors in the market, retail florist were considered to be service oriented and they prepared bouquets and decorated events. The supply chain for most of these competitors is a long process: distributor initially sell flowers to wholesalers, who then sell it to retailers, who further sells it to customers. Most of the flowers sold by florists are approximately a week old which means the value and life of the flowers have somewhat diminished. Most of the purchases made by consumers were picked up from stores, but others were required to be delivered. For delivery beyond a certain radius, florists usually used FTD. FTD  was a community which included more 25000 florists, and any shipment of flowers to a far location was passed onto a florist, within the community of FTD, that was closer to the shipping address. FTD also offered its members promotional and advertising support which consisted of advertising on television, newspaper, radio, magazines, and outdoor advertising.

Company Analysis

Strengths

One of the factor that has helped Calyx and Corolla expand and maintain its service is their relationship with the flower growers and the federal express. Calyx and Corolla's growers consists of 30 quality flower suppliers. "For these growers, Calyx & Corolla represented an exciting new distribution opportunity that could increase sales and help offset the seasonality of their business" (Salmon & Wylie, 1995, p. 7).  Calyx and Corolla paid their growers wholesale price plus a charge to cover the labour associated with the order. Calyx and Corolla would provide their growers with supplies and a demand forecast so the grower would plan accordingly and the growers would notify Calyx and Corolla of low stock positions. This helps direct customer requests to growers that have the product in stock and does not delay in the process of shipping. The strong relationship with Federal Express has helped Calyx and Corolla receive special attention. "Many delivery drivers had also become aware of Calyx and Corolla and when no one was at home, would not leave packages to freeze on a cold day" (Salmon & Wylie, 1995, p. 8). Secondly, during peak periods, Federal Express left trailers at various growers to be filled and replaced when full (Salmon & Wylie, 1995, p. 8). The relationships with the growers has helped meet customer needs and Federal Express has helped deliver products on a timely manner.  Secondly, Calyx and Corolla have established a contract with their growers that growers were prohibited to supply any other mail order retailers. This provides Calyx and Corolla with a competitive advantage over their competitors. Thirdly, one method of their advertisement and promotion, catalogue, has been a huge success and played a significant factor in increasing sales and awareness of this company. According to the case, "seventy percent of Calyx & Corolla's revenue were derived directly from the catalog" (Salmon & Wylie, 1995, p. 9). Fourthly, as discussed above, Calyx and Corolla has the fastest delivery system which helps consumers receive the best  quality flowers. Instead of buying flowers from wholesalers, who buys it from distributors, Calyx and Corolla takes consumer order, and forwards the order directly to the grower who ships the goods to the consumers. This ensures best quality product shipped to consumers in the short period of time. Lastly, the management team of Calyx and Corolla appreciate the corporate culture and find job satisfaction.