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FedEx Ground Moving Via Express?
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<blockquote data-quote="Ricochet1a" data-source="post: 580820" data-attributes="member: 22880"><p>In the short term, you can give them "Express" times with "Ground" prices. Think of it as a form of advertising. Like all "teaser" promotions, either the price will eventually go up, or the customer will get less for their dollar. </p><p> </p><p>When the economy starts to recover, these customers are already shipping with Ground. They can switch to UPS, but if the costs and delivery times are comparable, why bother? My ISP did the same thing to me. Low teaser rate for a year then jacked up the price. The cost difference between what I'm getting an the competing provider isn't enough for me to bother with switching. So the teaser rate worked. </p><p> </p><p>If a company can grab market share with no real cost for doing so, they'll do it every time. Maintaining market share is a battle, but when the competitors are so closely matched, most customers will choose to stay with the service they have. The real issue is whether Ground can provide the minimum level of service with its low prices to keep customers when the economy improves. UPS is hopeing that the customers will come back. FedEx is betting that customers want low rates more than a higher service level. </p><p> </p><p>There is a side problem for FedEx though in this strategy. They are using the same brand name (FedEx) to apply to two completely different services. One a high expense high service overnight option and the other a basement price low service get it there in a few days option. A very schizophrenic business model. The FedEx brand should've never been applied to the Ground business.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 580820, member: 22880"] In the short term, you can give them "Express" times with "Ground" prices. Think of it as a form of advertising. Like all "teaser" promotions, either the price will eventually go up, or the customer will get less for their dollar. When the economy starts to recover, these customers are already shipping with Ground. They can switch to UPS, but if the costs and delivery times are comparable, why bother? My ISP did the same thing to me. Low teaser rate for a year then jacked up the price. The cost difference between what I'm getting an the competing provider isn't enough for me to bother with switching. So the teaser rate worked. If a company can grab market share with no real cost for doing so, they'll do it every time. Maintaining market share is a battle, but when the competitors are so closely matched, most customers will choose to stay with the service they have. The real issue is whether Ground can provide the minimum level of service with its low prices to keep customers when the economy improves. UPS is hopeing that the customers will come back. FedEx is betting that customers want low rates more than a higher service level. There is a side problem for FedEx though in this strategy. They are using the same brand name (FedEx) to apply to two completely different services. One a high expense high service overnight option and the other a basement price low service get it there in a few days option. A very schizophrenic business model. The FedEx brand should've never been applied to the Ground business. [/QUOTE]
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