Case Study Teddy's Flower Shop

For a single small store with direct sales to buyers/end users, going through the exercise of deciding on appropriate distribution and sales force choices may yield new sales and volume gains. For example, Teddy Bear's Flower Shop research finds that most of its customers are located within a radius of a half to one mile of the flower shop.

Further, many customers of Teddy's and other shops are dissatisfied with the difficulty of buying flowers. Florist shops are not always located within a conveniently accessible radius of work or home. Flower gifts are very personal, and shoppers like to see the arrangements and attach a personal card to the gift, if possible.

Flowers are sold locally by other independent flower shops and other outlets such as grocery stores, plant nurseries, the airport, train and bus terminals.

Teddy decided that his local direct competitors included independent flower shops, the airport, and commuter train stations. His marketing strategy was to sell primarily to business people, not homemakers. He estimated the total market was over $1,000,000 per year, based on obtaining information on wholesaler shipments into the local warehouses. He also obtained estimates of volume done by his various competitors from delivery personnel that came to his shop.

Teddy continued to research the possibility of another way to gain sales from local area businesses within a mile of his shop. He began making notes from his discussions with customers about frequency of purchase and what kind of gift they wanted to buy for what kind of occasions. He asked about gift price ranges, and how much they were willing to spend. He asked them about their degree of satisfaction for the flowers/plants they bought for gifts.

Teddy already sold teddy bears in the shop, and considered what other types of merchandise and gifts he could sell. He considered opening a second and third shop in the airport and train station and purchasing an adjacent neighborhood store. However, these were very expensive and risky alternatives for Teddy. He did not have the financial resources to tackle new store locations at this time.

He finally decided on telemarketing and marketing by fax to local businesses with an expansion of gift assortments, based on his market research surveys. He estimated a budget of $1,000 per month was required to cover his total marketing area for potential business lead lists, extra operators, and fax broadcast services. This extra expense required $3,000 per month in extra sales to break even (materials and overhead = 67 percent).

However, Teddy decided he could afford only $300 per month in "risk capital" for the first year. Teddy decided to try out the idea over a year's time to see if enough extra business could be generated in part of the industrial neighborhood nearby. He considered charging a nominal fee of $1-2 per order for the extra service in calls and faxes to help defray costs.

Teddy's mission was to "offer the highest value and most creative solutions to gift giving" to his industrial customers. Working in cooperation with local wine merchants, cheese vendors, and other retailers, Teddy could envision a gift basket business whose product would always include a fresh plant or flowers packaged with wine and/or cheese. These combinations would add variety and value and could command a premium price.

Teddy paid his two high-school age children to pass out flyers and make sales calls to local businesses after school three days a week, with businesses being able to order by fax or phone. Eventually, he planned to hire a part-time sales rep on commission if business growth warranted it.