Posted: June 4th, 2015

Topic: MARKETING MANAGEMENT(The expanded marketing mix )

Question No 1: Are there any products/services able to benefit from quality, feature and style improvements? If so how?

Product: Product can be a good or service or an idea. Good is a tangible physical item whereas the service or idea falls under intangible and non physical category of product. Some companies may only produce goods or may only offer services. But there products could be combination of both goods and services.

FedEx offering goods or services?

Products offered by FedEx are mainly considered as services. However, their products also includes combination of both goods and services in which major portion of the product is covered by services. For example delivering or express mail service totally comes under services. However, if a customer books a service where FedEx buys and delivers fresh flowers and birthday cakes at desired destination it will be considered a mix of goods and services. Moreover, the packaging of parcels is tangible part of FedEx products. Therefore, the FedEx products are mix of goods and services, wherein services are dominating part.

Consumer or business products?

The mail and parcel delivery services provided by the FedEx are consumed by the final consumers to satisfy their needs and do not generate any further product, therefore, these falls under the consumer product classification. However, if the retail business has signed a contract with FedEx for delivery of its online orders then it will be considered as business product, because FedEx is offering services to small retail business which in turn used these delivery services to generate its business and increase its sales.

Consumer product category: (Convenience product or shopping product)

FedEx products mainly fall under the convenience product category because these are inexpensive and frequently used services. However, sometimes a service can also fall under the shopping product if the goods being sent though courier are expensive and requires special care( like medical equipments, fragile goods, antiques being sent for delivery, etc) then more efforts and time will be consumed before buying decision is made for courier / delivery service.

Total product concept:

Core product is basis product that is the major reason why customer is buying a product. This is fundamental benefit of a product. In case of FedEx, shipment or delivery of goods to desired destination is the core product.

Expected product is the attributes which are expected by the customers as part of the core product. It includes design, packaging, quality and brand names. FedEx’ packaging of parcels and gift items, time sensitive delivery, reliability and safety of goods being shipped are expected products. Customers are offered to choose their choice of packaging and can keep the original packaging of parcels. Moreover, the wide range of delivery and pickup timings options are also available.

Augmented product is the additional benefits to compliment the core and expected product. These benefits are helpful for company to differentiate their products from competitors.

FedEx offers tracking services as part of their delivery of parcels, customers can track their shipments via mobile, or internet. Sometimes a text message or email option is also available once the goods are delivered to destination. Track by phone, track by mobile, track by using FedEx desktop, track by using FedEx ship manager app, setup online account with FedEx and online billing options, these all comes under augmented product of FedEx.

Potential product is the possibilities that can become part of actual or augmented product in future. Companies keep on innovating and adding new attributes to existing products.

Product Mix (Product depth and width): Products being offered by FedEx in the United States:

FedEx Portfolio
FedEx Express FedEx Ground FedEx Freight FedEx Office Services
Same Day

First Overnight

Priority Overnight

2Day A.M

2Day

 

 

Home Delivery

Smart Post

 

 

 

 

 

Priority

Economy

 

 

 

 

 

Print Services

Supply Chain Services

 

 

 

 

 

Depth
Width

Product Positioning:

Fed Ex is positioned for its quality of services i.e. fast, express and time sensitive deliveries. The slogan of FedEx “The World on Time” further strengthens their positioning. FedEx deliveries are as fast as UPS in US market but the price charged for the same services by FedEx is a little less than UPS.

The perceptual map of the FedEx can be build by taking two factors in considerations i.e. quality (delivery speed) and price.

 

Question No 2: Are there any new products worth adding?

 

For FedEx a big opportunity exists in the US market as people are getting more and more concerned about environment therefore, the use of solar and environment friendly delivery vehicles will be worth adding to FedEx transpiration fleet. It will increase the customer’s satisfaction and result in better image of the FedEx.

Question No 3: What are the pricing objectives, policies, strategies and procedures? To what extent are prices set on sound cost, demand and competitive criteria.

 

Price: is the value exchanged for a product in a market transaction.

Pricing objectives: The pricing objective of FedEx is based on the “Market Share”. One of the corporate objectives of the FedEx is to increase its market share therefore the FedEx has set its prices a little below than its rival UPS or at the same pricing level. In US market there are only three main courier companies namely FedEx, UPS and USPS. FedEx and UPS are rivals and holds major share in this market. A courier service market report states that FedEx and UPS holds more than 80% of US courier market (HighBeam Business, 2011). The pricing battle keeps on playing in US market among these two courier giants. Therefore, the pricing objective of the FedEx is gaining market share which is influence by the competitor’s price.

