Lab L 212 – Calyx and Corolla
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A1). Calyx and corolla made a fundamental change in the flower distribution as they established direct linkages with the growers with the help of fed ex.The revolution decreased the delivery time and the final cost of the consumers.They delivered roses to customers within one to two days from the time they were cut and anthuriums in three to four days.
C and C had a unique distribution chain and transportation mechanism.Orders were received by telephone, fax or mail from the central office in San Francisco and then sent via fax or mail to the 30 flower growers who supplied to calyx and corolla.Then federal express was responsible for further transit of flowers from C and C where they were packed to the customers.Prices were at par with the FTD prices and this included everything.C and C established linkages with the best flower growers and Fed Ex, the number one air carrier.The top management was responsible for maintaining relation with both the parties and if anything went wrong they were held responsible.
Advantages
Time advantage-C&C has a strong network that helps it to deliver the flowers faster then the other competitors due to strong business terms with Fed ex and the growers.
*Contractual relations -with third parties like growers restrict them to provide service to any other florists.
* Low overhead, low product loss and high profits due to efficient value chain.
* Maintenance of a sophisticated customer database helps to manipulate anddesign efficient strategy
*Just in time (JIT) cuts the cost of having inventory.
– Allows Calyx and Corolla to gather customer information(how often they order,etc)
– Customer service can track orders with online tracking system.
– Continuity programs offset some seasonality.
A2). Calyx and Corolla uses information on existing customers to determine how to make new sales and new customers and how to best distribute catalogs.The management is involved in the design of new flower arrangements and the layout of the catalog.
Although 70% of the orders received by Calyx and Corolla were from catalogs, only half of the profit before G and A can be attributed to catalog sales.This is mainly due to low response rate to catalogs distributed to people on rented list of names.Calyx and Corolla actually lost $470,000 distributing catalogs to people on rented name lists because they must pay $0.40 to prepare and send each catalog and there is only a 1-2% response rate.