Fedex Courier Pak

1001 words 5 pages
Federal Express established itself as a key player in the competitive airfreight industry, just three years after beginning operations, as a direct result of its unique strategic hub system and a policy of limiting package size to under 70 pounds. By capitalizing on this strategy, FedEx was able to boost its average delivery volume in 1976 to 20,726 packages per day via its three services, Priority-One, Standard Air, and Courier Pack, compared with an average of 10,521 delivered daily the prior year. Clearly the company’s calculated use of strategically-located hubs, nighttime flight routes, and limited package size allowed the company to carve out a niche by reliably delivering packages on an immediate, overnight basis. However, …show more content…

These factors positioned Federal Express to best dominate its competitors and exploit the market of emergency/overnight package delivery.
By 1976, the company was slamming its better-known competition in delivery speed, while also undercutting its competitors’ price. For example, an independent research group found that 93 percent of FedEx Priority One packages arrived the next day, compared with only 42 percent for Emery Air Freight, and lower percentages for FedEx’ other competitors. Furthermore, FedEx’ service was found to be cheaper than Emery’s. Clearly FedEx was uniquely positioned to exploit these results – and a marketing campaign would be effective in convincing potential customers of this advantage.

Research suggested that customers dependant on next-day rush service, were price insensitive. In 1976, after raising prices for Courier Pak by 20 percent, FedEx experienced a 15 percent increase in volume. Thus it stands to reason that FedEx could benefit from future price increases, which would not affect their volume but would boost their already robust profit margin for the product.
As a result of these four factors, Federal Express executives have the most to gain by allocating their marketing funds to advertising the Courier Pak service.

Users of Courier Pak’s competitor