FedEx

Marketing Mix: Federal Express

By

R. Nowaid

Billy Durant once said, "A good product would sell itself," and Henry Ford said, "Any customer can have a car painted any color that he wants so long as it is black." Traditionally, the common business believe was not customer-centric. Ever since Borden introduced the term marketing mix in 1953, and McCarthy categorized the marketing mix in 1960, the traditional views changed forever.

Federal Express (FedEx) is one of the world's leading private parcel carriers that is operating in 214 countries around the world. FedEx employs an extensive marketing program to serve target markets and customers around the world.

The Marketing Mix Concept

The marketing mix is "the controllable variables that the company puts together to satisfy a target group." The marketing mix transforms the marketing strategy into action by using specific tools commonly known as the four Ps, product, place, promotion, and price.

The entire FedEx operation heavily relies on the company's intense marketing scheme. FedEx management relies on market information to create and alter products, service destinations, prices, and promotion strategies.

Product

The product is "the good or service for the target's needs" (Perreault, et. al., 2009, p. 36). FedEx originally operated as a distribution channel for express parcel deliveries; however, that product line has extended to copy centers as well.

Place

The place is "concerned with all the decisions involved in getting the 'right' product to the target market's Place." FedEx customer base and marketplace is extended from the continental United States (US) to the most remote parts of the world.

Promotion

Promotion is "concerned with telling the target market or others in the channel of distribution about the 'right' product." FedEx promotions are designed to create brand recognition so that customers can associate FedEx with speed, reliance, and quality service.

Price

Price is "making it right." Pricing by itself is a comprehensive analytical study that must embrace factors like the entire cost of marketing mix, competition, customer reaction, and other socioeconomic inventories. In 2004, FedEx was the third parcel carrier in Afghanistan (after TNT and DHL). FedEx was charging excessive for a flat parcel to be delivered internationally from Afghanistan; since TNT and DHL were offering the same service at a lower price, Fed Ex was forced to reestablish new pricing guideline that would be more competitive.

The FedEx Marketing Plan

The FedEx marketing plan is one of the most comprehensive and effective strategies in the express parcel delivery industry. "Central to FedEx's global marketing strategy is a rigid adherence to the brand identity: Speed, reliability and connectivity are at the heart of the brand's identity and the same message is religiously conveyed everywhere." In an ever-changing global marketplace, FedEx brand marketing tactics kept the company on the competitive edge with dynamic and innovative solutions. Even with the economic turmoil, FedEx is profitable.

FedEx Background

FedEx was found by Frederick Smith in 1973 using an eight million dollar inheritance. FedEx handles more than seven million packages per day with gross income exceeding 20 billion dollars in 2006.

FedEx product lines.

FedEx has seven product lines (FedEx Express® FedEx Ground® FedEx Freight® FedEx Custom Critical® FedEx Trade Networks® FedEx Services® Kinko's®) and operates under a single management umbrella.

FedEx Express®

This division is the world's largest transportation company, operating in 214 countries. Federal Express Corporation owns its own fleet of 661 aircraft.

FedEx Ground®

This division is second to the United States Postal Service (USPS) in overnight small package shipment.

FedEx Custom Critical®

This division is the world's largest door-to-door urgent shipment company operating in the United States, Canada, and Europe.

FedEx Trade Networks®

This division is a freight forwarding and customs brokerage house aimed to facilitate international trade.

FedEx Freight®

This division is the largest US regional less-than-truck load (LTL) freightliners.

FedEx Services®

This division is a supply chain management and technology company.

Kinko's®

This subsidiary is a business service center with more than 1200 retail stores that provides copy, fax, publishing, and back-office support. Federal Express purchased Kinko's in 2004 for 2.4 billion dollars. FedEx spent more than 700,000 hours in cross training Kinko's employees on how to handle FedEx packages.

FedEx Marketing Strategy

Each product line exposes the company to a variety of risks and opens the door to a number of opportunities. The FedEx product lines are diverse; therefore, only the corporate marketing plan and strategy are analyzed. The FedEx marketing department is in charge of coordinating marketing and brand recognition among Federal Express subsidiaries and product lines. The marketing efforts include networking, technology support, and data management.

Product.

FedEx products are cross branded and interconnected for delivering single-point easy access shipping for customers. Users of one product can cross-over to another product line and use the same account information from point of creation to final delivery. Essentially, FedEx policy is to acquire businesses and develop product lines that can increase the company's revenues and keeping FedEx fleet full and moving at all times.

Place.

FedEx serves 214 countries and every major city in the United States, Canada, and the European Union. In line with the company's policies, in 2003, FedEx purchased Kinko's Copy Center. Acquisition of Kinko's brought unparallel abilities that previous merger acquisitions did not offer for FedEx. 1200 store retail chain was popular among the corporate world and consumers who needed to overnight business plans, résumés, reports, and any valuable document. Federal Express Corporation uses Kinko's stores as a shipping outlet kiosk.

Promotion.

Federal Express has a clear promotional vision: increase shipping. Federal Express Corporation has set a number of partnerships in place with distribution centers, supply chain management firms, government agencies, and other parcel delivery companies. Federal Express and the United States Postal Service signed two contracts, each for a term of seven years, known as Global Express Guaranteed (GXG); under the terms of the contract FedEx will deliver all express packages for the USPS. Additionally, in the past 10 years, Federal Express created partnership agreements with a number of giant merchandizing companies like Google, eBay, Amazon, Overstock.com, and Home Shopping Network to reduce the cost of shipping and increase the volume of parcel deliveries.

Price.

Pricing structure is complicated because it is affected by number of factors: (1) cost of fuel and energy; (2) tariffs, duties, and taxes; (3) rentals, leases, and utilities; (4) fluctuating labor costs; (5) foreign subsidies; and (6) competition pricing. The U.S. government does not offer any subsidies for the transportation sector except for the USPS; however, the European Union subsidizes the entire transit and transport industry for local companies. FedEx does not receive any government subsidies like its competitors: USPS, DHL, and TNT.

Conclusion

Organizations are heavily reliant on marketing as a pillar of the business structure. FedEx grew from shipping six packages on the day it opened its doors to seven million packages per day.