The product in question is a freight product that covers shipment of documents or other items up to a weight of 2 pounds and offered overnight delivery of the documents. Another value proposition of this product is the added safety feature of it being shipped in waterproof or tear-proof envelopes ensuring the documents are shipped without the possibility of damage.
The targeted segment for this product is the Rush segment customers who are not too price sensitive and expect delivery of the consignment on the following day. Typically the order for a consignment is placed by either the executive or his secretary that desires the shipment.
In this segment, Federal Express faces competition from many airfreight forwarders (Emery Air Freight), some airlines and also the US Postal Services Express Mail. Due to the availability of many established and recognized alternatives such as Emery (61% unprompted recall for Emery against 12% for Federal Express) the perceived value for Federal Express is lower than the Objective value offered. This low perceived value has also affected the demand for Courier Pak.
The objective value or true economic value offered by the Courier Pak is higher because the customer in this case cares most for reliable and timely shipping of documents. This is not a price sensitive customer and in most cases the cost of the shipment would be borne by the company. On these two parameters of reliability and timely shipping of documents Federal Express was rated 93% on performance as against 42% which is the most recognized brand.
Another advantage that Federal Express offers to its customers is the culture of their business. The freight business is a very operational and labour intensive business and relies on efficiency of the employees for reliability. The fact that a proposal for union creation was voted down shows that Federal Express has an advantage over its...