FedEx From a House of Brands to a Branded House

Federal Express was founded in 1973 by Frederick W. Smith. He literally invented the concept of overnight delivery, thereby creating a whole new market where previously there was none. Starting off with only fourteen small jets at its disposal, FedEx today has more than 560 aircrafts – making them the largest all-cargo air fleet in the world. The total daily lift capacity of their fleet exceeds 26.5 million pounds. Within 24 hours it travels approximately 500,000 miles. With the 2.5 million miles the FedEx Express couriers log a day; it is equivalent to 100 trips around the earth. A need that already has been identified rarely provides companies with big business opportunities. The greatest opportunities arise when you detect a completely new need that your customers didn’t even recognize themselves until you offered a solution to them. That is the success story of FedEx with its overnight delivery system.

The company was named “Federal Express” because of the intended associations with the word “Federal” since it expressed an interest in nationwide economic activity. Another trace to the name is the proposed contract with the Federal Reserve Bank, which the company hoped to attain at that time. Although the proposal was denied, the name “Federal Express” was chosen since Smith believed it was a particularly good one for their purposes. It draws public attention to the business and facilitates name recognition.

While the ability to identify an unidentified need provides a great business opportunity, it tends to remain useless if a company fails to come up with a new and innovative way of meeting it. The delivery of a new service can be quite tricky. FedEx solved it brilliantly by its hub-and-spoke distribution system. This innovation lies at the heart of the FedEx network and is only one example of various other innovative solutions in this area. The effective integration of its ground and air system is another case where the company proved its willingness to do things differently.

Soon after its foundation, the company managed to become the premier carrier of high-priority goods in the marketplace, setting the industry standard for their operations. Considering the fact that there was no other company with a comparative market offering at that time, this is not really surprising. Nonetheless, the company did not generate any profit until July 1975. By the end of 1995 the company was well established, with an astonishing growth rate of about 40 percent annually. Gradually new competitors appeared, attracted by this appealing economic potential. In 1983, the company made business history by being the first American company reaching the financial hallmark of US$1 billion in revenues within ten years of start-up without mergers or acquisitions. By building out its core competencies in logistics FedEx has definitely produced a competitive advantage. When UPS, its main competitor, successfully invaded the airborne delivery system in 2001, FedEx responded with counteroffensive defense. In order to challenge UPS in its own home turf it invested heavily in ground delivery service while still building out its special overnight services, such as extended pickup hours and Saturday delivery.

FEDEX BRAND

The idea of express networks that first emerged 150 to 200 years ago in the United States still constitutes the core of the FedEx brand. These networks were established to move something very important under someone’s custodial control and have it delivered within a certain time. This basic principle of a general delivery service lies at the heart of the FedEx business. Transportation, logistics, and movement of goods – anything that suits this basic principle fits the FedEx brand. The focus of the brand, though, rests on what it identifies: express networks. General but yet powerful associations are security and reliability. It provides customers with peace of mind, nurturing their sense of security by using the brand.

Over the years, customers adopted the shortened name FedEx to speak of the company and its services. Actually the term has been used as a verb, meaning the equivalent of “sending an overnight shipment”. To “FedEx” something is common terminology. Thankful for this cue from its customers, the company officially changed its brand from Federal Express to FedEx in 1994. This can be regarded as the first evolution of the company’s corporate identity.

In the early 1990s the company was then expanding into global markets and wanted to modernize its corporate brand. Soon, the company realized that more than a cosmetic face-lift was needed for its dated purple logo. In order to do it right FedEx started a complete overhaul of the corporate identity from the visual design to the corporate name to the names of everything that it offered – from services to drop boxes to shipping containers. Research findings at the time revealed that many customers didn’t really understand what FedEx’s services were because the naming was quite confusing. In some cases FedEx used acronyms that didn’t gave them any clue at all. In order to clarify the naming system and to keep it simple the company implemented a system that relies solely upon the FedEx brand in addition with real words to describe the operating company, product or service explicitly. The re-branding efforts created a successful brand portfolio of services and products with names that have become timeless.

In 2000, the company implemented the second evolution of the company’s corporate identity when it changed the name to FedEx Express in order to better position the business in the overall FedEx Corporation portfolio of services. Just like it was the case for UPS changing its logo, the re-branding signified an expanding breadth of the company’s market offerings. It simply had to move away from being just an overnight delivery service business, which can be compared to UPS moving away from being just a ground delivery service business.

The brand promise of FedEx that secured its place in customers’ minds and hearts is the guaranteed next-day delivery “absolutely, positively by 10:30 a.m.” With the intention to create a more diversified business including a portfolio of different but related businesses, the company invested heavily in a number of acquisitions and realignments.

