Case 1: “Federal Express”
Company analysis – Does Courier Pak (CP) make sense for Fed Ex FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth. Customer analysis – Who needs CP? How large is the market? Is CP an economically viable product? Can FedEx do 6000 CPs a day? If you look at the current market for Special-Handled Packages there is huge potential for FedEx to take market share with CP and reach their goal of 6000 Pieces per day. Two products that are already offered in the market (Airline Over-the-Counter and Skycap and VIP Services) cost more than CP and make up a total of 12,000 Pieces a day. Looking at the past data, it was mainly the executives or their secretaries who utilized CP rather than shipping managers of the companies. Due to the nature of their needs, they demand fast overnight deliveries to their client instead of the usual routine by going through the shipping department which will slow them down. Focusing on the demand for special-handling of packages, the review of the potential market was almost 870,000 pieces a day. It is a huge market of approximately 670 times the size of the current average daily CP volume of around 1,300 and is still expecting to grow at 20% each year. Using the BCG Matrix, Fed Ex’s CP is currently in the question mark zone where it is a low-share business product in a high-growth market. With a huge market to capitalize on, Fed Ex needs to prioritize its resources on CP to make it into a Star product. Especially since this is an unrealized and unexplored market, Fed Ex has the potential to make CP into a niche...
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