Pricing Strategy: FedEx is pursuing competitor based pricing. Under this strategy FedEx have only three options, either price its products a little below or a little high or price at the same pricing level as its competitor. Under this method FedEx has to set its pricing in comparison to its competitors. UPS is FedEx’s competitor in the US market. Therefore, FedEx sets its prices in comparison to UPS.

The pricing also differ in different products categories but the difference is not very big. Therefore, we are safe to say that FedEx is using a competitor based pricing strategy. The price comparison of 2014 prices of FedEx and UPS (Endicia, 2014).

Elastic or inelastic Demand: Demand is considered inelastic if product is necessity, there are fewer competitors in industry and product differentiation is high. In the case of FedEx courier products are more towards the inelastic side because people/businesses have to use these services they just can’t halt doing online shopping or sending gifts or getting freight services. In the US, trend of online shopping is on rise as people can’t spare much time out of their busy lives. Moreover, there are only three main companies covering US market FedEx, UPS and USPS. Because the cost of operating and establishing courier business is very high so the competitor forces are low. However, the product differentiation is low but still these companies have created differentiation on different bases, for example:

  1. Timing of the delivery (express delivery, time definite delivery, scheduled time delivery)
  2. Place of the delivery (cities, states, rural vs. urban and national vs. international)
  3. Packaging differentiation
  4. Mode of transportation (environment friendly vs. traditional vehicles & air, ocean or ground )

Finally based on above factors we can say that the product demand is inelastic for FedEx in the US market.

Discounts and Allowances Tactics: FedEx offer discounts on different events like Christmas. One of the offer that save customer upto 16% discounts on selected products is by registering and using FedEx Ship Manager (an online tool). This tactic is aimed to increase attraction of FedEx services, customer experience and customer loyalties.

Source: http://www.fedex.com/us/oadr/en/discounts/index.html

Evaluation of Competitor’s pricing and future move of FedEx: in few services FedEx has set its prices a little above the UPS just to give an exclusive image to its products and brand name. This means the FedEx also wants to create its brand image in customer’s mind and trying to build a value perception. This may help FedEx to switch from competitor based market strategy to value based market strategy. This move is expected to happen in near future as FedEx has already announced new courier charges that will be effective from January 2015. FedEx has come up with a new method of determination of courier charges which not only take weight of the parcel into consideration but also the volume / physical dimensions of the parcel. FedEx is the first one to adapt this pricing method in US market but it is still under great criticism in US (Bosdal, 2014).

 

Question No 4: What are the distribution objectives and strategies? How can these be improved?

 

Key Facts about FedEx Channel in US
FedEx offices in USA 1800 offices all over the US for FedEx services

 

FedEx Drop Box There are more than 43000 drop boxes across the US where customers can drop their parcels for onward deliveries.
FedEx ship site services at Office Max FedEx shipping services are available at more than 900 “Office Max Stores” in the US. They not only accept drop off packages but also provide printing services as well.

Source: www.fedex.com/us/small-business/updates/January-2011/fedex-locations.html

The target customers for FedEx are all those individuals and businesses who want to send something anywhere in the world, regardless of sending one or million of parcel in their whole life. Therefore, the target market is very broad for FedEx.

The logistics process of FedEx starts with picking-up of parcels and packets. FedEx employees collect all the parcels and packages from all locations including drop boxes and official outlets. The collection is made at multiple times during the day and nights based on their locations.

Once parcels and packets are gathered they all transported to the closest FedEx hub, which is a central point where parcels are sorted in accordance to delivery places normally area codes. After parcels and packages are sorted they are loaded to relevant trucks. Then these trucks head towards north, south, east and west to delivery these parcels. FedEx also uses planes and ships to deliver services.

The drivers and pilots are under strict monitoring to ensure the timely delivery of parcel to desired destinations and they are really very efficient and good doing this job.

FedEx logistic system is highly automated and they use state of the art technology to process these shipments and deliveries. During this whole process of delivery customers are given the facility to track the current status of their parcels that gives a real time status of their shipments.

