Fedex Term Paper

8/12/2019 Fedex Term Paper

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2013

Submitted by:

Vadlagatta Sravanthi

11/10/2013

FedEx


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INTRODUCTION

FedEx was founded at Little Rock, Arkansas (1971) as Federal Express Corporation andit was Founded by Frederick W. Smith.

FedEx Corporation is a Delaware corporation, incorporated October 2, 1997. FDXCorporation was founded in January 1998 with the acquisition of Caliber System Inc. byFederal Express.

In February 2000, FedEx acquired Tower Group International, an internationallogistics company.

FedEx Corp. acquired privately held Kinko's Inc. in February 2004 and rebranded itFedEx Kinko's.

Revenue for 2011 was US$39.3bn and net income was US$1.42bn.


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The service triangle

The marketing mix allows FedEx to target their audience. FedEx depends on the

marketing; management needs market information to create new products or tweak

existing products, service location, prices and promotion strategies. These four Ps are

the driving force to marketing. FedEx has seven product line and they all employ these

Ps in their campaign. Each product line provides different value to FedEx. The

marketing department is responsible for marketing and brand recognition for all FedEx

entities.

Product

The product is the good or service (Kotler & Keller, 2009). When FedEx began, they

were an express delivery service; however, they have evolved since then to include

office locations for customers, providing copying/printing services and creating

creative company collateral. The FedEx policy is to retain clients for a variety of

services. For corporations, this may mean using them for printing, copying, collation of

mailings and shipping. By offering a variety of services, FedEx is able to be a one-stop-

shop for companies of all sizes. The acquisition of Kinkos was a key component to the

success in this area. Also, by providing multiple revenue streams, they are able to keep

the packages moving.

Place

The place is getting the right product to the right market. FedEx has locations all over

the globe. They can ship next door or around the globe. The acquisition of Kinkos

helped to increase the convenience of FedEx for the average user. FedEx has 1,065

stations and 10 express hubs for their operations. Ground has 32 hubs and over 500


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pickup/delivery terminals. There are 355 service centers and nearly 2,000 office

locations. Their air fleet totals 688 planes and service at more than 375 global

airports. Their ground fleet is comprised of over 90,000 vehicles. In addition to these

facilities, there are 698 FedEx World Service Centers; 1,804 FedEx Office locations,

6,671 FedEx Authorized ShipCenters and Alliance Partners and 43,106 FedEx DropBoxes (including 4,988 U.S. Postal Service locations) (FedEx, 2011).

Promotion

Promotion tells the market about the product. FedEx promotions are designed to

create brand recognition; they can depend on FedEx for fast service and high quality

Federal Express has a clear promotional vision: increase shipping. FedEx has

partnerships in place with vendors, governmental agencies, distribution centers and

other carriers to serve clients everywhere. Additionally, in the past 10 years, Federal

Express created partnership agreements with a number of large merchandising

companies like Amazon, Overstock.com, and Home Shopping Network to reduce the cost

of shipping and increase the volume of parcel deliveries. Recently, they have been doing

mobile advertising and social media outlets.

Price

Price is what will it cost; this can be a tricky issue. Price can be subjective and

emotional-customers may attach a different value on a product besides just the cost.

Physical evidence

Federal express has following physical evidence it includes product, service, andeverything about the company, appears from the outside. Decisions need to be madeabout the size, shape, color, material, UPC bar code, and label of the packaging. Thisshould be customer tested and updated when needed. Packaging involves the visuallayout, practical setup, and when needed for products, clear and precise installationinstructions.

Product liability insurance is needed in case anyone suffers any harm from yourproduct. Engineering tests are also needed to make sure the package can stand up toabuses. There may also be regulatory issues to consider.

Visual packaging of a tangible product can make or break a purchase. Smallimprovements in the packaging or external appearance of your product or service canlead to completely different reactions from your customers.


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It is also important in selling and marketing servicesandintangible products thatyou cantsee, but that you can provide the support needed to the customer who canseeand feel the physical evidence.

Physical Evidence can also refer to the people within company and how they dress andact. It can refer to how your office is set up, the professionalism of your staff, nicebrochures, how you interact with your customer base, and every single visual elementabout your company.

Process

The process of service delivery is crucial since it ensures that the same standard ofservice is repeatedly delivered to the customers. Therefore, most companies haveaservice blueprint which provides the details of the service delivery process, oftengoing down to even defining the service script and the greeting phrases to be used bytheservice staff.

