Calyx Flowers Case Study

 

INTRODUCTION

Calyx and Corolla (C&C) is a company started by a entrepreneur, Ruth, M. Owades in 1988which delivers flowers to the end customers using the courier service provided by Fed ex.Customers are provided with an option to order fresh flower and bouquets from a four-colorcatalogue by placing an order to the company, which also shows floral bouquets, plants,preserved designs, and corporate gifts. The fresh flower order goes immediately to one of 30growers in the C&C network, who picks and packages the flower and ships them via FedEx.The flowers arrive fresher and last about 10 days longer than flower ordered from stores-bestretailers. The credit for such an efficient value chain goes to the sophisticated system andC&C strong alliances with FedEx and the grower. Calyx & Corolla was primarily a mailorder company, but management is now considering expanding their market and is unsure of how they should proceed. FTD

1

florist network is one of the major competitors of Calyx &Corolla which has a member owned worldwide co operative of 25000 florists

2

.The calyx & Corolla top management team has exceptionally talented members like Owadesand Lee but the things that the company is concentrating upon is that of the future strategy of the company to tackle various externalities faced by the company in future due to arrival of IT as a very strong medium. Again to capture significant market share they will have to spendspecific amounts on the advertisement therefore it will have to assess the financialimplications of spending heavily on the advertisements. Moreover what should be thestrategy to advertise is also an issue because the catalogue medium was already fetchingresults then would it be safe getting into aggressive indirect advertising.

VALUE CHAINBefore Calyx & Corolla:

The industry was highly fragmented at each and every level, where small family run businesswere the major players. The channel of the flowers from the field of a grower to the consumeris depicted in the above flowchart. The consumers were buying 59% of flowers from theflorists; supermarkets were holding a share of 18% in this market.

3

Payments: Growers were paid by the distributors after a span of 60 to 90 days and distributorswere paid by the whole sellers on the same terms. Retailers had to pay in cash as they were

1

FTD stands for Florists' Telegraph Delivery

2

The members of FTD took orders from local customers for delivery by member florists at other locations.

3

The data has been taken from the case facts given in the Calyx&Corolla case

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.

Continue reading the main story

0 Replies to “Calyx Flowers Case Study”

Lascia un Commento

L'indirizzo email non verrà pubblicato. I campi obbligatori sono contrassegnati *