Greater control over product – By removing the three levels (distributor, wholesaler and retailer) the company has greater control over the quality and presentation of the delivered product. There is a direct relationship between the two components (grower and customer) which allows for more accountability and control by C&C. Training the growers to package to strict aesthetic standards is worth the $9 per order premium compared to FTD’s hit & miss product selection of what is ordered compared to what is received.
Higher Quality of product – The product typically arrives 7 – 10 days sooner than standard delivery method (i.e. FTD); therefore, the customer receives a fresher product that not only looks better when it arrives, but lasts a week or more longer than anything that the consumer could buy through a local florist. With a standardized catalog of premium arrangements and flowers and exclusive growers, the customer will receive exactly the superior quality product that was ordered.
Weaknesses
As a result of eliminating multiple levels, the relationship with the 2 primary components (Fed Ex and the growers) is critical.
Dependency on Fed-Ex – If Fed-Ex ability to deliver is compromised due to weather conditions, competing seasonal delivery, (Christmas), labor relations, etc., then C&C’s business premise breaks down.
Dependency on growers – if the product that the grower supplies is not grown and packaged in accordance with the established specifications, then C&C is not supplying the quality of product as pictured in the catalog and the customer does not receive what was ordered.
Opportunities
C&C has identified the targeted demographic as women aged 30 -55, most of whom work and have substantial disposable income. Marketing strategies targeting this specific demographic should be developed. These other business opportunities would be valuable in helping round out the seasonal peaks of the flower industry.
Expanding corporate clientele - Potential for expanding with high-end client such as an exclusive hotel chain to do lobby and banquet / corporate events. This is an excellent twofold opportunity – partnering with hotel chain get the hotel business and expose to a target market that would not necessarily get the catalog at home. The business traveler who misses an event at home such as a birthday or anniversary but has access to flower catalogues in the hotel. Target high-end hotels with high-end customers.
Premium business alliances – C&C should continue to develop promotional events at select premium retailers (similar to Bloomingdales) with clients of the target demographic. These promotional offers should be affiliated with stores where this demographic tend to shop (Tiffany’s, Nordstrom’s, Williams & Sonoma) and can be tied in with products (jewelry, vases) and during selected holidays (Valentine’s Day, Mother’s Day). Ensure targeted customer service follow up after the promotion – a customer buys a vase with free C&C flowers, wowing these new customers with the amazing product quality and superior longevity of the blooms, and following up to offer a promotional price on a seasonal offering to get past the hurdle of the “first order”. Instead of mailing a massive catalog blast, refining the catalog mailing list more specifically to the target market to increase the likelihood of making the first sale and continuing to generate loyal, happy, repeat customers, where C&C’s return is 3 times that of mass mailed catalogue recipients (Appendix 1).
Television Advertising - Mini strategy in Minnesota to target women in television advertising during programming identified as being watched by the targeted audience. This would include programming such as cooking shows, gardening shows, and afternoon talk shows such as Oprah network. The TV campaign needs to be targeted to people that buy flowers themselves – namely women. Once they buy as a gift for someone else, information about the continuity programs should be highlighted.
Expansion of Fed Ex relationship - to have Fed-Ex exclusively deliver Sundays and holidays for C&C would give them a significant competitive advantage over any other company attempting to enter the market. That would solidify C&C’s role as the market leader in premium home flower delivery and create a significant barrier to entry.
Threats
Competitors – others will see the growth and margins that C&C has cornered so there should be barriers to entry to protect their business. In order to develop any opportunity, competitors would have to develop the same relationships. The relationship with Fed Ex should certainly be exclusive on weekends and holidays, but Owades needs to work towards a completely exclusive relationship with Fed-Ex. The relationship with their 30 growers is exclusive and therefore protected.
Economic downturn – flowers are a luxury not a necessity. When the economy is bad, and disposable income is reduced, fewer luxury items are purchased.
In conclusion, C&C has the potential for significant growth based on the existing sales model. The number one target has to be expanding their exposure to the specific target market of women aged 30-55 to generate the first sale (Appendix 1). Repeat customers generate the highest rate of return. The targeted television advertising, corporate promotions, and business alliances with premium retailers will assist in showcasing their offerings to the most likely customers. Since 70% of business is generated from the C&C catalog, by focusing on whom the catalog is directed to and increasing C&C’s exposure to the target market to increase the repeat customer (where they generate a 5 – 10% return) is where C&C’s advertising time and resources will be best and most profitably directed.
APPENDIX 1
MBQC 831 – NCCB 503
Calyx & Corolla Individual Case
by
yakoweshen (student)
