Differentiation Strategy

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This strategy is developing new IT features to differentiate products and services. It also use IT features to reduce the differentiation advantage of competitors and to focus products and services at selected market niches. In 1971, FedEx began to offer overnight package delivery by air. At that time, Fred Smith found that U.S. Postal Service and United Parcel Service (UPS) also taking several days to deliver packages. Therefore, Smith started the overnight delivery and he charges higher prices for its services than many of its competitors of its industry because he convinced that customers would be willing to pay a high premium price for fast reliable delivery and to get such a unique new service. The purpose of differentiation is to establish a strong customer base which understands that FedEx does offer a superior service than its rivals. FedEx is the most customer-friendly because they offer special services such as a money back guarantee, and the capability to pick up packages from the customers home. FedEx understands that different customers have different needs. Therefore FedEx has divided itself into six different segments; FedEx Express, FedEx Ground, FedEx Freight, FedEx Custom Critical, FedEx Trade Networks, and FedEx Supply Chain Services. By using this method, FedEx is able to meet the needs of all these segment and this also help FedEx to achieved a high level of quality services. Their service includes customer responsiveness and innovations such as; its aircraft fleet, its hubs and package handling systems, package tracking, customer support functions, and logistics support. Not only does this help FedEx follow through with their promises, but in some ways that are superior to that of the competition.
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