With the acquisition of Caliber System Inc., for instance, the FedEx Corporation, originally called FDX Corp., was formed in January 1998

Fig. 1 From a house of brands to a branded house

In a move to integrate the company’s portfolio of services and become a Branded House, all Caliber System Inc. subsidiaries were re-branded. Today’s FedEx is directed by FedEx Corporation, which leads the various companies that operate according to the business motto “operate independently, compete collectively and manage collaboratively,” under the FedEx brand name worldwide. This way it ensures that all companies can benefit from the FedEx brand as it is one of the world’s most recognized and trusted brands. In 2004, the FedEx Corporation acquired the privately held Kinko’s Inc. and later re-branded it FedEx Kinko’s. It is therefore the only acquired brand the company chose to keep as an official subbrand with its own equity in the brand portfolio.

Fig. 2 FedEx Kinko’s as the only independent subbrand

COMMUNICATING THE BRAND

FedEx regards its own operations as one of the best channels of communications they have. The close integration of their information systems and transportation systems with those of their customers makes it even more difficult to switch to alternative market offerings. One of the first things they see on the screen when they turn on their PC is FedEx.

While most brands focus either on businesses or on consumers, FedEx keeps them both on its radar screen. The primary target is the B2B world, but in order to ensure that its ubiquitous brands maintain its leadership status they also build its master brand inside the B2C ? universe. All communications contribute to developing the FedEx brand image and reputation. Advertising, direct mail, sponsorships, corporate identity sales force, couriers and information systems are used. Maintaining its reputation and its brand image is a top priority concern, since it is one of the most valuable things the company has. As CEO, Frederick W. Smith regards guarding and championing the brand as an important part of his job. Major branding decisions are usually made by him, the Vice President of Marketing, and the Director of Global Brand Management. Market research is used to validate and provide guidance for execution.

Over the years, FedEx had several taglines: America, you’ve got a new airline, Absolutely, Positively, Don’t worry. There’s a FedEx for that, Our office is your office and Relax, it’s FedEx. The last one was so successful that they launched a new advertising campaign in 2005, still using this previous tagline. Communication elements comprise TV, print, radio and online ads. The campaign is targeted at small businesses and delivers the central message that the portfolio of FedEx services will help them to meet their needs.

The launch campaign for the FedEx Kinko’s Office and Print Centers in July 2004, incorporated TV spots, print, radio, direct mail and online elements around the slogan Our office is your office. It was targeted especially at small businesses and had to reflect the one-stop resources offered by the centers. FedEx has some kind of signature style about its ads that is rooted in its rich heritage of humor in advertising. The TV spots used a series of hilarious slices of small-business life and were wonderfully wry and perfectly cast to deliver a key point. News that is delivered in an entertaining fashion tends to be more memorable for people. The humor in the advertising cam¬paign also has positive effects on FedEx’s sense of self-confidence. The target audience of small business owners’ response to the spots was overwhelmingly positive.

The average core customers of FedEx are primarily males between the ages of 25 and 55. One central goal of communications is to place the brand wherever this target group frequents. That’s the reason why the company extended its sponsorship of the National Football League for three years. It was also driving the decision to join forces with Joe Gibbs Racing in 2005. FedEx is sponsoring the #11 FedEx Chevrolet during the 2005 NASCAR season. The FedEx Racing cam¬paign with the headline “Every Day Is Race Day” will be supported by TV, print and online ads.

Sponsorships are used quite intensely at FedEx. Qualities like speed, teamwork, and precision in building the largest express delivery company in the world are held up high. These same qualities are prominent in their sponsorships, resulting in rather natural and complementary relationships. The company regards this marketing tool a great opportunity to drive business and even integrates the sponsorships as an anchor point throughout the marketing mix, not the other way around. Certain events are used as content useable in media, promotions, employee incentives, and online. Examples include NFL-themed promotions, Orange Bowl-flavored retail incentives, and PGA-related TV spots. The company uses sponsorships to invade new markets and penetrate new areas, resulting in high growth rates.

Sometimes companies get very lucky because their company and/or brand are included in movies simply for plot reasons. FedEx lucked out in 2003 when they benefited tremendously from product placement at no cost because the company and brand were featured in the major motion picture Castaway starring Tom Hanks. Actually, you could say that this was a two hour FedEx commercial that people even paid to see. There were plenty of Fed Ex trucks, Fed Ex posters and Fed Ex planes; you can imagine how much favorable exposure FedEx received from this.

Fig. 3 FedEx branded delivery truck

Further readings in: Philip Kotler, Waldemar Pförtsch

Business-to-Business Brand Management, Springer Heidelberg, New York 2006

USA http://www.amazon.com/exec/obidos/ASIN/3540253602/wwwpfoertscco-21/

Germany http://www.amazon.de/exec/obidos/ASIN/3540253602/wwwpfoertscco-21/ .

