Using the marketing mix to drive change

A Parcelforce Worldwide case study

Page 1: Introduction
Parcelforce Worldwide is part of the Royal Mail Group
and is a leading provider of express parcel deliveries. It
provides a range of services including a guaranteed
delivery on certain times or days. Parcelforce Worldwide
uses a network of international partners to extend its
reach beyond the UK to 99.6% of the world population.
The companys European delivery partners include
General Logistics Systems (GLS), a commercial parcel
carrier and European Parcels Group (EPG), which is a
postal parcels company and is part of the Express Mails
Services (EMS) worldwide network.
Parcelforce Worldwide delivers around 210,000 parcels a day and operates in three distinct
markets:

Business-to-Business services (B2B) the transportation of parcels and supplies from one
company or commercial venture to another. For example, this could be a manufacturer
sending to a wholesaler or a wholesaler sending to a retailer. These are likely to be repeat
orders to re-stock a supply chain.
Business-to-Consumer services (B2C) parcels going from businesses to homes. This is
driven by retailers and etailers (online retailers) sending mainly single parcels to
consumers.
Consumer-to-Consumer (C2C) parcels going from one home address to another. This could
be people sending Christmas or birthday presents or eBay parcels through a Post Office or
ordering a collection on the Parcelforce Worldwide website.

In the last few years Parcelforce Worldwide has made big changes to improve its business.
It has improved its quality of service by focusing on time-critical products. This reduced
the number of parcels handled (the volume) but increased the value of each delivery.
Parcelforce Worldwide is now a key player in the market.
In 2007, an analysis of a customer research survey showed Parcelforce Worldwide needed
to improve its international services. It also needed to change its marketing to respond to an
increase in competition and changes in the external environment. This case study explores
how this was achieved using the marketing mix or 4Ps.

There are different strategies which can

be applied for each element depending
on circumstances and aims. Parcelforce
Worldwide needed to achieve the right
balance of the marketing mix to achieve
its goals.

Product

The product was the key starting point for Parcelforce

Worldwide. As a service organisation, it looked at the
service range it offered the market. A range may be
broadened or a product strengthened for tactical reasons,
such as matching a competitors offer. Alternatively, a
product may be re-positioned to make it more acceptable
for a new group of customers.
Differentiation

An example of this is Parcelforce Worldwides International Datapost service. This

covered both the urgent (i.e. very fast) and deferred (i.e. medium-speed) categories of
its delivery range. Parcelforce Worldwide needed to differentiate the product to meet the
needs of the different users.
It therefore created two separate products - Global Express for the urgent category and
Global Priority for the deferred or medium speed market. This enabled customers to clearly
pick out which product suited their need.
Market research

As a market-orientated organisation, Parcelforce Worldwide must understand what its

customers want to meet their needs. Market research helped Parcelforce Worldwide decide
what it needed to change to best meet those needs. Market research falls in two types:
1. Primary research this involves gathering information from original sources. Research
may be either:

qualitative methods that try to find out how people feel. Samples of customers are often
asked to discuss products and services while researchers take notes about what they have
to say

quantitative methods that produce figures or statistics. Questionnaires, telephone and

internet surveys are often used.

2. Secondary research this involves compiling information from existing or published

sources. Internal sources include Parcelforce Worldwides own customer databases;
external sources include published materials like newspapers, trade publications, industry
reports and the internet.
Outcomes of research

Parcelforce Worldwide focused on primary

research through web interviews to see
what customers thought about its services.
It needed to identify the right focus for its
approach in an increasingly competitive
market. One key question was to find out
what was the main factor affecting the
decision making of customers using the
Urgent service. (This is an example of
quota sampling as it selected customers
from the Urgent product subset). The research showed that for most of these customers,
speed not price was the primary factor.
The other key issues the research identified were:

Parcelforce Worldwides product portfolio was not aligned to customer needs.

In the urgent market, customers were mainly interested in speed of delivery; in the
deferred market, customers wanted a balance of speed and price; and lastly, there was
also a market where price was the main purchasing consideration.
Across all services, customers had a number of factors they required as a minimum. These
included reliability, high levels of customer service, management reporting and good
tracking.

To meet these needs, Parcelforce Worldwide has created a new set of international services
which have these factors as attributes and which are then differentiated by price and speed
in line with customers needs. It has also created product names (or brands) that help to
reinforce and clarify for customers what each service offers.

