Calyx Flowers: Managing Profitable Growth

Calyx Flowers: Managing Profitable Growth

I. Main Problem:

How to increase the financial performance of Calyx Flowers through marketing and thus enlarging customer base. Main barriers to overcome are:

* Competitors: The flower delivery market is fragmented and therefore heavily competitive; easier to get flowers from other competitors

* Marketing channel: Promotion is done primarily through catalogs mainly to existing customers → Narrow perspective; Cut cost by shifting to online orders (which consist of 40%)

II. Alternatives:

1) Attract new customers by increasing catalog mailings to potential buyers by 3mm

* Pros: Expand size of potential customer base; Increase brand awareness; Provides more information for profile-based segmentation

* Cons: Added cost (rental fee per name + production/mailing fee) involved; New people who receive catalogs might have aversion to the company acquiring their names and personal information; Yields only 1% return

2) Advertise more aggressively using traditional mass media (i.e. radio, TV)

* Pros: Able to reach broader audience and create brand awareness; Previous success launching other brands; Allows for partial segmentation by choosing specific channels

* Cons: Higher cost than option #1 or 3; Difficult to target their specific market segment; Cannot gauge effectiveness of their target audience receiving message; Cannot assess target segment's reaction

3) Advertise more aggressively on the Internet

* Pros: Requires lower capital (depending on which website & how big they want to advertise); Micro-segment more effectively

* Cons: Internet advertising can be annoying to certain customers so they might respond negatively; Banner ads or click ads are ineffective

III. Recommendation:

It is evident that the failure of Calyx Flowers to meet its financial performance goals is due to the ineffective marketing campaign they are currently utilizing. In order to improve financial performance, we feel it is imperative to increase Calyx's current customer base by targeting other market segments as well as communicating in a more cost efficient and effective manner.

We recommend implementing a marketing strategy by advertising and communicating primarily through the Internet. We propose eliminating all direct mail catalogs for non-customers entirely and communicating via e-mail with current customers who currently purchase online, thereby reducing advertising costs. We recommend cross-promotional