Normal View Attach:Site/PageHeader/softflow.gif Δ Home Edit History Recent Changes
News Portfolio Information Research Dialogue Only for students Only for research TriadSkin powered by PmWiki	Main Fed Ex FedEx From a House of Brands to a Branded House Federal Express was founded in 1973 by Frederick W. Smith. He literally invented the concept of overnight delivery, thereby creating a whole new market where previously there was none. Starting off with only fourteen small jets at its disposal, FedEx today has more than 560 aircrafts – making them the largest all-cargo air fleet in the world. The total daily lift capacity of their fleet exceeds 26.5 million pounds. Within 24 hours it travels approximately 500,000 miles. With the 2.5 million miles the FedEx Express couriers log a day; it is equivalent to 100 trips around the earth. A need that already has been identified rarely provides companies with big business opportunities. The greatest opportunities arise when you detect a completely new need that your customers didn’t even recognize themselves until you offered a solution to them. That is the success story of FedEx with its overnight delivery system. The company was named “Federal Express” because of the intended associations with the word “Federal” since it expressed an interest in nationwide economic activity. Another trace to the name is the proposed contract with the Federal Reserve Bank, which the company hoped to attain at that time. Although the proposal was denied, the name “Federal Express” was chosen since Smith believed it was a particularly good one for their purposes. It draws public attention to the business and facilitates name recognition. While the ability to identify an unidentified need provides a great business opportunity, it tends to remain useless if a company fails to come up with a new and innovative way of meeting it. The delivery of a new service can be quite tricky. FedEx solved it brilliantly by its hub-and-spoke distribution system. This innovation lies at the heart of the FedEx network and is only one example of various other innovative solutions in this area. The effective integration of its ground and air system is another case where the company proved its willingness to do things differently. Soon after its foundation, the company managed to become the premier carrier of high-priority goods in the marketplace, setting the industry standard for their operations. Considering the fact that there was no other company with a comparative market offering at that time, this is not really surprising. Nonetheless, the company did not generate any profit until July 1975. By the end of 1995 the company was well established, with an astonishing growth rate of about 40 percent annually. Gradually new competitors appeared, attracted by this appealing economic potential. In 1983, the company made business history by being the first American company reaching the financial hallmark of US$1 billion in revenues within ten years of start-up without mergers or acquisitions. By building out its core competencies in logistics FedEx has definitely produced a competitive advantage. When UPS, its main competitor, successfully invaded the airborne delivery system in 2001, FedEx responded with counteroffensive defense. In order to challenge UPS in its own home turf it invested heavily in ground delivery service while still building out its special overnight services, such as extended pickup hours and Saturday delivery. FEDEX BRAND The idea of express networks that first emerged 150 to 200 years ago in the United States still constitutes the core of the FedEx brand. These networks were established to move something very important under someone’s custodial control and have it delivered within a certain time. This basic principle of a general delivery service lies at the heart of the FedEx business. Transportation, logistics, and movement of goods – anything that suits this basic principle fits the FedEx brand. The focus of the brand, though, rests on what it identifies: express networks. General but yet powerful associations are security and reliability. It provides customers with peace of mind, nurturing their sense of security by using the brand. Over the years, customers adopted the shortened name FedEx to speak of the company and its services. Actually the term has been used as a verb, meaning the equivalent of “sending an overnight shipment”. To “FedEx” something is common terminology. Thankful for this cue from its customers, the company officially changed its brand from Federal Express to FedEx in 1994. This can be regarded as the first evolution of the company’s corporate identity. In the early 1990s the company was then expanding into global markets and wanted to modernize its corporate brand. Soon, the company realized that more than a cosmetic face-lift was needed for its dated purple logo. In order to do it right FedEx started a complete overhaul of the corporate identity from the visual design to the corporate name to the names of everything that it offered – from services to drop boxes to shipping containers. Research findings at the time revealed that many customers didn’t really understand what FedEx’s services were because the naming was quite confusing. In some cases FedEx used acronyms that didn’t gave them any clue at all. In order to clarify the naming system and to keep it simple the company implemented a system that relies solely upon the FedEx brand in addition with real words to describe the operating company, product or service explicitly. The re-branding efforts created a successful brand portfolio of services and products with names that have become timeless. In 2000, the company implemented the second evolution of the company’s corporate identity when it changed the name to FedEx Express in order to better position the business in the overall FedEx Corporation portfolio of services. Just like it was the case for UPS changing its logo, the re-branding signified an expanding breadth of the company’s market offerings. It simply had to move away from being just an overnight delivery service business, which can be compared to UPS moving away from being just a ground delivery service business. The brand promise of FedEx that secured its place in customers’ minds