The Importance of the Brand in Brand Extension, Marketing Plan Example

Executive summary

The report analyzes the market presence of United Parcel Service (UPS) and the nature of the operational and competitive dynamics prevalent in the market. It also examines various elements in the internal and external environments of the company. Then identifies critical factors that must be considered to enhance its operational capabilities and survival in the long-run. The report highlights how the business operates in diverse political, economic, and social contexts as a multinational company. It demonstrates the need for differentiated strategies to minimize risks in different regions. The company has been operating in the industry for a long time and, therefore, it has been able to build significant strengths in global presence, expertise, and brand name. The report proposes the need for the company to segment its market, and offer services in the emergency sector. The emergency sector consolidates its market presence through an increase in market share and improved bottom-line performance.

Introduction

United Parcel Service (UPS) management needs to conduct research on various markets that the company operates in. Market research would help the administration understand different markets by identifying the attributes and drawbacks based on the capabilities and resources of the company.  Identification of the characteristics and disadvantages of different markets fastens the expansion of the company and the identification of new consumer segments.

Identifying new market segments and expanding the business, enables the company to have a competitive advantage over its rivals, leading to increased market share (Burke, 2013). The vast distribution network is one of the significant strengths of the company; the distribution network ensures the company has massive economies of scale in the global market. Also, the ability of the company to invest in advanced technologies has been instrumental in enhancing the levels of efficiency in its service provision (Guoan & Xue, 2019).

However, the business faces increased competitive threat from its rivals, who are mostly global entities and have a considerable presence in the worldwide market. Increased competition from the rivals constrains the ability of the business to expand its market share. Therefore, it becomes vital for the company to consider expanding its services to new customer segments. This report proposes the provision of emergency night courier services where businesses and households seeking such services can contact the business (Hooley, Broderick, & Moller, 2015). Focusing on such market enables UPS to increase its market share and later improve its bottom lines.

Market analysis

One of the tools for conducting a market analysis for a business is Five C’s Analysis (Burke, 2013). The tool evaluates various dimensions like the customers, context, company, and collaborators, and eventually, the business competitors. All those dimensions are analyzed below.

Analysis of the Customers

Most of the customers for UPS include individuals, businesses, and households that usually send parcels and other packages from one place to another (Burke, 2013). The primary functional need that the customers prefer is safety and efficiency of the service. Safety and effectiveness of the service ensure the designated packages arrive at their terminus in time and proper conditions (Smith & Nagle, 2015). These capabilities of efficacy and safety make the customers highly satisfied with the service. The company primarily segments its customers based on their demographics, such as language and income levels. It, at times, uses geographic segmentation where customers are segmented based on their location.

Analysis of the Context

Through the use of the PESTLE analysis, it is easier to identify the context in which the company operates. Notably, the United States is the main target market for the company. In the United States, there is political certainty due to the entrenchment of democratic principles and the rule of law that offers a stable operating environment (Smith & Nagle, 2015). It is paramount to note that the company also serves other countries in regions, such as the Middle East and Africa. In these nations, vices such as corruption, bureaucracy, and weak enforcement of tax, labor, and patent laws are imperfect. Therefore the vices expose the operations of the company to unfair competition and illegal practices (Hooley, Broderick & Moller, 2015).

On economic factors, the business operates in diverse environments. In its primary market in the United States, there is financial stability. Nonetheless, the venture exposes itself to aspects like high inflation rates, volatile exchange rates, and low levels of economic growth in developing countries such as in Africa. Such outcomes delay the growth and expansion of the company, exposing the company to risks (Rahman & Areni, 2014). On social factors, most of the population served by the company is made up of literate people. Therefore they can understand the nature of service and can interact with the company and its marketing and other messages without difficulties. Further, most of the customers served by the company are oriented to both low and high context cultures based on their geographical origins (Rahman & Areni, 2014).

On technological factors, the company exploits the advanced technologies to offer advanced features to the customers. For examples, the ability of customers to track their parcels to ensure they are aware of the possible delivery dates. By using technological capabilities, the levels of efficiency are enhanced by the company; thus improving service quality which leads to the customers’ satisfaction. They also rank the company highly in comparison to the competitors (Guoan & Xue, 2019). On environmental factors, the company ensures its services are sustainable by adhering to the required standards. The company concentrates much on areas such as ecological conservation to reduce air and water pollution. In packaging, the company utilizes reusable and recyclable bags to minimize environmental pollution. On statutory factors, the company adheres to various laws and policies in areas such as labor, copyrights, and patents and also health and safety (Smith & Nagle, 2015).

Analysis of the Company

The main competitive advantage of the company is its vast extensive global distribution network (Smith & Nagle, 2015). The vast network guarantees the company large economies of scale. The company leverages on the use of technology to enhance the levels of efficiency in its supply chain network. Besides that, it deploys strategies such as modeling, and mining data emanating from its planning systems. The two are used to guide drivers on the most economical and efficient routes to reduce production costs and delays. The company also uses the vast knowledge it has about the market to make predictions. The predictions are based on the experience it has in the distribution sector.

Analysis of the Collaborators

Some of the main collaborators of the company include technology-providing companies, governments, and security companies. The collaborators ensure the services are provided in a free environment to enable the company to exploit its logistical capabilities without hitches (Rosier, 2011). Also, the collaborators ensure vertical integration of the company’s assets. For example, they guarantee successful service delivery of company assets like the distribution tracks, and airplanes to the designated customer segments.

