Scribd Logo
Upload

Welcome to Scribd!

  • 4 Case Study Calyx Corolla

    Uploaded by

    prakshi
    39 views15 pages
    The document discusses the traditional floral business model and compares it to Calyx & Corolla's direct-to-consumer model. It analyzes Calyx & Corolla's financial performance over its first three years, customer acquisition costs, response rates to catalogs, and lifetime customer value. It identifies opportunities for Calyx & Corolla to reduce costs and increase demand through product segmentation, catalog frequency, and developing long-term customer relationships.

    Original Description:

    Original Title

    66240861-4-Case-Study-Calyx-Corolla (1)

    Copyright

    © © All Rights Reserved

    Available Formats

    TXT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses the traditional floral business model and compares it to Calyx & Corolla's direct-to-consumer model. It analyzes Calyx & Corolla's financial performance over its first three years, customer acquisition costs, response rates to catalogs, and lifetime customer value. It identifies opportunities for Calyx & Corolla to reduce costs and increase demand through product segmentation, catalog frequency, and developing long-term customer relationships.

    Copyright:

    © All Rights Reserved
    Download as TXT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    39 views15 pages

    4 Case Study Calyx Corolla

    Uploaded by

    prakshi
    The document discusses the traditional floral business model and compares it to Calyx & Corolla's direct-to-consumer model. It analyzes Calyx & Corolla's financial performance over its first three years, customer acquisition costs, response rates to catalogs, and lifetime customer value. It identifies opportunities for Calyx & Corolla to reduce costs and increase demand through product segmentation, catalog frequency, and developing long-term customer relationships.

    Copyright:

    © All Rights Reserved
    Download as TXT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 15

    traditional floral business model

    Floral Catalog

    $x

    $2x

    $4x

    $8x

    distributors

    wholesalers

    retail

    growers

    customers
    Calyx & Corolla

    Floral Catalog

    distributors

    wholesalers

    retail

    growers FedEx

    customers
    Calyx & Corolla -$17
    Floral Catalog

    "Leaving +$38 for us!"

    +$69 -$5 -$9

    growers FedEx

    customers
    Why are they losing money every year?

    0
    -0.5

    $ Millions

    -1
    -1.5
    -2
    -2.5

    1st Yr

    2nd Yr

    3rd Yr
    How costly is it to attract customers?

    Calyx & Corolla

    32 ¢ 32 ¢ 32 ¢ 32 ¢ 40 ¢
    Floral Catalog

    32 ¢
    Floral Catalog

    32 ¢
    Floral Catalog

    Floral Catalog Floral Catalog Floral Catalog Floral Catalog

    32 ¢ 32 ¢ 32 ¢ 32 ¢
    Floral Catalog Floral Catalog Floral Catalog Floral Catalog

    32 ¢ 32 ¢ 32 ¢ 32 ¢
    Floral Catalog Floral Catalog Floral Catalog Floral Catalog

    32 ¢
    Floral Catalog

    32 ¢ 32 ¢ 32 ¢
    Floral Catalog Floral Catalog Floral Catalog
    How well do the catalogs work?
    • What % of sales from catalog? • How many catalog sales is this? • How many sales
    from previous customers? • How many from first time customers? • How many catalogs
    were sent out to these first timers? • What is the response rate?
    Is a response rate of 0.004 sufficiently high to justify sending out the catalogs?
    Expected profit per Catalog RR* [$69 – ($17+$9+$5)] = = = = Cost of catalog 0.36
    0.36 0.01

    (1)

    RR* [$38] RR*

    What was the cost of getting 45,000 new orders?

    (2)

    3 Million * 32 cents = $0.96 Million 7.9 Million * 40 cents = $3.16 Million $4.1
    Million 4.1 Million / 45,000 = $91 per customer! Average profit per order = $38
    Losing $53 per customer?
    Is lifetime customer value > customer acquisition cost?

    (0.05 * $38) – $0.32 = $1.58

    +$1.58 $1.58 $1.58 $1.58 $1.58

    …………

    customer acquisition
    cost
    -$53

    lifetime customer value

    time
    Past advertising starting to pay off?

    Year 1 Sales
    Advertising Costs
    return for
    every $1
    +756 -1,223 0.61 Year 2 -4,466 0.90
    Year 3 -7,021 1.46 ………
    ………????

    +4,018 +10,259
    lifetime customer value
    “present value of a stream of revenue a customer produces”
    • focus on long-term relationship, not a single transaction

    Annual profit

    price premium cost savings referrals demand increase base profit acquisition cost

    time
    CC's opportunities & threats
    1. Should Calyx & Corolla grow rapidly or slowly?
    2. Increase Primary as well as Secondary Demand?
    3. How can they reduce customer acquisition costs?
    4. How can they increase customer lifetime value?
    5. Is their target market too small?
    • The last time you bought flowers, where did you buy them, and why did you
    buy them?
    Willingness to Assemble
    Low
    Funerals High
    Supermarkets

    Low
    Demand for Freshness High

    Florists

    C&C
    Flower Market Segments

    Events (Wedding; Funerals)

    PRODUCT ATTRIBUTES fresh unarranged floral variety information No Sun/Hol delivery


    come in Fed Ex box

    Personal

    Gift

    Corporate
    How frequently should catalogs be sent?
    And to whom?

    ¾What functions does the catalog serve?

    # catalogs sent per year


    # orders made per year

    You might also like