Calyx Flowers: Managing Profitable Growth

Calyx Flowers, a catalogue-based flower delivery service, is deliberating strategies to improve its financial performance. To grow profits, the Calyx marketing team is entertaining three potential solutions: increasing catalog mailings, increasing advertising using traditional mass media, and increasing advertising over the internet. The question is which strategy will have the greatest impact on the company's financial performance. This case provides an opportunity to explore issues related to segmentation and targeting. You should consider potential ways to segment the market and propose a segmentation strategy that suits the situation. Then, you should assess the relative attractiveness of the segments by considering characteristics of the segments (e.g., size, growth, purchasing power) and the competencies of the company relative to its competitors. Based on this analysis, how should the company focus its resources—e.g., which customers should it target and why?

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