People

An extremely important part of any company is having the right people tosupport the companys products and/or service. Excellent customer servicepersonnel who can provide support with clearly known expectations, such ashours of operation and average response time, is key to maintaining a high levelof customer satisfaction. Customer service skills were discussed in lesson9. Lessons 1 through 4 cover everything from how to lead the people, to hiring,

retaining, training, and building teamwork. Knowledgeable staff adds much valueto the product offering.
http://en.wikipedia.org/wiki/Service_blueprinthttp://en.wikipedia.org/wiki/Service_blueprint


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GAPS MODEL

Customer Gap

The customer gap is the difference between customer expectations and customer perceptions.

Customer expectation is what the customer expects according to available resources and is

influenced by cultural background, family lifestyle, personality, demographics, advertising,

experience with similar products and information available online. Customer perception is totally

subjective and is based on the customers interaction with the product or service. Perception isderived from the customers satisfaction of the specific product or service and the quality of

service delivery.

WHAT FEDEX DID TO CLOSE THIS GAP?

Know your customer (KYC) whom u target.


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Gap 1: The listening gap

Gap between consumer expectation and management perception: arises when the

management or service provider does not correctly perceive what the customers wants

or needs.


Only make promises you can keep Never overpromise because you will under deliver FedEx uses PSP philosophy-

PEOPLE: Customer comes first.SERVICE: Meeting and exceeding customer expectations.PROFIT: Peoplescommitment and empowerment.

GAP 2: The Service Design & Standards Gap

Gap between management perception andservice quality specification: this is when themanagement or service provider might correctly perceive what the customer wants, butmay not set a performance standard.


Highly controlled distribution system with constant information about the status of the

shipment

FedEx has its own air service in and out of china

.

FedEx is focused on three primary growth strategies.

A collaborative sales process that leverages their shared customer relationships,aggressive global marketing of the broad
https://www.boundless.com/marketing/definition/service-quality/https://www.boundless.com/marketing/definition/service-quality/


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FedEx portfolio to targeted prospective customers, and a strategic application of

information systems to reduce costs and improve customer access and connectivity.

GAP 3: The Service Performance Gap:

Gap between service delivery and external communication: consumer expectations arehighly influenced by statements made by company representatives and advertisements.The gap arises when these assumed expectations are not fulfilled at the time ofservice delivery.


The hub-and-spoke distribution network is a system of connections arranged likea chariot wheel, in which all traffic moves along spokes connected to the hub atthe center.

FedEx is made up of more than 300,000 team members from various walks oflife and different cultures

FedEx has a very good repo with US Govt. which has achieved it many contractswhich makes them best in US where it has major revenues coming from.

GAP 4: The Communication Gap

Gap between service delivery and external communication: consumer expectations arehighly influenced by statements made by company representatives and advertisements.The gap arises when these assumed expectations are not fulfilled at the time ofservice delivery.


FedEx Corporation specializes in overnight delivery of high-priority packages,documents, and heavy freight.

The company created the overnight air-express industry virtually singlehandedly in the1970s; its success was such that by the 1990s it faced the sincerest form of flattery:increasing competition from rival carriers However, FedEx's continued mastery oflogistics and its ability to track packages during the shipping process has enabled it toretain its leadership role in the express air cargo industry, as well as act as a movingwarehouse for numerous corporate and individual customers. It operates in 211countries, and serves all of the United States, providing 24-to-48-hour delivery of

valuable, time-sensitive cargo to any destination worldwide.


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THE SERVICE PROFIT CHAIN

Service profit chain shows the relationship between profitability, customer loyalty,employee satisfaction, loyalty, and productivity. Profit and growth are stimulatedprimarily by customer loyalty where customer loyalty is a direct result of customersatisfaction. Customer satisfaction is influenced by the value of the service that

provided to the customer, and the value of the service is created by satisfied, loyal,and productive employee

WHAT IS FEDEX SERVICE-PROFIT VALUE CHAIN?

FedEx mission is to produce superior financial returns for shareowners by providinghigh value-added supply chain, transportation, business and related informationservices through focused operating companies. Customer requirements will be met inthe highest quality manner appropriate to each market segment served. FedEx willstrive to develop mutually rewarding relationships with its employees, partners and

suppliers. Safety will be the first consideration in all operations. Corporate activitieswill be conducted to the highest ethical and professional standards.

