Company and Product Analysis Calyx Term Paper

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The market is not yet a mature one and people still have to get used to the idea of ordering the gift flowers from a catalogue rather than buying them themselves at the flower shop. One opportunity for the company is to capture more gift business and divert consumers' options from traditional florists.

On the other hand, the second opportunity, closely tied to the flower market, but with ramifications into other areas, refers to events such as weddings and funerals, less exploited until now, as well as corporate events and parties, practically any activity involving a decorating opportunity and where fresh flowers are needed. There are several advantages and disadvantages worth investigating when considering an expansion on the decorative market.

First of all, C&C needs to acknowledge that moving into the decorative business involves (1) a completely new set of competitors and (2) the need to be able to adapt the company's structure to the challenges a new market involves. To the latter, we may add the fact that a strong financial support is needed if the company is to be expanding on such a market. The most important challenge seems to be the new competition. On the niche market it has dominated so far, the company was able to dominate its competition by providing the best solutions. On the other hand, a new and larger market brings about stronger and better prepared competitors.

Among the advantages of such a solution, one may mention the new opportunities that a larger market presents. C&C can use the excellently well managed supply chain it has built on the market it currently operates and expand it to fit the needs and demands of consumers in the decorative markets. One may consider, for example, the need for fresh flowers delivered in due time for a wedding.

So, following this brief internal and external analysis, given the internal strengths of the company, most notably the team and the business relationships it has managed to form and consolidate, Ruth Owades should choose an aggressive growth strategy that should be directed not only towards the flower market, but also towards other segment in the decorating market.

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The main problem it needs to work out is the financial backing issues, as it is less likely that the company currently has the financial strengths to backup such an expansion.

Although it is difficult to estimate the cost of getting a new customer, we can evaluate the activities directed towards this goal. We have the costs of printing and delivering catalogues to potential consumers, to each we need to add the 5-10% yield from prior customer mailings and the 1-2% yield from the rented mailing lists. To this, we need to add other advertising means, among them TV advertising including the 800 number to call, as well as the printing costs for the mini-catalogues to be introduced in the newspapers (9 cents each) and the cost of getting published in the newspaper ($34 seasonal bouquet). On the other hand, it is difficult to evaluate the number of consumers attracted through each exact method of advertising.

Active customers purchased between 2 and 10 times a year. If we use an average 5 times a year, this would mean than average active consumers purchased a set of fresh flowers from C&C once every two months. Estimating an average price of $50, this means that each new consumer brought a profit of around $25 a month.

The catalogue operation is the most important advertising method used by the company, yet the yields it brings about are quite insignificant. Fr example, these account to yields of 5 to 10% on the prior customer mailings and only 1 or 2% on the rented mailing lists. Nevertheless, if we look at the number of people these catalogues were mailed to, 7,855,000 individuals on the rented mailing lists and 100,000 on the prior consumer list in fiscal year 1991, and applying these percentages, we obtain consistent values: 78,550 new consumers from….....

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