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“A marketing mix study on DHL express”

JAIPURIA INSTITUTE OF MANAGEMENT LUCKNOW

Prepared For:

Prof. Shalini Nath Tripathi
Faculty, JIM-Lucknow

Prepared by: Rakesh Kumar Pandey (Leader) Akash Chug Anand Kumar Faraaz Amzad (CFT_07-120) (CFT_08-006 ) (CFT_08-012 ) (CFT_08-045)

Gurtej Singh
PGDM 2008-10

(CFT_08-052)

ACKNOWLEDGEMENT No academic endeavor can be single handedly accomplished. This work is no exception. At the outset, we would like to express our gratitude to Prof. S.N Tripathi for initiating us into this project. We sincerely acknowledge our thanks for her valuable suggestions and time to time consultation. Last, but not least, we would like to thank all the staff and faculty member of Jaipuria Institute of Management, Lucknow for their kind cooperation and assistance during our project work. -

OBJECTIVE : DHL has the world’s largest express and logistics Network. Over the past decades it had turned delivering goods into a finely oiled process. . DHL has developed a reputation for consistently developing innovative solutions that streamline operations and improve control. Their in-house teams have contributed to the solutions design of some of the world's leading brands and enabled to win key contacts. DHL is service based company and services are critical for competitive advantage in companies from all sectors. Superior customer service is one of the key drivers of competitive advantage. The purpose of this project is • • • • • • • • To identify the 7P’s of services of DHL courier. Product Price Place Promotion Process People Physical evidence

• What are the core and supplementary services of courier? • To find out service failure and service recovery processes of DHL courier.

METHODOLOGY: To fulfill our objectives we use • Secondary literature study (Different newspaper and related website articles). • Case studies and their analysis. articles from

LITERATURE REVIEW
CASE 1 Title - Worldwide delivery for DHL, Nassau Girl Scouts. Source -- Long Island Business News (7/1993 to 5/2009) Date -- 2008 Subject -- PARTNERSHIP,DHL International GmbH,GIRL Scouts A full-service company, Corporate Couriers handles complete delivery and logistics solutions, offering on-demand services, scheduled services, freight distribution and secure warehousing for a variety of industries. The company picks up and deliveries most anything, from mundane financial institution documents to biohazardous materials, from machine parts to blood and organ transplants The courier company has stayed ahead of the pack in a $59 billion nationwide industry by meeting clients’ needs and by modernizing operations with up-to-the-minute technology Case 2 Title -- Courier and Express Services Published by: Key Note Publications Ltd Published: May. 1, 2000 - 70 Pages It is estimated that the total value of courier and express services in 1999 was £4.21bn, compared with an estimated £2.92bn in 1995. During this period, the importance of express services for logistical purposes grew rapidly. The courier and express industry includes Parcelforce, the stateowned subsidiary of the Post Office, which competes commercially in the open market with the numerous independents in the industry . All own large fleets of vehicles but the revenues from transport are only part of their total revenues, which include fees for many other services rendered, such as management of the post room, inventory control, re-ordering stock, maintaining records, warehousing, packing and shipping, low-tech assembly, etc.

Case 3 Title -- The street takes to air. By: DeNitto, Emily, Crain's New York Business, 8756789X, 02/22/99, Vol. 15, Issue 8 Financial institutions are turning more often to DHL Worldwide Express' helicopter service from John F. Kennedy International Airport. Banks and others can miss the chance to make tens of thousands of dollars every time a courier delivering financial materials has to sit in New York gridlock. The chopper gets checks and money orders to the Wall Street heliport in about nine minutes, instead of the average 90 minutes by van. Over the past year, DHL has increased its flights to Wall Street by 50%, to 12 daily. A dozen financial firms use the service, which now carries more than 70,000 packages per month. Case 4Title -Courier flights inexpensive way to travel the world. Source:Westchester County Business Journal Date: 1996 Subjects: AIR travel -- Economic aspects,EXPRESS service -United States, AIR travel. Solution Reports on a survey conducted by the International Association of Air Travel Couriers (IAATC) on opportunities for travelers willing to fly as air couriers in exchange for inexpensive air tickets. Increase in air courier routes in 1995; Courier companies' addition of courier flights . Courier flight fares rise and fall with the seasons and the demand. If airline prices are up in general, or you are trying to get to a popular destination, you could pay more. Sometimes, the price is almost as high as a regular flight or a consolidator fare, so it pays to check. Depending upon the route and the time of year, you may be limited to one carry-on, as your baggage allowance is used for the shipment. In some cases–low-volume flights–you will be allowed your checked baggage and the excess will be used for the shipment.