Analysis of the Competitors

Some of the main competitors of UPS include FedEx, DHL, Purolator, DB Schenker, TNT, and YRC Worldwide (Rosier, 2011). These entities are present in most of the global markets where UPS operates and have a significant presence in the courier and logistics services industry. Even though UPS has a larger market share in distribution and logistics sectors as compared to its competitors, they pose significant threats to the company. The risks are as a result of their high-efficiency levels and ability to differentiate their service offerings.

Porter’s Five Forces Analysis of the Industry

The tool is vital in revealing the nature of the balance of power in the competitive environment where the company operates (Porter, 2008).

The threat of new entrants (low): The threat posed by new entrants into the industry is little because of the enormous capital outlays. The new companies that enter the sector require a lot of money to make any significant presence in the market. Most of the companies in the logistics and courier industry are well established global entities. These companies have significant economies of scale, vast networks, easy access to distribution, and value chains. And therefore, a new entrant faces an arduous task of gaining any meaningful presence in the industry (Juga, 2016). Similarly, the current operators have invested heavily in areas such as innovation and research. The investment accords them a considerable advantage over any new entrant into the sector.

Supplier power (low): Most of the supplies required by the operators in the courier and logistics industry are not unique. The supplies include distribution tracks, technologies, and security services for the cargo. The costs of switching from one supplier to another are, therefore, meager. Most of the suppliers prefer retaining businesses due to significant economic benefits. Most of the orders are bulk due to the extensive nature of the companies’ operations (Guoan & Xue, 2019).

Buyer Power (low): The number of customers that are served by the industry operators is high, and the possibility of these customers dictating terms to the company is little (Hooley, Broderick, & Moller, 2015). However, most of the customers are located in different regions of the world. The customers prefer quality services, and therefore, they have little say over the prices charged for the services.

The threat of substitutes (low): The threat posed by substitutes is little due to the ability of most of the operators in the industry understanding the core needs of their customers. And therefore offering differentiated services to different customer segments guarantee consistency and effectiveness. Such differentiation increases the switching costs of the customers, thereby decimating any possibility of the customers utilizing other forms of logistics and courier services (Porter, 2008).

Competitive rivalry (high): The competitors in the courier and logistics services industry are large and well endowed. Most of them are global entities with vast distribution networks that make them benefit from massive economies of scale. The entities also have access to financial resources that they utilize to improve the quality of their services. Having access to financial resources enables companies to have a competitive advantage over their rivals.  (Keller & Lehmann, 2016).

SWOT Analysis of UPS

 Market segmentation

The company must segment the market based on the levels of emergency of the cargo (Rahman & Areni, 2014). Establishing such a segment will make the business venture into overnight express courier and logistics services for different forms of cargo thereby guaranteeing additional market share. The idea comes at a time when most businesses have become global and are operating in different time zones. For them to enhance efficiency, such companies are prioritizing interconnection of their operations globally; and therefore have the availability to have night courier and logistics express services. Emergency cargo services ensure UPS exploits its significant global market presence to increase its market share. The market share will increase because customers, especially businesses operating in critical sectors like finance, healthcare, and insurance, would opt to use such services (Burke, 2013). The availability of urgent freight service would improve the positioning of the company. The presence of the company in every global region would make it attractive to most of the businesses operating, or providing critical services where the time element is vital.

Target market recommendation

The target market for emergency service includes businesses that operate in critical sectors of the global economy. For instance, finance companies, and households, which have urgent issues that must be done within specific timelines (Broniarczyk & Alba, 2014). The target market is viable as the availability of the service would make the company levy premium charges compared to other players in the sector like FedEx. Also, UPS would be able to exploit its large distribution networks in various regions, such as the Middle East, Africa, and Asia. In those continents, most of its competitors are not significantly present (Rahman & Areni, 2014). Also, most of the players in the target markets don’t provide critical services where the time element is vital. Because of the global nature of most businesses, emergency service would be exploited by most global companies (Broniarczyk & Alba, 2014).

Conclusion

The ability of the business to use its strengths is vital in ensuring it manages competitive threats. Most of the rivals of UPS are established entities with similar capabilities, though they don’t have large distribution networks and resources. UPS needs to focus on investing in advanced technology for modeling and tracking parcels. Advanced technology ensures the company utilizes the most economical service delivery option and therefore cutting costs and improving performance.

References

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Burke, S. (2013). Competitive positioning strength: Market measurement. Journal of Strategic Marketing, 19(5), 421-428.

Guoan, Z. & Xue, G. (2019). The digital sales transformation featured by precise retail marketing strategy. Expert Journal of Marketing, 7(1), 72-76.

Hooley, G., Broderick, A., & Moller, K. (2015). Competitive positioning and the resource-based view of the firm. Journal of Strategic Marketing, 6, 97-115.

Juga, J. (2016). Generic capabilities: Combining positional and resource-based views for strategic advantage., Journal of Strategic Marketing 7, 3-18.

Keller, K., & Lehmann, D. (2016). Brands and branding: Research findings and future priorities. Marketing Science, 25, 740-759.

Porter, M. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86-104.

Rahman, K. & Areni, C. (2014). Generic, genuine, or completely new? Branding strategies to leverage new products. Journal of Strategic Marketing, 22(1), 3-15.

Rosier, E. (2011). Marketing strategy in a turbulent environment. Journal of Strategic Marketing, 19(5), 413-419.

Smith, G. & Nagle, T. (2015). A question of value. Journal of Marketing Management, 39-43.