FedEx uses PSP philosophy-

PEOPLE: Customer comes first.SERVICE: Meeting and exceeding customer expectations.PROFIT: Peoplescommitment and empowerment.


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The evolution of customer relationship

1. Customers as strangers. The firm makes communication with the potential

customers in order to attract them and acquire their business. The marketing effortstowards could familiar those potential customers with the firms offering, andencourage them to make the firm have a try.


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2. Customer as acquaintances. When the customers awareness and attempt areachieved, the firm and the customer could become acquaintances by the familiarity. Atthis period, the firm should build the relationship to satisfy the customers. Anacquaintance is effective as long as the customer is relatively satisfied and what isbeing received in the exchange is perceived as fair value.

3. Customer as friends. When the customers continue to create and achieve the valuewith the firm in the exchange relationship, the firm should begin to collect specificknowledge of the customers needs. The firm needs to build the relationship to achievethe customer retention at this period.

4.CUSOMER AS PARTNER:

The creation of trust lead to the creation of commitment and that is the conditionnecessary for customer to extend relationship therefore, if the firm wants to buildA partner relationship with the customer, the firm wants to build a partner relationshipwith the customers, the firm must use customer knowledge and information systems todeliver highly personalized and customized offerings.

FEDEXS STRATEGY

Build Customer Loyalty by Investing in Customer Service

DO keep your workTo ensure customer trust and loyalty, stay true to your company's promises. With morecompetition and fewer buyers, the caliber of customers' experience is critical. Socontinue providing them the quality products and top-notch service they're used to.

DO boost value with little cost

By making just a few simple changes, customers get more for the same investment,customer affinity grows and your revenue improves.Some ideas:Include low book-valued items from inventory at no charge.Offer discounts on future purchases.Add features and functions already available with some of your other products.Bundle products and services. Let customers know when you provide increased valuewithout a corresponding increase in price.Retain traditional sales deals.Canceling them turns off loyal customers, and they'll go elsewhere.


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DO empathize with customersShow clients you understand that everyone is under pressure. But don't throw cautionto the wind. Some customers will ask for special pricing and terms and, if possible,accommodate their needs. Before accepting such requests, consider asking for longer-term agreements to lock in future business. Yet when requests outweigh the value, it'stime to say "no." It's critical to cut costs during a recession, and customers understandthat.

DO exude confidence through qualityDown times are the perfect times to demonstrate your competitive edge. While otherscut back on people, marketing and service, you can step in and create confidence andcertainty in your brand. Your integrity and image will directly affect your success, nowand in the future.

DO communicate constantlyKeeping customers happy by staying in tune with their needs will not only build loyaltybut also allow you to capture more market share as less savvy competitors stumble. Soinform customers when their products ship and provide advance notice of delays. Sendupdates and respond quickly to requests. Clearly communicate return and refundinformation. Follow up to ensure satisfaction, and don't forget to send a heartfeltthank-you. It really goes a long way.

Free or discounted item or service. Any business that offers a product or service cantake advantage of this type of reward system. A coffee shop or bakery patron can get

their card punched for the first four lattes or pastries purchased, and then get the

fifth one free.

Price cards. Create a punch card with a dollar amount thats appropriate for your type

of business. If you own a bookstore, the card might have $5 punches with the reward

of a free or discounted item once the customer spends $25.

Charitable donation. Either as an ongoing practice or promotional event, make acharitable donation for every purchase over a certain amount. Make it a contest your

customers can take part in by creating a sign with your logo that shows your progress

toward a set goal.

Prepaid discount cards. If your store or shop offers a regularly used service oil

changes, dry cleaning or dog grooming, for instance customers can purchase a prepaid

card at a discount. The customer benefits are two-fold: By purchasing the service in

advance, they can get an accumulative discount, plus they dont have to have cash on

hand every time they visit your store. You benefit by knowing the customers are morelikely to return to cash in on their prepaid savings.


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Discount from a partnering business. Consider combining marketing efforts with a

nearby business to increase your customer base. If you sell exercise apparel, for

instance, the reward on your loyalty punch card could be a two-week membership at a

local health club. In turn, the health club could offer new clients a $10 coupon for

apparel from your store.

Customer-selected merchandise. Some gas station owners use punch cards to offer

returning customers free or discounted in-store items of their choice when they fill up

their tank a certain number of times.

Raffle opportunity. Planning a special promotion or event? Build the excitement leading

up to the event by using the loyalty cards as a raffle opportunity for a big item or

special service. For every five punches, your loyal customer can be entered five times

into the drawing during the event. This is perfect for restaurants or entertainmentvenues.

