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Distribution Strategies: Calyx & Corolla: MARK4210: Strategic Marketing 2014 Spring, Section L1/L2
Distribution Strategies: Calyx & Corolla: MARK4210: Strategic Marketing 2014 Spring, Section L1/L2
Distribution Strategies:
Calyx & Corolla
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MARK4210, 2014 Spring, L1/L2
Key Questions for Discussion
1. What’s the traditional channel of distribution for flowers
(conventional florists, FTD, 1800-Flowers)? And what’s the
distribution channel for Calyx & Corolla? Please draw the value
chain for each showing the distribution of flowers from growers to
consumers. Include all the various members of the distribution
channel and any information about margins and prices available
in the case.
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MARK4210, 2014 Spring, L1/L2
Customer Lifetime Value (CLTV)
To calculate CLTV, use the following approach and ignore taxes; if a number you need is given as a
range in the case, use the midpoint for simplicity.
First, think about the net acquisition cost of a new customer. To calculate this, you need:
• (1) how does C&C acquire customers and how much does it cost to acquire a customer (not the cost to
reach a prospect); and
• (2) the average contribution of one order
Next, think about the discounted net value each customer can bring in their lifetime. Assume that
each customer acquired stays with Calyx & Corolla for 5 years. To calculate this, you need to:
• (1) calculate the cost of retaining each customer every year (think about how C&C retains customers )
• (2) calculate the contribution from the orders each customer place in a year.
• (3) calculate the net value of each customer in a year (that is, Contribution – Cost),
• (4) do the same calculation for year 1 through year 5; and
• (5) calculate the discounted net value of one customer over the 5 years =
(Year1 net value) / (1 + i) + (Year2 net value) / (1 + i)2 + …… + (Year5 net value) / (1 + i)5.
Use a discount rate of 10% (i = 10%) to make this calculation.
The following table might help you: Year 1 Year 2 Year 3 Year 4 Year 5
Cost
Contribution
Net Value
Discounted Net Value
Finally, the CLTV of a Calyx and Corolla customer is: Discounted net value of one customer
over the 5 years – net acquisition cost.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
Net Value =
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2
IN CLASS USE ONLY, NOT FOR RELEASE/CIRCULATION. TAKE NOTES AS NECESSARY.
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MARK4210, 2014 Spring, L1/L2