Case 5 Title: Courier service to enter Spokane market in 2000 Authors: Crompton, Kim Source: Journal of Business (10756124) Date: 2003 Subjects: DELIVERY Express (Company),EXPRESS service, SPOKANE (Wash.),... Reports on the opening of courier service Delivery Express Inc. in Spokane, Washington. Establishment of the branch office; Size of the workforce. Actually this research talked about the demand of courier in last four years in United state of America.

History
DHL are the first letters of the last names of the three company founders, Adrian Dalsey, Larry Hillblom and Robert Lynn. In 1969, just months after the world had marveled at Neil Armstrong's first steps on the moon, the three partners took another small step that would have a profound impact on the way the world does business. The founders began to personally ship papers by airplane from San Francisco to Honolulu, beginning customs clearance of the ship's cargo before the actual arrival of the ship and dramatically reducing waiting time in the harbour. Customers stood to save a fortune. With this concept, a new industry was born: international air express, the rapid delivery of documents and shipments by airplane. The DHL Network continued to grow at an incredible pace. The company expanded westward from Hawaii into the Far East and Pacific Rim, then the Middle East, Africa and Europe. By 1988, DHL was already present in 170 countries and had 16,000 employees. At the beginning of 2002, Deutsche Post World Net became the major shareholder in DHL. By the end of 2002, DHL was 100% owned by Deutsche Post World Net.In 2003, Deutsche Post World Net consolidated all of its express and logistics activities into one single brand, DHL The company DHL is the global market leader in international express, overland transport and air freight. The company’s services range from express document shipping to supply chain management. DHL’s international network extends to over 220 countries, with around 285,000 employees. In the company’s own words, “We move things – by road, rail, boat or air – We move things.” The company is part of the Deutsche Post World Net (DPWN) Group. While DPWN has a global approach to sustainable development, individual companies and countries within the Group are encouraged to develop approaches which meet the needs of their own regions, whilst still supporting the overall company goal. The Group recognises its business has an impact on the environment – operating vans, trucks, aircraft and

boats every day to deliver customers’ parcels. However it understands that it cannot simply stop doing business but, at the same time, it cannot ignore the environment. Instead the company seeks to recognise the impacts it creates and develop a programme to address them.

Global facts and figures Number of Employees: around 285,000 Number of Offices: around 6,500 Number of Hubs, Warehouses & Terminals: more than 450 Number of Gateways: 240 Number of Aircraft*: 420 Number of Vehicles: 76,200 Number of Countries & Territories: more than 220 Shipments per Year: more than 1.5 billion Destinations Covered: 120,000

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Seven P’s of DHL ExpressFirst- P
Product-

DHL is the leader in courier, express and parcel delivery services - both local and global. Whether it's documents or parcels, DHL has the service you are looking for. 1- DHL Express Internationally. DHL makes international shipping convenient with a variety of services and options to suit your needs. 2- DHL Same Day Service. When you're racing against time, choose DHL Same Day, the fastest delivery service available in today's air express industry 3-Logistics Services We offer a complete range of logistics and outsourcing solutions to meet your warehousing and distribution challenges. Optional Services DHL Express products are complemented by a range of payable Optional Services that provide flexibility to address specific customer needs. Dangerous Goods Let DHL assist your business when your shipment contains hazardous materials that require special handling. To find out more, call the DHL Dangerous Goods Hotline at 1-866-817-3794. Shipment Value Protection When your shipment needs extra coverage, DHL can help. Shipment Value Protection covers the actual cash value of the shipment or repair costs, whichever is less, in the event of physical loss or damage, subject to the exclusions listed in the terms and conditions or on the back of the DHL waybill. Arrange for this service when you contact your local representative for a pickup. Or just check the relevant box and enter the declared value in your shipping system or on your waybill.