The Five Dimensions of Service Quality

Every company owner wants to get loyal customers which add to repeating purchases

and of cause increasing their maximum revenue. But to get there they need to know

about the 5 Service Quality Dimensions. Many actually think that service is just a little

part of the marketing mix, but it is actually a very important part of both the 4 and 7

P's Each of the 5 Service Quality Dimensions makes an extra addition to the level andquality of service which the company offers their customers. It also makes the service

far more unique and satisfying.

Dimension 1 - tangibles;

The tangible Service Quality Dimension refers to the appearance of the physical

surroundings and facilities, equipment, personnel and the way of communication. In

other words, the tangible dimension is about creating first hand impressions. A

company should want all their customers to get a unique positive and never forgetting

first hand impression, this would make them more likely to return in the future.

Dimension 2 - reliability;

The reliability Service Quality Dimension refers to how the company are performing

and completing their promised service, quality and accuracy within the given set

requirements between the company and the customer. Reliability is just as important as

a goof first hand impression, because every customer want to know if their supplier is

reliable and fulfill the set requirements with satisfaction.

Dimension 3 - responsiveness;


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The responsiveness Service Quality Dimension refers to the willingness of the company

to help its customers in providing them with a good, quality and fast service. This is also

a very important dimension, because every customer feels more valued if they get the

best possible quality in the service.

Dimension 4 - assurance;

The assurance Service Quality Dimension refers to the company's employees. Are the

employees skilled workers which are able to gain the trust and confidence of the

customers? If the customers are not comfortable with the employees, there are a

rather large chance that the customers will not return to do further business with the

company.

Dimension 5 - empathy;

The empathy Service Quality Dimension refers to how the company cares and gives

individualized attention to their customers, to make the customers feeling extra valued

and special. The fifth dimension are actually combining the second, third and fourth

dimension to a higher level, even though the really cannot be compared as individuals. If

the customers feel they get individualized and quality attention there is a very big

chance that they will return to the company and do business there again.

Tangibles in FedEx are:

FedEx packaging , employee, branding, the infrastructure of FedEx, the aircraft owned

by FedEx and Federal express has following physical evidence it includes product,

service, and everything about the company, appears from the outside. Decisions need

to be made about the size, shape, color, material, UPC bar code, and label of the

packaging. This should be customer tested and updated when needed. Packaging

involves the visual layout, practical setup, and when needed for products, clear and

precise installation instructions.

Reliability in FedEx are:

FedEx offer a Money-Back Guarantee for FedExs China domestic Priority Delivery

Service, and China domestic General Delivery Service. This guarantee can be suspended

or revoked at our sole discretion without prior notice to you.

Responsiveness in FedEx are:

FedEx Corporation specializes in overnight delivery of high-priority packages,

documents, and heavy freight. The company created the overnight air-express industry

virtually singlehandedly in the 1970s; its success was such that by the 1990s it facedthe sincerest form of flattery


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Empathy

What is Emotional Branding? FedExs emotional branding strategy is all about

the powerful feeling of frustration. FedEx mercilessly pokes fun at the office

politics freak show, and shows us that they understand our pain.

SERVICE RECOVERY

Service recovery means doing whatever it takes to solve a customers problemand

doing it quickly.

WHAT DOES FedEx do ?

1. Act quickly. If you can solve a customers problem quickly, in 60 seconds or less, you

not only maintain that customers loyalty, you save your organization money. How? Thecost to move a complaint up the ladder takes more time and increases the cost ofresolving the situation by getting others involved. The real magic happens when afrontline employee handles the situation.

2. Take responsibility. Most employees, when faced with a complaining customer, takethe attitude, I didnt cause the problem, so why should I apologize? They take

complaints personally rather than merely apologizing for the situation and then workquickly to resolve it. Instead of running for cover, you should simply say, Im so sorry

for the problem; let me take care of this for you.

3. Be empowered. In order to put service recovery into practice, its imperative that

managers and supervisors empower their employees. That means giving them theauthority to do whatever is necessary to take care of the customer.

4. Compensate the customer. Every organization has something of low cost but highvalue that it can give a customer as compensation for a problem. A hotel can upgrade aguests room to a suite, a cell phone company can give a client 1,000 free minutes, and a

computer company can extend a warranty for a year. In each of these cases, the cost

to the company is virtually zero.

Fedex Term Paper

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