Federal Express Marketing

Federal Express

Federal Express has many advantages over its competitors that have not been fully leveraged. These advantages include; late afternoon pickups, direct service to 130 cities, and standard door to door service. These are important differentiating characteristics of Federal Express that need to be exploited for company growth. Specifically Federal Express needs to focus on expanding Courier Pak service in current and new markets.

The market for small sized “quick turn” shipments is immense, totaling nearly 870,000 pieces per day. While, in contrast, Federal Express’ Courier Pak only handles around 1000 of these types of shipments. This represents a major opportunity for Federal Express, even by capturing as little as 20% of the market would equal more than 2 Million in revenues. Courier Pak’s also easily fill space on “cubed out” aircraft, making them like a bonus on most flights. Pushing the aircraft beyond “cubed out” could be viewed as transporting these packages free of fixed costs. Free of fixed costs Courier Pak’s fetch a profit margin of 66%, a very attractive proposition.

A major competitor in this market, USPS, controls the majority of the overnight delivery service and is the primary focus for acquiring customers. 83% of USPS’ overnight packages fall in three categories: registered, certified, and special delivery mail. All of which involve some form of special handling, suggesting something fairly oblivious; if it is important enough to send overnight, customers want it to be treated specially. In order to compete with USPS in the overnight market, Federal Express should provide proof of delivery at no extra charge. While, at the same time, marketing the fact that they already provide the equivalent of registered and special delivery mail. In order to aggressively attack USPS' market share Federal Express should offer Courier Pak at an $11.50 price point to bring it into line with the average cost of $11.00 for USPS’ service w/ special...