Price
Price is determined by a number of factors. These include market share, competition,
material costs or how the customer sees the value of the product. Businesses can use
different pricing strategies for various purposes. Each gives different impacts.
Pricing strategies may be cost based or market-orientated:

Differential pricing this gives different prices for different groups or types of customers.
Parcelforce Worldwide is able to negotiate prices with business customers (B2B and B2C)
based on their exact sending profile (for example, volumes, weights, destinations).
Price leadership where a market leader sets market price. In the non-urgent market,
Parcelforce Worldwide is looking to achieve some degree of price leadership by finding
lower cost international delivery models and passing some of this cost saving to its
customers.
Market penetration pricing may be low in order to gain a foothold in a new market or with
a new product. To take market share with its new Express service, Parcelforce Worldwide
needed to price keenly.
Competitive pricing where price matches or undercuts those of competitors. This could,
for example, increase market share with Parcelforce Worldwides new Priority service.

Other pricing strategies a business may use include:

Parcelforce Worldwides market is
price sensitive and consumers have a
choice. New competitors affect its
choice of pricing strategies.
Parcelforce Worldwide has
differentiated its products by offering
services that offer a balance and
choice between speed and value for
money. Its express service leads on
speed; its non-urgent product leads on
price. This clearly sets Parcelforce
Worldwide as the price leader in the
non-urgent sector.

Place
Place refers to the channels that are used to reach the marketplace, for example, methods of
transporting and storing goods. Good distribution is defined as getting the right product to
the right place at the right time. The choice of distribution method depends on both product
and market.
Some businesses will sell to wholesalers, who then sell to retailers. Others will sell directly
to retailers or consumers. Place also includes where a business has its points of sale. In
Parcelforce Worldwides case, customers can access its services through:

depots Parcelforce Worldwide has 53 depots across the UK where all customers (B2B, B2C
and C2C) can send parcels to both UK and international destinations
Post Office branches all customers can also send parcels from Post Offices across the UK.
This tends to be focused more on C2C customers

direct collection by Parcelforce Worldwide all business and personal customers can access
services through the Parcelforce Worldwide website (for ordering a collection, printing
barcode labels or accessing the customer address book) or through a call centre to book a
direct collection by Parcelforce Worldwide van from the customers premises (business or
home)
international partner networks overseas where customers send parcels from overseas
back into the UK through a partner company, with the final delivery in the UK carried out
by Parcelforce Worldwide.

New technology allows Parcelforce Worldwide to track parcels. In 2007, a single IT

platform was created which can follow every single event of a parcel's journey, from
dispatch to depot to customer.
Extending reach through partnerships

Parcelforce Worldwides development of key

partnerships has played a part in improving its
service. Its network partner GLS is an unrivalled
road-based European network that deals with specific
day guaranteed deliveries. It consists of 23 parcel
delivery companies covering five million kilometres
in 30 countries across Europe. GLS provides
Parcelforce Worldwide with the broadest delivery
network and capability across Europe. Parcelforce
Worldwide is also part of the EMS network.
These partnerships have widened Parcelforce Worldwides service offerings dramatically,
particularly in the international markets. This has provided the company with a competitive
edge and expanded its global reach. The main benefits of these partnerships come from
using their existing delivery mechanisms without the need to set up new transportation
methods or services. This reduces both capital and revenue costs.

Promotion
Promotion represents the ways a business informs customers of products and persuades
them to buy. Promotional activity needs clear aims and objectives. For example, the
business needs to understand who it is promoting to, what the messages are, what return on
investment it expects to get and when the returns will be seen. Using market research
establishes the best market segments at which to aim a campaign.

Before a new campaign, Parcelforce Worldwide looks back at the outcomes of previous
promotions. This helps decide which type of campaigns give the best return on investment.
Parcelforce Worldwides approach to and style of promotion has changed as market
competitiveness has increased. This helps to maintain its market position.

Promotion can be classified as either:

Above-the-line this includes directly paid-for advertising

through media such as television, radio, internet and
newspapers. It also includes exhibitions and
sponsorship. It is mainly used to reach consumers, but
can also be used in B2B markets. For example,
Parcelforce
Worldwide
runs
online
banner
advertisements to promote the availability of its
services on the website.
Below-the-line this includes other forms of promotion where the business has more
control, such as direct mail, e-mail marketing, public relations and sales promotions.

For example, Parcelforce Worldwide is using direct mail to tell thousands of UK businesses
about the new services, which will generate responses from potential interested new
customers for the sales teams to follow up. It is also using email to tell all existing
customers about the new international services.

Conclusion
Parcelforce Worldwides vision is: 'To be the UK's most trusted worldwide express
carrier'. Its simplified range of products and its focus on customer needs have helped
towards achieving this goal. Parcelforce Worldwides new international product portfolio
will allow it to sell services which more closely meet customer needs. Through this, it will
win more business and market share as well as retaining its existing customers.
Parcelforce Worldwide now faces the challenge of building on these improvements and
operating at sustained levels of profitability. Developing its partnerships will improve this.
By addressing the 4Ps of the marketing mix, Parcelforce Worldwide has been able to
establish a new product range, choose the most effective approach to price, place it so that
it is easily accessible and promote the range to customers. By responding to external
changes, it has improved its market position and can meet potential competition.