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... n 90 years ago and is six times bigger than that of Fed Exs. Thus, UPS can reach virtually every address in the U. S. - Integration of overnight delivery into its vast ground-transportation network. As a result overall overnight delivery cost is almost half of Fed Exs costs. - UPSs management is considered to be the broadest and deepest in the in-duty. - Best return on equity and balance sheet among the worlds major freight transportation companies. - Well-known corporate design (brown color) - Very good in logistics and related services. UPS handles storage, tracking, re-pair, and shipping for big clients. - Six new direct routes to China - Tracking software that works with every corporate system. 2. 2 Weaknesses Analysis - Weak positioned in overnight (express) shipping segment, small market share in airborne service in comparison with FedEx. - Expansion beyond packages.
UPS has added logistics, freight forwarding, and vendor financing, but currently with very small returns. - Weak brand recognition, FedEx commands rates from corporate customer that are 8 - 12 % higher than those at UPS for identical service. - Weak in the Asian market - No dominant global position - CEO is leaving UPS in 2002 2. 3 Opportunities Analysis - International growth, because none of the U. S. freight transportation compa-nies has a dominant global position and several markets are going to be de-regulated (e. g.
China, Germany etc. ) - International shipment volumes are expected to post high single-digit gains, reflecting strength on the export side, mainly in Europe and Canada. - Growth of Internet retail (B 2 C) - As the flows of information become more important to the movements of goods, UPS can increase their market share, due to their IT knowledge - Ground transportation segment can benefit from outsourcing and inventory re-duction efforts of companies 2. 4 Threats Analysis - Fed Exs contract with the USPS for handling overnight and Priority Mail. - Fed Exs Drop Boxes at post office facility of USPS. - Fed Exs effort ($ 500 million) to increase ground network - Threat of substitute like Email and increasing online-security (electronic sig-nature) may lessen the need to courier deliveries - Increasing fuel prices - Terrorism, as security increases and, thus, cost of transportation rises - Teamster contracts, because the union contract of most of UPSs non-management employees ends July 31, 2002. If a timely new accord seems elusive, some UPS customer could start moving their business to rivals. - Weakening economy - FedEx as an alternative investment choice for the investment community 2. 5 Central marketing problem The central marketing problem of UPS is its positioning. UPS is actually positioned as just a domestic (U. S. ) ground shipping company, instead of being the primary coordinator of the flow of goods, information and funds throughout the entire supply chain on an international basis, as UPS perceives themselves. 3 Objectives 3. 1 Financial objectives In order to deliver a good performance the following objects must be set. - Produce an EPS of $ 2. 69 in 2002. - Increase operating margin by 1. 4 % points. 3. 2 Marketing Objectives - Increase average daily volume of ground deliveries from 10, 945, 000 units in 2000 to 11, 100, 000 in 2002, which represents an add-on profit contribution of $ 34 million from ground delivery. - Increase average daily volume of air deliveries from 2, 162, 000 units in 2000 to 2, 350, 000 in 2002, which represents an add-on profit contribution of $ 180 million from air delivery. - Increase average daily volume of international deliveries from 1, 129, 000 units in 2000 to 1, 300, 000 in 2002, which represents an add-on profit contribution of $ 60 million from international. - Increase plane fleet by 10 units in 2002 - Increase market share of first time user of overnight (express) by 5 % in 2002, measured by surveys among business customers (B 2 B). - As a result increase revenue by 14. 6 % in 2002. 4 Marketing Strategy 4. 1 Segmentation Geographical Segmentation: - United States of America - South America - Europe - Developed Asian countries - Emerging Asian countries Customer Segmentation: - Private households (B 2 C) - Companies (B 2 B) 4. 2 Target Market According to the central marketing problem UPS has to target the following: - In order to gain market share of Fed Exs overnight product UPS should target companies (such as hospitals, finance companies etc. ) and households, which are currently using FedEx for urgent freight. - Global manufacturing companies where UPS can handle storage, tracking and shipping on an international basis. 4. 3 Positioning First choice for reliable, fast, and reasonably priced ground, overnight (express), and international delivery. 4. 4 Slogan The only thing we can do is fast and that we can do everywhere. 5 Action Plan 5. 1 Product In order to increase customer satisfaction, UPS should provide a money-back-guarantee for overnight (express) freight, if it is not right on time.
With the intention of attracting more customers, UPS should introduce night and Saturday deliveries, like FedEx does. 5. 2 Price UPS should stay somewhat beneath core competitors price in order to promote their overnight product and, thus, gain market share in that segment. For the new services such as night and Saturday delivery they should charge a premium. With the attention of gaining more business customers for the overnight prod-uct they should offer corporate rates. In order to gain more households they should offer frequent user coupons. Key-account management should negotiate contracts with individual pricing with global companies. 5. 3 Place In order to gain more customers and provide greater choice, reliability, and convenience for households and small and midsize companies UPS should establish a Drop Box network.
This could be done by an alliance e. g. with Wal-Mart, because there is literally a Wal-Mart everywhere. Establishing an Asian network by setting up an Asian hub and buying air routes. Additionally, building relationships with governments of emerging Asian countries in order to be first in that market when the deregulation process starts. 5. 4 Promotion UPS should undertake media advertisement with the goal to address Fed Exs overnight customers. Therefore, UPS should advertise on CNN, on Business Week, in Web-Portals (e.
g. Yahoo Finance) for addressing business customer and in regular TV-Program and newspapers in order to address households. UPS should increase key-account (sales force) to address global companies in order to undertake their global shipping. They should push their international business by talking to global companies and showing presence at international trade events. In addition, UPS should continue sponsoring racing sport events such as For-mula 1, Indy-Series, etc. , because they are associated with speed. 6 Projected income statement Year 1998 1999 2000 2001 e 2002 e Revenue 24788 27052 29771 30980 34123 Revenue Growth 9, 1 % 10, 1 % 4, 1 % 10, 1 % Cost of Goods Sold 7352 7779 8713 9850 9950 Gross Profit 17436 19273 21058 21130 24173 SG& A Expenses 14346 15285 16546 17500 18500 Operating Income 3090 3988 4512 3630 5673 Operating Margin 12, 5 % 14, 7 % 15, 2 % 11, 7 % 16, 6 % Total Net Income 1741 883 2934 2700 3100 EPS ($) 1, 51 0, 76 2, 54 2, 34 2, 69 EPS Growth - 49, 3 % 232, 3 % - 8, 0 % 14, 8 % Table 2: UPSs projected P& L statement Note: SG& A Expenses are going up, due to marketing efforts and so do cost of goods sold due to the increase in revenue and additional expenses such as increasing fleet size.
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Research essay sample on Gain Market Share Fed Exs
