REVENUE MANAGEMENT OF BLUE DART

Revenue Management is the application of disciplined analytics that
predict consumer behavior at the micro-market level and optimize product
availability and price to maximize revenue growth.
The primary aim of Revenue Management is selling the right product to the right
customer at the right time for the right price and with the right pack. The essence
of this discipline is in understanding customers' perception of product value and
accurately aligning product prices, placement and availability with each customer
segment.

We intend to analyze the company “BLUE DART” in courier industry.
BACKGROUND OF THE COMPANY
Blue Dart (Indian partner of FedEx) offers track and trace software‟s to enable
customers to track their shipments from their workplace. Customers stand to gain
from Blue Dart's domestic network and DHL's global reach. Blue Dart's Domestic
Priority service provides the customer with a wide distribution network, time-
definite deliveries and, most importantly, a track and trace system with real-time
feedback on the status of each shipment.
REVENUE OBJECTIVES OF THE COMPANY
Currently, the company is commanding a 40% share in the domestic air express
market is the only company providing a gamut of services – air expresses (both
domestic and international through DHL), airfreight, ground and charters. It is a
one-stop solution for any logistical requirement.
Blue Dart has predetermined goals to become the „Express & Logistics Provider of
Choice‟ for Indian businesses. It continues to be the „Trade Facilitator of the
country‟ and focuses on specific customer needs, rolling out relevant solutions that
meet and exceed customer expectations .The revenue objective of the company
will be to optimize the routes and maximize the demand.


ISHIKAWA DIAGRAM
Common uses of the Ishikawa diagram are product design and quality defect
prevention, to identify potential factors causing an overall effect. Each cause or
reason for imperfection is a source of variation.
Causes are usually grouped into major categories to identify these sources of
variation. The categories typically include:
 People: Anyone involved with the process
 Methods: How the process is performed and the specific requirements for doing
it, such as policies, procedures, rules, regulations and laws
 Machines: Any equipment, computers, tools, etc. required to accomplish the job
 Materials: Raw materials, parts, pens, paper, etc. used to produce the final
product
 Measurements: Data generated from the process that are used to evaluate its
quality
 Environment: The conditions, such as location, time, temperature, and culture
in which the process operates.

PRICING STRATEGY
The best formula for courier job pricing involves a calculation of mileage, labor
costs and special circumstances that make deliveries difficult.
Basically, the pricing strategy that will be followed is Differential Strategy. This in
turn will be of three types:

 Time Differential: With respect to when the package is to be delivered. In
this type of strategy, as the date of placing an order is nearing the date of
delivery, there will be a very steep increase in the prices. For those packages
which do not necessarily have a stringent time constraint, the price increase
will be less (If any).
 Place Differential: With respect to the distance to be travelled and the route
taken. In this type of pricing, the customer will have to pay more to get a
courier delivered at a comparatively far off destination from the place of
order.
 Package Differential: A package weighing more or containing delicate or
special items needs extra packaging. Hence based on variations in these,
pricing will differ.
FACTORS AFFECTING REVENUE
Fuel cost, competition, infrastructure constraints, shortage of skilled manpower.

REVENUE CLASS FOR BLUE DART

Revenue class here is based on the time available for delivery of the
services. If a package is to be delivered within a particular time of the day,
then its priced differentially.
Following pricing can be made for differentiating:
Domestic 10:30 (To be delivered by 10:30 next morning)
First 500 gms rs.150
Addn 500 gms rs.75

Domestic 12:00 (To be delivered by 12:00 noon next day)
Rate per kg rs.99
Minimum charges rs.990


REVENUE MAXIMIZATION
The revenue generated can be maximized by:
 Reducing the bargaining power of the contract customers so as to reduce the
margins of discount.
 Better route optimization.
 Ensuring a better quality of service over the competitors for a similar price
range.
 Investing in vehicles with better wear and tear resistance so as to reduce the
maintenance costs.