Airborne express has been making good profits for few years now and has 16% of express mail market share. The company follows the “best cost provider” strategy, meaning provides best price to the customer compared to rivals by maintaining good product attributes. Another key strategy of the company is focus on niche markets. The company ensures to have a sustainable competitive edge in the market by providing the lowest cost. However, the competition from rivals and the changing market conditions make it important to have an evolving strategy. Key elements that need to continue (See Exhibit 2.):
Remain the best cost provider.
Sales force to continue working with the major clients to strengthen the relationship. Maintaining aircrafts fleet.
Maintaining low union workforce, less cost part time workers and independent contractors. Early delivery to important customers.
Key elements that need focus:
Distance based pricing.
Investment in more aircrafts.
Consider residential deliveries.
Alliance and partnerships.
1. Airborne express has to implement distance based pricing which is followed by the key rivals. If it is not implemented, the company might lose clients who target low distance mail deliveries. The company would then end up with majority of high distance deliveries that would incur more cost. 2. Airborne is a fast follower and should start further exploring the international markets. The company should partner with strong second tier players such as DHL or TNT (preferably DHL). DHL has a great international focus and tie ups, and this will help the company expand globally. 3. Airborne express should continue to partner with RPS due to its strong hold in ground transportation. Since RPS also encroached UPS’s traditional customer Airborne could use this relationship to become a key rival to UPS and Federal Express. Also, the company is currently not focusing on technology to the extent its rivals are. The rivals have used the technology (See Exhibit3.) to help provide good customer value proposition. Airborne should soon upgrade its technology in order to not lose customer. This would help create better brand image, and in turn retain customer loyalty. 4. Airborne should plan to adopt higher prices for the different mailing options it renders, but at the same time should ensure to remain as the best cost provider. This is because all the key players provide almost the same products/services which leads to a high “buyer power” (See Exhibit1). Increasing the price will also help recover the dying margins. 5. Airborne should revisit the residential deliveries that it once gave up. In order to meet this service the company should invest in buying new aircrafts, and utilize those for the new service. 6. Airborne express should invest more amount in advertising and improving the brand image. This is one way more customers get to know the brand and would start utilizing the company’s products/services. (See Exhibit 3.) 7. As innovation is the key in this market, airborne express should follow the market trend and need to focus and improve the overnight mail delivery option. This way the company would get a market share in that segment as well. Conclusion:
Airborne Express should have evolving strategies to address the internal and external environments and market conditions or threats. It should be prepared to face threat in any form, it could even be from the US Postal Service that is trying to come back into the market. Airborne express should continue what it does best (best cost provider), and implement the above recommendations to remain in the market as a key player and compete with the “two 900-pound gorillas” or any new competitor. The company’s major short term goals should be to move towards distance based pricing, focus on overnight delivery, focus on new prices to ensure...
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