Neutral Delivery

Sending a shipment but need to keep the value confidential? Use DHL Neutral Delivery. Shippers can use this service to send non-document shipments directly to international customers and bill the duties and taxes to importers of record in the same destination. DHL Express's global headquarters are located at the site of Deutsche Post headquarters in Bonn. Headquarters for the Americas are located in Plantation, Florida, while its Asia-Pacific and EEMEA headquarters are located respectively in Singapore & Dubai The European HUB is now located in Leipzig. Most of DHL Express's business is incorporated as DHL International GmbH. Major Competitors include FedEx, UPS, TNT, and national post carriers such as United States Postal Service and Royal Mail. However, DHL has a minor partnership with the USPS, which allows DHL to deliver small packages to the recipient through the USPS network. It also is the sole provider for transferring USPS mail in and out of Iraq and Afghanistan. DHL offers worldwide services, including deliveries to countries such as Iraq, Afghanistan and Burma. As it is German-owned, DHL is not affected by U.S. embargoes or sanctions and will ship to Cuba [16] and North Korea. [17] As a foreign company, DHL is not allowed to make domestic flights between U.S. airports, so these freight flights are contracted out. DHL may require some international recipients to pay any customs charges into DHL's foreign bank account and proof of payment provided, before package delivery can be completed. Such cases may involve a physical journey to the DHL bank and/or the local DHL office, although the recipient can opt to pay for the charges of the delivery at their premises. Value Added Services
• • •

Co packing Product assembly Other value added services

Second-P Price Companies usually do not set a single price, but rather a pricing structure that reflects variations in geographical demand and costs, market— segment requirements, purchase timing, order levels, delivery frequency, guaranties, service contracts, and other factor. As a result of discounts, allowances, and promotional support, a company rarely realized the same

profit from each unit of a product that it sells. In this Analysis, we want to know how far DHL implemented the concept of the price adaptations.
1. Geographical pricing (Cash, Countertrade, Barter)

In geographical pricing the company decides how to price its product to different customers in different customers in different locations and countries. As DHL expanded service into new countries, it developed many different pricing strategies and structure. DHL country managers had almost total control of pricing, they typically set prices based on four factors: what the market could bear, price charged by competition (which was often initially the national post office), DHL initial entry pricing in other countries, and DHL’s then current pricing around the world. From this strategies, we know that the pricing policy is different in each country, which appropriate with the condition and situation of the country.
2. Price discount and allowances

Most companies will adjust their list price and give discounts and allowance for early payments, volume purchases, and off-season buying. Companies must do this carefully or find that their profits are much less than planned. DHL do this concept with pricing structures such as monthly handling fee, frequency discount, and loaded half-kilo. For the allowance concept, DHL also have the other strategy, like negotiations price that make possible to get flexibility price. The strategy which customize the table to the customers needs, and this strategy really help the negotiations.

3. Promotional Pricing

Promotional pricing strategies are often a zero-sum game . if they work, competitors copy them and they lose their effectiveness. If they do not work. They waste the money that Could have been put into other marketing tools. In this case, DHL did not make a promotional pricing, but to hold out their customer they make a strategy pricing structures.
4. Differentiated pricing

Company often adjust their basic price to accommodate differences in customers, product, locations, and so on. Although FedEx charged the same for parcel and documents, DHL have a differentiation on product basic price, DHL base price were calculated according to product (service, DHL have 2 kind of product services there are worldwide document express and worldwide parcel express), weight, origin, and destination. Prices were often higher for parcel than for documents of equivalent

weight due to extra costs for custom clearance, handling, packaging, and additional paperwork. Third - P Place DHL services are available almost everywhere at any time. DHL is completely service oriented therefore it does not have its own material movement but that of the customers both the sender, the receiver and also the intermediateries. That means it only involves physical distribution and procurement. Procurement also includes the material needed for packaging such as paper, moulded trays and boxes, wooden crates, standard containers wraps, plastic inlays etc. The materials or the goods collected from the senders (including papers, documents, physical goods like clothing, household good, chemicals, exotic animals etc) are weighed, checked for condition, and depending upon its various characteristics it is packed. The goods are then dispatched to their destinations. There is no value addition to the material itself but it is done to the service which is provided ( eg if there has to be a certain package delivered from India to UK the normal services would take about 2 days whereas as a super fast delivery would be done in about 9 hours) DHL’s whole business is dependent on the vital point of timely delivery. Based on the distance to the final receiver, the accessibility, the documentations and procedures that need to be handled etc they have fine tuned the process of delivery. They can accurately gauge how much time it will take for the goods to reach its end destination

