If you are plain vanilla, how do you persuade your customers you are cappuccino-chip cheesecake?
If you are Federal Express Corp., you try to cultivate small businesses through a special menu of incentives.If you are United Parcel Service, you stress the value of one-stop shipping at low cost.
If you are Airborne Express, you tailor specialized transport initiatives, also at low cost, to high-volume shippers.
If you are DHL Worldwide Express, you emphasize the know-how that comes
from more than 20 years of mastering the intricacies of international shipping.
If you are Emery Worldwide, you highlight the geographic breadth of your system and marketing programs aimed at specific industries.
And if you are a sales and marketing executive for any of these companies, you tear your hair out because you realize everyone else essentially offers the same products you do.
Gone are the days when air express was new and fresh. Today, it bears all the traits of a commodity business, with competitors offering nearly identical services at comparable levels of quality, and with each new advance copied almost as soon as it hits the marketplace.
The ability to differentiate your product may save you from the other problem of being a commodity product. You will need to use low price as your selling point.
In this environment, companies have found it increasingly difficult to separate themselves from the pack. What is more, the air express industry no longer corners the market on speed, the key element that drove it to such dizzying heights of success in the 1970s and early 1980s. Today, fast trucks and trains speed goods to nearby and far-flung destinations under schedules unheard of a decade ago. In doing so, they have stripped air express of a critical service advantage.
"People are now buying time-definite services rather than a mode of transportation," said David I. Beatson, vice president of marketing for Emery Worldwide.
As the competition becomes more brutal, the industry's major players, some of the most nimble and innovative companies in American business today, search for edges wherever they may find them. "You look for those slivers of things that a competitor can't deliver, or won't," said Robert G. Brazier, president of Airborne Express.
The consensus among carrier executives is that a company has to offer a full range of services that are competitively priced and create customer convenience at every step of the process. UPS, for example, has used its
financial might to develop a broad menu of services to appeal to all shippers. It has also narrowed the automation gap with Federal Express to the point where a shipper is unlikely to tell the two technologies apart.
"It started out as largely a price issue, because we had service gaps," said Ken Sternad, a UPS spokesman. In recent years, however, UPS has dramatically expanded its menu of services. As a result, the company's strategy is aimed at persuading the shipper that UPS can give him everything he wants. "We can simply do more for a customer than anyone else," he said.
Federal Express, meanwhile, is looking to broaden its appeal to small businesses, a long-overlooked segment of the shipping market. The company has unveiled a program, called FedExtras, under which small businesses - companies that ship one to nine packages a day - receive a free automated tracking system, discounts from list prices and bonus points for shipping activity. Those points can be used to buy office equipment.
FedExtras is part of a campaign to reach potential customers who do not use Federal Express because its undiscounted prices are much higher than those charged by UPS. Many small businesses do not ship enough to qualify for Federal Express' volume discounts.
"If you look at our list prices and UPS' list prices, we're not comparable," said Alan B. Graf Jr., chief financial officer for Federal Express. Mr. Graf would not comment on whether the company will slash rates on all freight tendered by small businesses, but said it plans, at a minimum, to build more services for those customers into its existing rate structure.
"Clearly, we have to emphasize the value side of the house as well," he said.
Mr. Brazier of Airborne said his company, with a goal to prove that "our wheat is better than the other guy's wheat," tries to tailor a service to a shipper's needs while offering the lowest-cost alternative in the market. But even that strategy comes with risks. "We don't want to become so specialized that we drive ourselves nuts from a cost standpoint," he said.
Mr. Brazier said Airborne and its competitors have been helped by a
rebounding U.S. economy, a rising tide which has lifted the industry's collective boat through most of the year. All of the major companies have posted double-digit traffic gains during 1993, while Emery, UPS and Airborne have reported volume increases of well over 20 percent.
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The increases were partly due to the vicious rate wars of 1991 and 1992, which drove prices down to levels that attracted users of other, less- expensive modes of transportation. "The rates have come down and people are willing to listen," said Mr. Brazier.
Some companies seek to differentiate by offering selective services. DHL, one of the oldest and most well-known international express carrier, focuses its marketing strategy exclusively on overseas operations. Television commercials that run in the United States pooh-pooh the "problems" of shipping in the United States, and compare it with the nightmares of dealing with the Chinese or the Eastern Europeans. "DHL. We'll take it from here." the commercial's narrator intones in an all-knowing, almost cocky tenor.
Dean Christon, manager for marketing and communications for DHL, said the company's message is aimed at customers worried about the costs and headaches of international shipping. "We stress experience, depth of coverage, more locations to more points than any nther carrier," he said. ''When you talk about experience, it's meaningful."
Emery touts its blend of domestic and international services encompassing 288 locations in 88 countries. "We have a network unsurpassed by anyone in the industry," said Mr. Beatson.
The company also stresses its specialized marketing programs for eight industries, including aerospace, fashion and pharmaceuticals. When asked whether other carriers offer similar services, Mr. Beatson said he has held numerous conversations with shippers and carriers, and "all of them say that no one has the type of programs that we have."