Essay Preview: Federal Express
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Yes. As CP has great potential, since CP only takes up less than 10% of total overnight package volume and 5% of total dollar value. Moreover, CP has the higher contribution margin as 66% than both of priority one and standard air. Survey of FECs customers show that only 25% used CP which shows the great potential of the market. Also compared with Priority One, CP volume is more concentrated in the top stations, which may save the distribution cost. However , therere some other indicators that are unfavorable for CP. CPs value-to-volume is very high, though its down to around 100 in 1976, still much higher than Priority One with only half as 48.
CP provides the overnight delivery service. The target segment should be the emergent and rush delivery service market. Potential market for CP is total volume of emergency and rush is 18 mil and 230 mil in dollar value in 1974 or 0.87 mil pieces per day.
Price: Universal $12.5 for up to 2 pounds. Save 14 compared with Delta Dash. On average only weigh around one pound; get the extra value for the one pound. Convenience: dont need to weigh. Disadvantage: has to be purchased in advance in 5 or more one time.
Promotion and target market: whole industry is lack of marketing expertise. Focus both on personal contact and public. Specialization strategy Focus one major customers: manufacturing, advertising, publishing, data processing and office equipment companies. Should target consignees to persuade them to use the service while theyre always very reluctant to change. Size limitations.
Distribution: Competitive advantage: FEC owned all the trucks and airplanes used for delivery, so all the routes and schedules are designed for packages rather than people. How to serve the out-of-service areas.