Services include:
  

Roll in Management: de-installation of finished goods at the customer's site Returns Management: receiving, sorting, verifying and managing returned products Express Delivery: Exchange of Dead On Arrival products

Key services include:
    

International freight forwarding Domestic and regional inbound deliveries Inventory planning, forecasting, procurement and analysis Distribution centre operations Outbound delivery

DHL’s distribution to store solutions are focused on helping retailers create efficient and flexible supply chains to deliver product to retail outlets at high levels of service. These solutions are built from several core services including reverse logistics:
  

logistics network strategy warehouse design and simulation transport modelling.

DHL uses all the modes of transportations that is
• • • •

airways roadways waterways rail freight

DHL has its own fleet of airplanes and motor vans. Depending upon the final destination where the goods have to finally reach and the type of package the customer has paid for, DHL uses the individual modes of transport or a combination of either of these or all. Once again the geographical location and how fast the goods have to be delivered are the factors for the final selection of modes of transportation . The concept of economies of scale and economies of distance are both taken into consideration in case of larger consignments where DHL provides an appropriate logistical solution which helps in reducing the overall cost for the customers.

Fourth - P Promotion DHL had a single sales force which sold both document and parcel services. Sales reps were organized geographically and were evaluated primarily on monthly sales. Typically sales reps had separate monthly sales objectives for international, domestic and total sales and received a bonus whenever they exceeded any one of the tree. Sales managers were evaluated against profit as well as revenue objectives. DHL spent roughly 4% of worldwide sales on advertising. In 1990, DHL launched a new advertising campaign in US with slogan “Faster to more of the world”.
Fifth –P People –

DHL's international network links more than 220 countries and territories worldwide. Some 300,000 employees are dedicated to providing fast and reliable services that exceed customers' expectations. DHL is the global market leader of the international express and logistics industry, specialising in providing innovative and customised solutions from a single source. Customer service centres DHL Express operates two customer service and sales centres in East Midlands Airport and Salford, Manchester with a population of around 700 employees. DHL wishes to offer the following vocational opportunities:
• • •

Customer service level 2 and 3 Business administration level 2 and 3 Contact centre operations level 2

DHL Express also wishes to offer a skills for life programme for those employees who would benefit from development in basic English and Maths.
Learning and Skills Council

The LSC exists to make England better skilled and more competitive. We are responsible for ensuring the availability of high-quality education and

training for everyone. We have a single goal: to improve the skills of England's young people and adults to world class standards. Our vision is that young people and adults in England have knowledge and skills matching the best in the world and are part of a truly competitive workforce. We work nationally, regionally and locally to deliver this ambition on behalf of learners and employers. DHL people are passionate about what they do and passionate about the service they provide to their customers. Each individual contributes to DHL overall success and encourage personal responsibility, commitment and cooperation - for the benefit of company and customers. DHL employees have the opportunity to continually expand their skills to the support provided by a large worldwide company. DHL people develop, change and take on new challenges on a national or an international basis. DHL corporate culture creates added value and leads DHL on the way to become stronger than DHL competitors. This is an obligation that DHL have to our shareholders. Our corporate culture unites the excellence of individual subsidiaries and their unique company cultures to produce a shared strength. An active, open corporate culture makes us an attractive employer for highly talented people and strengthens our position as a responsible global corporate citizen in this world. Training programme . Today's innovative ideas are the solutions for tomorrow's challenges. That's why the fostering of creative, hard-working talented people represents an investment in the future at DHL and Deutsche Post DHL. Through an extensive package of programs, DHL offer students and college graduates around the world the chance to show just what they can do: They gain valuable experience in the Group, work independently on projects and stay in touch with the company afterward GRADUATE PROGRAMME.. The DHL Logistics Graduate Programme exposes graduates to the Supply Chain industry through various operational placements at many of locations throughout the UK. You'll need to have a minimum 2:2 honours degree in a business related subject, be able to move anywhere within the UK and have the drive and determination to make a difference to DHL business.

GROW The career-starting program "Grow" - Graduate Opportunities Worldwide offers a variety of opportunities for ambitious and motivated (technical) college graduates. MBA PROGRAMME Deutsche Post DHL cultivates the international elite of the future. In this program, MBA students from Europe, the United States and Asia spend three to six months at the company working on projects. Under the supervision of a department head, they play an active part in both the operative business and demanding strategic projects..

