Ups Markets, Marketing & Strategy Report 2016

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MARKETS, MARKETING & STRATEGY REPORT 2016

United Parcel Service[pic 2]

STUDENT ID: 1525591[pic 3]

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Executive summary 

This report aim is to provide a clear analysis of UPS’ place in the shipping market.

In an industry that is currently worth almost $2,804.5 Billion, with an annual growth of 4.5% between 2010 and 2014 (MarketLine 2014), UPS has succeeded in distinguishing itself from its competitors, and to become the second delivery company worldwide.

On a market where only a few top-flight companies are monopolizing the industry (87% of the market shares), and where service options are basically the same for each company, UPS had to adopt a precise marketing and management strategy in order to differentiate itself.
This report showed us three main issue on this industry. First that, currently the shipping market is mainly concentrated in America (49.2% of the global industry value in 2014). Second, that there is a lack of service differentiation between DHL, FedEX, TNT, UPS… And finally, that the delivery sector is not purely innovative.

Therefore, in order to strengthen its leadership, the strategy of UPS targets three main points.
First, UPS aims an excellence in its services and a perfect brand image. That is why, it is investing a lot on environmental programs through its business. Sustainability investments will provide excellence in services and moreover, responding to one of the century’s main issue.

Then, in order to extend its market shares, UPS is setting up an expansion policy, mainly on the Chinese market.

And finally, on a market where innovations are lacking, UPS invests on new technologies like ORION, mainly based on a sustainable process in order to decreased its costs and to provide very last services to its customers.

Table of contents

I. Introduction        4

II. Porter’s five forces analysis on UPS business environment        5

Figure 1: Porter’s five forces         5

II.1 Threat of new entrant         5

II.2 Threat of substitutes         5

II.4 Supplier power        6

II.5 Degree of rivalry         6

III. SWOT analysis on UPS’ resources         7

III.1 Strengths         7

III.2 Weaknesses         7

III.3 Opportunities         8

III.4 Threats        8

IV. Segmentation analysis        9

V. Relation of the three previous models on business performance        10

Conclusion        11

Appendix         12

A.1 Annual UPS’ revenues (2009-2014)        12

A.2 2014 UPS’ revenue by segment        12

A.3 2014 UPS’ revenue by Geography        13

A.4 Shipping companies’ market position worldwide (2010)        13

A.5 Value on data analytics on UPS sustainable projects         14

Reference list        15

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Additional tables or figure:

Figure 1: Porter’s Five Forces

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I. Introduction

UPS is a leading company worldwide on shipping services.

The shipping industry is a constant growing market. In 2014, the global transportation industry had a value of $2,804.5 Billion with an annual growth of 4.5% between 2010 and 2014 (MarketLine 2014).

Created in 1907, UPS has managed to become the 40th most valuable brand worldwide in 2015 (Forbes). In order to reach its current position on such a restricted market with only a few leading companies such as DHL, FedEx, TNT, UPS has adopted an excellence business services strategy in order to differentiate itself from competitors.

The marketing report objective is to show how UPS became a leading shipping company by giving an overview of UPS’ business environment, and of the company itself, its strengths, weaknesses and opportunities for the future.
The Porter’s five forces analysis will provide a precise analysis on the delivery business environment, and what UPS has to face. The SWOT analysis will precisely evaluate UPS’ asset, and finally the segmentation analysis will show us how UPS segments the market, and how it responds to each segment’s needs.

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II. Porter’s five forces analysis on UPS business environment

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Figure 1: Porter’s five forces 

        II.1 Threat of new entrant

Basically, operating a global delivery business is highly capital intensive because of extensive logistics and communication system requirements.

Marine, rail and air sectors require high working skills (rail or plane pilots).
Nevertheless, the road sector, is the one with the lowest entry barriers. Indeed, anyone having a driving license and a truck can start a local delivery business. Moreover, knowing that 75% of delivery revenues for UPS are U.S. domestic and that 61.6% of its revenues come from the road sector (UPS annual report 2014), it seems that a new entrant on the road sector is a threat for UPS.
However, with a small initial amount of capital, the business would be limited to short distances of shipping and to become a global rival, the business would quickly be highly capital extensive.