Source: http://www.autoracing1.com/

The competitive edge for FedEx in logistics is based on its contemporary and state of the art technological infrastructure supported by highly skilled workers and a massive fleet of vehicles and planes. FedEx have more than 649 aircrafts, 47500 motorized vehicles that support FedEx to handle average daily volume of 3.9 million packages around 220 countries (latest position updated by company’s website on March 19, 2014). FedEx motorized vehicles includes trucks, vans, containers and tricycles. FedEx has introduced electric tricycles in Paris to avoid traffic jams and to make timely deliveries these tricycles are environment friendly and 100% electric.

FedEx 100% electric vehicles                                                                        Source: green.autoblog.com

FedEx have best distribution channels that a courier company can have. FedEx is well aware of how to reach customers. The company reach its customer in verities of ways for example, online, by air, by land, by sea and also reach them by, mobile phone, telephone and Fax machines. In this era of technology FedEx has made this possible for its customer to plan their shipments over the internet and they don’t even need to go to company’s outlets. Another service available to customer is call and pick up where customers call FedEx representatives and they just come and pick up their parcels for delivery to desired destinations.

Question No 5: What are the organisation’s promotional objectives and strategies? Are they sound?

Promotion includes various methods to spread the word about your company and its products. The main aim of promotion is sending consistent message to customers and stakeholders to avoid confusion. Companies have following options for selection of their promotional strategy.

Promotional Strategies:

Adverting: Advertising is a type of communication aimed to influence potential customers to select your product over a competitor. There are varieties of channel available to use for advertisement starting from television, radio, cinemas, newspapers, brochures, flyers, bill board, outdoor advertising. FedEx can choose multiple of the above for its advertisement.

FedEx uses multiple media for advertisement including televisions, radios, outdoors, billboards and newspapers.

A billboard ad is showing the safety and fast delivery by FedEx                                                

Personal Relation (PR): PR is used by companies to establish mutual understanding between company and its stakeholders. Mostly it is used to clear the misunderstanding amount customers or to build a good image of the company through media, press release or company’s spokesperson. FedEx uses PR for its image building and creating a positive image of company.

Recently FedEx has given a press release that the company is going to be more environmental friendly by replacing its traditional vehicles to 100% electrically operated vehicles this will help company to save environment. The company has already introduced this environment friendly scheme in Paris.

Sales Promotions: Sales promotions are introduced by the companies to increase short term sales of its products by offering incentives. These include coupons, short term discounts, and loyalty incentives. FedEx provides discounted rates around some special events like Christmas and on using online services.

Direct Marketing: Direct marketing is delivering the message directly to the consumers. Mail order catalogues, bulk mail, personalised letters, email and telemarketing are few methods of direct marketing. FedEx sends emails and letter of the new products to its customers (Miller, 2013).

 

Internet:

FedEx having a world class information system and being a market leader in the field of technology is using very innovative method of marketing over the internet. The FedEx’s website is an integrated solution for all users. It offers shipment services and tracking services and allows users to plan their schedule for shipments while at home or at office.

 

There are number of funny TV commercials available on YouTube which allow viewers to comment and discuss company’s products on internet blogs. FedEx is using YouTube for its marketing there is a collection of funny FedEx videos link available on company’s website.

 

FedEx has its presence on social media to spread word about company’s products and positive image. For example facebook, twitter and instagram.

 

Mobile apps have been introduced by FedEx to deliver its message and increase customer’s exposure of FedEx offerings. FedEx launched a FedEx Rewards Game that was build to take advantage of the FedEx’s NFL sponsorship. The winner was able to claim reward. The game program was based to deliver the targeted messaging to game players. For example, the background of the rewards was custom designed on game player’s favourite football teams. This program uses customer’s data and determines the customer’s preference which in turn allows FedEx to send them marketing messages based on their preferences (Miller, 2013).

 

Source: http://www.colloquy.com/article_view.asp?xd=8544

Personal Selling: personal selling is the one to one communication with the potential buyers for example through sales man, exhibitions or trade shows.

Sponsorships: Sponsorship is financing any activity or event in return to advertise company’s products and brands. FedEx have a sponsorship policy available on its website and anyone who fulfils the criteria of sponsorship is given funding from FedEx. The major categories in which FedEx provide sponsorship are community and corporate sponsorships.                                                          Source: http://www.fedex.com/us/sports/index_flash.html

Promotional Objectives:

FedEx slogan: The world on time speaks about the FedEx commitment to deliver on time.

