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  Delivering Overnight Brands   Delivering Overnight Brands  Barry Silverstein  
         
 
Delivering Overnight Brands FedEx created the overnight shipping business. UPS’s brown trucks are recognized the world over. DHL gained a reputation for international air delivery. Now all three shipping companies have entered each other’s businesses and provide virtually the same services. It’s a market in which brand differentiation is crucial—and it is made all the more complex by the need to convey a truly global brand message that effectively crosses cultures and nationalities.

Fred Smith conceived of an overnight delivery service and started “Federal Express” in 1973. By then, UPS had already been in business for 65 years, but it was primarily a ground delivery service in the United States. A little known fact is that UPS offered “Blue Label” air express service even before Federal Express got its start. But, as Mike Brewster says in his book Driving Change, Federal Express boasted “an innovative business model that would ultimately redefine the airfreight industry, encroach on UPS’s core businesses, and force UPS to rethink fundamental strategic assumptions.”

 
According to Brewster, UPS wasn’t particularly concerned about Federal Express in its early years, because it didn’t directly compete with UPS’s ground service. The problem was that Federal Express identified a market that was much larger than anyone anticipated, including UPS. Brewster says: “By the early 1980s, customers were beginning to ask UPS drivers and sales professionals why UPS wasn’t offering next day delivery. UPS, a company that had built its reputation and name on the high standards of its service, had been outplayed at its own game.” UPS did eventually respond to the challenge. Like its competitors, UPS today offers worldwide overnight delivery.

DHL’s story is quite different. Founded in the United States in 1969, the company quickly became known for international door-to-door service in the Pacific Basin. Even as Federal Express was starting to grow its business in the 1970s, DHL was expanding to Europe, Latin America, the Middle East, and Africa. DHL was the first to bring air express to the Eastern Bloc countries in 1983 and the People’s Republic of China in 1986. In 2003, DHL acquired Airborne, another air delivery service. Now, with the deep pockets of its parent company, Deutsche Post World Net (Germany’s private postal service), DHL is fast becoming a formidable competitor.

So how do these brands compete on the global marketing stage? Federal Express, officially re-branded FedEx, has adopted a naming strategy, complete with color coding that distinctly segments its services. While “Fed” always appears in corporate purple, “Ex” changes colors based on the service; for example, in “FedEx Express,” the company’s core overnight delivery service, “Ex” and “Express” are orange, while in “FedEx Ground,” the service that most directly competes with UPS, “Ex” and “Ground” are green.

In brand advertising, FedEx became widely known for its defining 1980s slogan, “When it absolutely, positively has to get there overnight.” Currently, the company uses “Relax, it’s FedEx” as an overall theme. FedEx tends to take a humorous approach to advertising; its television ad featuring a prehistoric shipper who gets fired for not using FedEx (even though it didn’t exist yet) won a Bronze Lion at the Cannes Advertising Festival.

The UPS brand tends to be positioned in a more business-like manner. The positioning theme, “What Can Brown Do for You?” capitalizes on the UPS brown trucks and drivers’ uniforms. A current television advertising campaign utilizes a whiteboard to demonstrate in simple terms some of UPS’s service offerings, many of which reflect the company’s use of innovative technology. A sophisticated interactive online experience accompanies the advertising.

DHL, with its bold yellow and red corporate colors, initiated a major marketing campaign about two years ago with the pitch, “Competition. Great for you. Bad for them.” While some advertisers shy away from attacking their rivals by name, DHL did exactly that. Some television ads showed DHL drivers and trucks out-maneuvering FedEx and UPS. Obviously, DHL believed acknowledging its two larger competitors created an opportunity for the upstart brand to be seen as a credible third member of the pack. DHL has moved into the next phase of its branding campaign with current advertising that focuses on superior customer service.

 
According to BusinessWeek, DHL had about 40 percent market share in both Europe and Asia, but only 7 percent market share in the US before it launched the campaign. Overall awareness of DHL by its target customers in the US is today at 60 percent, according to BtoBOnline.com.

All three companies know their business audience well. They each use print ads that target business readers, business-focused online media, and television advertising placed during sports events. Each company also has relationships with major sports. FedEx has a significant NFL sponsorship this year, as well as deals with the NBA, NASCAR, and the PGA, according to BtoBOnline.com. UPS sponsors car racing organizations NASCAR and NHRA. DHL leverages its sponsorship agreement with Major League Baseball for advertising and promotion.

Which brand delivers? While FedEx and UPS are better known, it was DHL that won “the Great Package Race” of 2007. The Supply Chain & Logistics Institute of Georgia Institute of Technology sponsored a contest in which all three competitors were given packages to deliver to five obscure worldwide locations, such as Apia, the only city on Upulu, a Samoan island with no street addresses. The “race” was held on April 13, 2007 and the companies were not aware they were competing. According to the Institute, DHL was able to deliver three out of the five packages successfully (including the package to Apia). FedEx and UPS each successfully delivered one of the five packages.

It remains to be seen which of the three competitors will win the Great Branding Race of 2007.    

[3-Dec-2007]

 
  
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

     
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Delivering Overnight Brands
 
 Although DHL is larger than UPS and FedEx by annual revenue and better known globally, it has failed to make the personal connection with consumers in the US that the other two have. Just try shipping a package across the globe and you’ll find that DHL is cheaper and just as reliable as the other two. But for the small and mid size company, it is all about the relationship of the UPS and FedEx drivers with their customers. You know “Jim” will stop every day, even if you don’t have a package for him. You might chat with him about the recent local news, the weather, traffic, just about anything. He is, in his brown or purple and white uniform, another buddy in your company. The DHL driver on the other hand, is a contractor who cares little about DHL or your package, who’s always in a hurry and who changes as often as every week. 
Carlos Vanegas - December 3, 2007
 
 It well exciting if having more pictures. 
jake long, manager - December 4, 2007
 
 I agree with Carlos. I don't have a single pleasant memory of interacting with DHL. Every time our small business calls for a package pickup, a DHL driver--different every time--arrives early or late, with a surly disposition and clear surprise that we wouldn't want our pickup 90 minutes early. Also, in my experience, I've found that if you really need something delivered by the time you're paying for, you don't want to use DHL. A client of ours has a contract with them, and despite that, I would say that our packages fail to arrive at their offices by the prescribed time at least 25 of the time. Advertising aside, I think it's a classic example of not living the brand. 
Lynne LaCascia, Director of Strategy, McRoberts Mitchell - December 4, 2007
 
 What has made FedEx tick in India is that they successfully lived upto the proposition of "Overnight delivery" where other likes TNT, Blue Dart and DHL have not been able to do.In fact in corporate parlance, sending official documents through FedEx is like Hiring IBM - they never do wrong! 
Anshul Sushil, Associate Manager - Corporate Brand Strategy, HCL Technologies - December 17, 2007
 
 MAKES GREAT READING,GIVES A SIMALTANEOUS INSIGHT ABOUT SO MANY MARKETING TRUTHS LIKE SERVICE DIFFRENTIATION,SEGMENTATION ETC 
S.LAKSHMI NARASIMHAN, HEAD ACADEMICS ICFAI NATIONAL COLLEGE TAMBARAM CHENNAI INDIA, ICFAI NATIONAL COLLEGE - December 26, 2007
 
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