and hearts is the guaranteed next-day delivery “absolutely, positively by 10:30 a.m.” With the intention to create a more diversified business including a portfolio of different but related businesses, the company invested heavily in a number of acquisitions and realignments. With the acquisition of Caliber System Inc., for instance, the FedEx Corporation, originally called FDX Corp., was formed in January 1998 Fig. 1 From a house of brands to a branded house In a move to integrate the company’s portfolio of services and become a Branded House, all Caliber System Inc. subsidiaries were re-branded. Today’s FedEx is directed by FedEx Corporation, which leads the various companies that operate according to the business motto “operate independently, compete collectively and manage collaboratively,” under the FedEx brand name worldwide. This way it ensures that all companies can benefit from the FedEx brand as it is one of the world’s most recognized and trusted brands. In 2004, the FedEx Corporation acquired the privately held Kinko’s Inc. and later re-branded it FedEx Kinko’s. It is therefore the only acquired brand the company chose to keep as an official subbrand with its own equity in the brand portfolio. Fig. 2 FedEx Kinko’s as the only independent subbrand COMMUNICATING THE BRAND FedEx regards its own operations as one of the best channels of communications they have. The close integration of their information systems and transportation systems with those of their customers makes it even more difficult to switch to alternative market offerings. One of the first things they see on the screen when they turn on their PC is FedEx. While most brands focus either on businesses or on consumers, FedEx keeps them both on its radar screen. The primary target is the B2B world, but in order to ensure that its ubiquitous brands maintain its leadership status they also build its master brand inside the B2C ? universe. All communications contribute to developing the FedEx brand image and reputation. Advertising, direct mail, sponsorships, corporate identity sales force, couriers and information systems are used. Maintaining its reputation and its brand image is a top priority concern, since it is one of the most valuable things the company has. As CEO, Frederick W. Smith regards guarding and championing the brand as an important part of his job. Major branding decisions are usually made by him, the Vice President of Marketing, and the Director of Global Brand Management. Market research is used to validate and provide guidance for execution. Over the years, FedEx had several taglines: America, you’ve got a new airline, Absolutely, Positively, Don’t worry. There’s a FedEx for that, Our office is your office and Relax, it’s FedEx. The last one was so successful that they launched a new advertising campaign in 2005, still using this previous tagline. Communication elements comprise TV, print, radio and online ads. The campaign is targeted at small businesses and delivers the central message that the portfolio of FedEx services will help them to meet their needs. The launch campaign for the FedEx Kinko’s Office and Print Centers in July 2004, incorporated TV spots, print, radio, direct mail and online elements around the slogan Our office is your office. It was targeted especially at small businesses and had to reflect the one-stop resources offered by the centers. FedEx has some kind of signature style about its ads that is rooted in its rich heritage of humor in advertising. The TV spots used a series of hilarious slices of small-business life and were wonderfully wry and perfectly cast to deliver a key point. News that is delivered in an entertaining fashion tends to be more memorable for people. The humor in the advertising cam¬paign also has positive effects on FedEx’s sense of self-confidence. The target audience of small business owners’ response to the spots was overwhelmingly positive. The average core customers of FedEx are primarily males between the ages of 25 and 55. One central goal of communications is to place the brand wherever this target group frequents. That’s the reason why the company extended its sponsorship of the National Football League for three years. It was also driving the decision to join forces with Joe Gibbs Racing in 2005. FedEx is sponsoring the #11 FedEx Chevrolet during the 2005 NASCAR season. The FedEx Racing cam¬paign with the headline “Every Day Is Race Day” will be supported by TV, print and online ads. Sponsorships are used quite intensely at FedEx. Qualities like speed, teamwork, and precision in building the largest express delivery company in the world are held up high. These same qualities are prominent in their sponsorships, resulting in rather natural and complementary relationships. The company regards this marketing tool a great opportunity to drive business and even integrates the sponsorships as an anchor point throughout the marketing mix, not the other way around. Certain events are used as content useable in media, promotions, employee incentives, and online. Examples include NFL-themed promotions, Orange Bowl-flavored retail incentives, and PGA-related TV spots. The company uses sponsorships to invade new markets and penetrate new areas, resulting in high growth rates. Sometimes companies get very lucky because their company and/or brand are included in movies simply for plot reasons. FedEx lucked out in 2003 when they benefited tremendously from product placement at no cost because the company and brand were featured in the major motion picture Castaway starring Tom Hanks. Actually, you could say that this was a two hour FedEx commercial that people even paid to see. There were plenty of Fed Ex trucks, Fed Ex posters and Fed Ex planes; you can imagine how much favorable exposure FedEx received from this. Fig. 3 FedEx branded delivery truck Further readings in: Philip Kotler, Waldemar Pförtsch Business-to-Business Brand Management, Springer Heidelberg, New York 2006 USA http://www.amazon.com/exec/obidos/ASIN/3540253602/wwwpfoertscco-21/ Germany http://www.amazon.de/exec/obidos/ASIN/3540253602/wwwpfoertscco-21/ . Edit Page History List Group Page last modified on March 05, 2007, at 06:30 AM	Order here
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