FedEx’s promotional messages are aimed to keep reminding their customers about FedEx’s speedy deliveries and their urge to stay ahead of competitors by innovation and use of new technology.

FedEx promotional objective are liking and preference. FedEx‘s one of the promotional objective is based on preference. The Television commercials show the FedEx ability to serve customers with better technology as compared to its competitor. In almost all commercials and banners FedEx’s vehicles and planes gives a blurred view of the surrounding that shows that FedEx is faster than its competitors. Using robots shows that FedEx is ahead in technology being used to service customers.

FedEx is trying to create liking by using environment friendly vehicles. The company is using PR strategy when FedEx announced that they are working to replace their traditional transportation vehicles with electric vehicles which will reduce the negative impact on environment. Currently FedEx has 118 electric vehicles and still working to bring more in their green vehicle fleet.

Question No 6: How could the promotional budget be improved to get better results?

 

Promotional budget is the amount of funds allocated for promotional activities of the company. There are two approaches of promotional budgeting.

  1. Top down             Build up

Top down approach: Under this method budget limitations are set by the top management and then the budget is planned within pre set limits. It is mostly used by the small businesses.

Build up approach: Under this approach promotional objectives are set, promotional activities are planned and then budget is allocated accordingly. Apparently there is not limitation on budget.

FedEx Promotional Budget Approach:

FedEx’s promotional budget is based on Build up methodology of budgeting. Because the whole campaign is planned before the budget is allocated. Promotional objective are designed and aligned with the corporate objectives and then

Question No 7: How could the use of the expanded marketing mix, as outlined in chapter 14 be used to improve the performance of the organisation?

 

Expended marketing mix includes four extra Ps of marketing:

  1. People
  2. Processes
  3. Physical Evidences
  4. partners

People include staff and other customers. These are those people who are involved in the process or experience. FedEx’s employees who are in direct connect and interaction with customers should be equipped with good interpersonal skills and customer relationship skills. Especially delivery staff who goes to customer’s places to deliver parcels should be trained for better customer service experience, because from the facebook page of the FedEx customer’s complaints are pointing out an issue regarding customer services.

Processes are steps and progression of services when customer engages in product. The processes at FedEx are highly efficient and automated. The availability of online services and use of information technology has posed a big threat about the personal information security. In recent years there are increased numbers of cases where personal information data of millions of customers have been stolen. This aspect of the technology might negatively affect FedEx therefore, improvement should be made to ensure the customer’s confidential data security.

Physical evidences are tangible and intangible hints that a customer can use to from his opinion about the company’s image. FedEx’s outlets are tidy and clean. Transpiration vehicles of FedEx are holding logos of the company with bright colours. FedEx should advertise its environment friendly image by introducing more and more solar and electric vehicles in their transpiration fleet.

Partnerships are coalition of two independent organizations for mutual benefits. FedEx is in an agreement with USPS to deliver its parcels in remote area of the United States where FedEx’s services are not available.

 

 

 

References:

 

Bosdal, C. Pros and Cons of UPS SurePost, FedEx SmartPost (May 14, 2014). Practical Ecommerce.

Retrieved from http://www.practicalecommerce.com/articles/67899-Pros-and-Cons-of-UPS-SurePost-FedEx-SmartPost

 

 

HighBeam Business, industry reports. Retrieved from

http://business.highbeam.com/industry-reports/transportation/air-courier-services

 

 

Miller, S. Live from NCDM13: How FedEx Scored Big With Small Data (December 16, 2013).

Retrieved from: https://thedma.org/advance/best-of-dma/how-fedex-scored-big-with-small-data/

 

 

Shipping Battles 2014: Price Change Comparison Charts – USPS vs. FedEx vs. UPS (2014). Retrieved

from /blog/2014/2014-usps-postage-change-infographic“>http://www.endicia.com/why-us/blog/2014/2014-usps-postage-change-infographic

 

The FedEx website allows browsers to access company information (http://www.fedex.com).

 

Yoney, D. Fed-Ex adding small electric vehicles to Paris fleet (April 30, 2009). Retrieved from:

http://green.autoblog.com/2009/04/30/fed-ex-adding-small-electric-vehicles-to-paris-fleet/

 

 

 

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