A review of these markets monstrance that there is about 870,000 small shipments every day. The Courier Peak is definitely an economically viable solution for Fed. Looking at the contribution margin for Priority One (P-1 Standard Air Service (AS), and Courier peak (CAP) we can see that P-1 has a CM of $12. 96, AS has a CM of $3. 41 , and CAP has a CM of $8. 25. Fed generally saw its planes reach maximum volume before maximum weight with an average of 10 lbs per cubic foot. Looking at the average weight of P-1 (14 lbs), AS (14 lbs), and CAP (1 lbs) we can see that Fed would be looking at a margin of $8. 25/pound for
CAP compared to $. 93/pound for P-1 and $. 24/pound for AS. Looking at the estimate of 10 lbs per cubic foot we can see that Cap’s volume to weight is about . 1 cubic feet compared to 1. 4 cubic feet for AS and P-1 . That means that Fed would be looking at a margin of 582. 50 per cubic foot for CAP compared to $2. 44 per cubic foot for AS and $9. 26 per cubic foot for P-1 That margin demonstrates the economic viability of CAP as well as the potential for large profits. Since the average flight in 1976 carried around 4900 lbs at 85% of volume capacity there is room for 1300 lbs more 6200-4900) and 15% more volume.
Looking at Exhibit 4 we can see that Fed is currently carrying a much larger volume of and AS than Cap’s. Cap’s low volume to weight ratio make it an attractive solution to dealing with planes maxing out on volume before weight. With room for more volume per plane and room for 1 300 lbs more of cargo it would easily be possible for Fed to increase Cap’s per day by 4700 to reach its goal of 6000 per day, especially with AS and P-1 packages being replaced by CAP. Competition Federal Express faces fierce competition from many suppliers but in the case f the Courier peak its main competition is of those in the Rush Services sector.
One of the Couriers Pack’s main competitors is that of Federal Expresses own Priority One service which also provides overnight delivery for about $23. 56. Other competitors include freight forwarders and express mail services such as Emery, American Airlines Parcel Service, and the US Postal Service. The Priority One service is of main concern because of the competing services in the same company, however Priority One is more expensive and has more weight capacity so there is room to market the Courier Peak more while still peeping the Priority One.
Standard Air service is another option within Federal Express with an average cost of $12. 62 for the shipper, however this option is for two-day delivery so won’t affect the Courier Peak market as much. Marketing TO formulate an effective marketing plan, the firm needs to make sure that they are aware of their company and the markets around it. One successful way to do this is to conduct a STOW analysis. STOW analysis is a way to understand and analyze a firm by reflecting on the it’s internal strengths and weaknesses as well as the it’s external opportunities and threats.
One of the greatest strengths for Fed is their ability for overnight delivery. This function is especially marketable when specifically looking at the strengths of the Courier Peak, making the CAP option attractive to customers. However, because of the small dimensions of the Courier peak, there are only specific situations where the CAP is the best option. This is one of the main weaknesses of the CAP, the dimensions of 12″ by 15. 5″ and weight limit of 2-b per package. The Courier Peak is perfect for documents and smaller items, but if a customer ants to ship something larger, the CAP is no longer an option.
Fed, accompanied by the Courier Peak. Has great opportunity for growth. This is the concept that will drive the marketing strategy. One of Feeder’s greatest threats is its competition. More and more companies are realizing that there is a market for products similar to the Courier Peak. Fed needs to create a marketing strategy that reflects their strengths and opportunities while taking into account its weaknesses and threats. Feeder’s marketing strategy should be one of acquisition. Fed needs to acquire new customers not just retain old ones.
Fed should market the Courier Peak as an asset to business-to- business communication, explaining that the Courier peak is a more efficient alternative to a company’s current system. Coo’s already occasionally uses the Courier Peak; Fed should focus on trying to expand these occasional uses to become a company wide policy. It is recommended that F-deeds concentrate their efforts on marketing to the profiles of office and business equipment along with printing and publishing. Both of these categories have a high number of Courier Packs used monthly with a low number of accounts.
In May of 1976 the office and business equipment category used 1,024 CAP with 22 accounts and the printing and publishing category uses 1,558 CAP with only 80 accounts. These categories have a high number of Courier Pass used monthly per account, 46. 5 and 19. 5 CAP respectively. Fed should concentrate their efforts On these categories because statistically they will get the most business for every single new account. Price, Promote, Distribute Using the volume trend analysis, we calculated average demand increasing at approximately 42 packages per week from 1974 until 1976.