Sixth –P Physical evidence • Uniform The DHL uniform is an important part of corporate identity and gives a positive professional image. If you’re required to wear a uniform we’d ask you to wear it all the time you are at work. Adjustments to skirts and trouser lengths are permitted, however they may only be altered to a length that’s suitable for working in a business environment and acceptable to your manager. You’re responsible for keeping your uniform clean and in good repair. Uniforms are generally not replaced earlier than 18 months after issue. Footwear must be appropriate for your job and must be approved by your manager ~ generally black or grey in colour. If in doubt ask your manager for guidelines. Uniform of DHL express gives a physical evidence to Service provider to better know customer in his mind whenever they are required to service. • • • • • • • Packaging Receipt Sound and Tone of voice Computer Appearance of the Employee Documents Forms

F R O N T S T A G E

Custom ers Calls ---------------

Line of Interact Contact Person (Visible action) G reet the custom er
Contact Pe n rso (Inv isible a ctio n)

Line of V isibility

B A C K S T A G E

Receiving parcel Packing from the regional hub the parcel
Custom ers Call centre ---------------

Line of Internal Physical Interaction

Dispatching the M aintaining

Receiving of parcel by the selected mode of transport to regional hub at the point of destination
Seventh-P Process DHL Process goes according to a six-step process:
     

Initiation: The formal start of the project Design: The formal agreement on how to approach the project and its deliverables Planning: Following agreement, a detailed plan is created Execution: After detailed planning and preparation, the project goes 'live' Closing: Gradually phase out and prepare for handover of the deliverables Handover: The formal end of the project

Physical Eviden

Confirmation rece

Inventory Flow Suppliers Physical distribution Manufacturing support Procurement

Information Flow

Customers

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Service recovery and failure by DHL express-

Collection Staff DHL employees are a highly trained and cognizant staff. Management team has over 100 years combined experience in the collection industry. Employ the most highly skilled and well trained collection team available. DHL provides ongoing training sessions with employees bi-weekly. Thier customer service representatives are contacting your customers 8:00am to 8:00pm Monday through Thursday, Friday until 6:00pm, and Saturday 8:00am until 12:00pm. Their success rate is higher because we are calling people during hours when most other collection agencies are closed. All of our collection staff has attained or is working toward their Professional Collection Specialist designation through the American Collectors Association. Acknowledgements Every customer that you assign to DHL will be acknowledged in writing. The acknowledgment provides you the name, your account number, our account number, and the dollar amount assigned. Acknowledgements insure proper account reconciliation between your office and DHL. Collection Methods All correspondence and collection procedures are consistent with the guidelines of the Fair Debt Collection Practices Act and their governing body the Federal Trade Commission. Their objective is to collect your money and at the same time treat your customer with respect and end the conversation with the customers' dignity intact. Legal Staff In the event your account needs the attention of an attorney, DHL retains reputable legal counsel with over 22 years of collection law experience. He and his highly qualified legal staff handle all legal affairs. All normally incurred legal costs are advanced by DHL.

Conclusion

DHL has developed a reputation for consistently developing innovative solutions that streamline operations and improve control. Their in-house teams have contributed to the solutions design of some of the world's leading brands and enabled to win key contacts. DHL is service based company and services are critical for competitive advantage in companies from all sectors. Superior customer service is one of the key drivers of competitive advantage. Regular communication with customers around the world is critical to your business - from product information to promotional mail shots, invoices to annual reports. The result can be mountains of mail that block your mailroom and drain resources and budgets. DHL’s profits would be maximized if each country managers simply charged each customer. DHL have good strategies for the pricing policies. Although have a highest price, DHL can hold out the market share by improve the quality of their service, so DHL should continue this strategy. But, DHL still have an attention with the competitor do and to the customer needs. DHL Express understands that addressing its corporate responsibility, environmental and community impacts is simply part of how it does business. In particular, the risks of not addressing the growing priority of the carbon agenda, was identified by DHL as a fundamental risk to its ongoing success. The company recognized that the growing customer awareness and initiatives undertaken by competitors had the potential to leave DHL behind, particularly given the nature and scale of its business.