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UPS Drone Service Delivery

Competition is stark within the parcel delivery sector. As such it is critical that continued advancements of goods and services are sought after and achieved by providers. In an effort to foster continued satisfaction of their customer base and advancement of the company, UPS has taken steps to evolve as a company.

Background

The United Parcel Service is the world’s biggest package delivery company. The organization also offers superior supply chain management solutions to a wide range of local and international clients. The company is based in Sandy Springs, Georgia. The logistics company delivers more than 15 million packages daily to approximately 6 million customers in over 220 countries around the world.

The large package delivery company also has its own air cargo delivery service as well as its own airline. The airline and air cargo delivery service are both located in Louisville, Kentucky. The acquisitions are meant to hasten the transportation of packages from their origins to their intended destinations. American citizens refer to the company as ‘Brown’ owing to the brown uniforms worn by its employees as well as the brown delivery trucks.

The company’s activities are divided into three main segments that include U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package involves the time-dictated delivery of letters, packages, and documents across the United States.

The international package encompasses the delivery of packages to more than 220 countries throughout the world. The shipments include those that are wholly outside the United States as well as those that originate in the United States or are distributed within its territory. The delivery of packages within this segment is also time-dictated.

The Supply Chain & Freight segment includes the company’s contract logistics and forwarding activities, and UPS freight among other related activities. UPS Freight provides less than truckload, and truckload services to consumers in North Africa. The company provides its logistics services to more than 176 countries. The activities include designing supply chains for the international clients, as well as executing and managing the said designs. In addition, the company also focuses on customs brokerage, freight forwarding, and distribution and consultancy services.

Product Details

The company intends to develop and deploy a drone delivery system to increase the efficiency of package delivery. Research indicates that the use of drone technology can revolutionize the transportation industry across the world. Many industries have adopted the drone technology and it seems like a very promising technology for all the stakeholders.

The initiation of the drone project at the company has been made necessary by increasing customer demands, as well as environmental protection regulations. Technological advances have also necessitated the company to invest in such technology to remain ahead of its competitors. Such a system would make it quicker to deliver the packages to the intended customers as well as have enormous benefits for the environment. Being at the top of the fray when it comes to adopting drone technology will guarantee the company a favorable placement in the minds of the customers.

Customers demand for faster and more reliable delivery of their packages. Faster package delivery is especially important in this day and age of e-commerce and online shopping. Package delivery through air, rail, and road transport is bound to face delays and cause major customers to become very irate and possibly take their business elsewhere. For instance, according to Risen (2013), UPS usually has a problem delivering packages during holiday seasons because of the high volume of packages that need to be delivered. The volume of air packages during the holidays often surpasses the capacity of the company’s network. The problem is exacerbated when there is poor weather such as heavy snow or rainfall.

When such delays occur, the company’s competitors such as Amazon sweep in and take advantage of the situation. Amazon has offered rebates in the past to UPS customers whose packages have not arrived on time. Such actions can severely undercut the company’s market share. Heavy last minute online shopping during the holidays has also stretched the company’s delivery limit in the United States.

A drone delivery system will help curb delays in the delivery of the packages to customers both domestically and internationally. Drones will help customers receive their packages faster and without delays. Customers who order online probably want the package to be delivered quickly. Regular transportation is bound to be full of delays and this may annoy the customers. The drone service will guarantee that the packages arrive timely to their destinations.

Furthermore, the drone services will help the company deliver products to rural areas or far to reach locations. Research indicates that rural customers buy online three times more than customers who dwell in metropolitan residences (Ferrier, 2016). For several years, the rural folks have been alienated because of their geographical distance from the metropolitan areas. The company will benefit greatly from utilizing drones as they are more capable of reaching the rural areas. Expansion into these areas will increase the company’s market share and revenue base.

SWOT Analysis of UPS Drone Delivery Service

Strengths (Internal)	Weaknesses (Internal)
· “On Time Delivery”: Delivery would be quicker and more efficient · “Meeting QCD Expectations”: quality, cost, and delivery would be at an all-time high for UPS · “Limited Competition”: Amazon will be introducing this product simultaneously · “Highly Time Effective”: Local drone deliveries will be one of the fastest services UPS would offer · “High Barrier to Entry”: Substantial financial investment would be needed (Pandit & Poojari, 2014)	· “Weather”: With any form of technology, weather may cause problems with components of the drone · “Theft”: Since these are expense equipment, people may attempt to steal them · “Vandalism”: As with theft, people may try to vandalize the drone · “Problem of Range”: Communication to the drone may be confined to local areas and could go outside of the working range · “Landing in Every Location”: The landing locations could be hazardous or inappropriate to leave a package (Pandit & Poojari, 2014)
Opportunities (External)	Threats (External)
· “Continued Expansion of Business”: Drones will develop new services based off the added drone capabilities · “Ability to Develop Additional Customer “: With quicker delivery times, customer base can expand · “Affiliate Relation with Related Vendors”: A new relationship with drone production companies would be formed (Pandit & Poojari, 2014)	· Growing competition from competitors like Amazon · “Changes in The Regulations System”: It’s possible that government restrictions could be placed on commercial drone usage · “Threat of New Entrant”: FedEx and new parcel delivery service may become available based off this new technology · “Threat of New Substitute”: Technology ever evolves and a new delivery product may be developed in the near future (Pandit & Poojari, 2014)

Competitive Analysis

Competitive means that there is a contest happening between two or more parties. Competitive analysis is a technique of examining the competitive situation in which a business functions. This analysis includes the weaknesses and strengths of the companies. Globalization shipping now is considered a big priority for individuals and businesses especially for those that do a lot of shopping over the Internet. The shipping industry has a tough competition among them. United Postal Service (UPS) multiple competitors in the market, such as Federal Express (FedEx), and United States Postal Service (USPS). The main business of UPS is to deliver shipments on time. UPS accomplishes this by using a cost leadership strategy, UPS does not charge extra for delivering their shipment on time because they give themselves a window of one to two weeks to deliver. "Fedex tries to deliver as soon as they can because their strategy is not based on cutting cost but based on delivering fast service. UPS made it very easy for their customers to locate them by having about 2100 center and 4700 independent owned stores. UPS is considered to have the best price in the market when it comes to any shipment over two pounds. While USPS is the cheapest choice when it comes to shipment less than 2 pounds, FedEx is considered a more expensive choice than UPS for expedited services. UPS is a larger company than FedEx with a net income of about $3 billion and revenue of $53 billion." Intruding drone service will help UPS to differentiate itself as a lot of customers may consider having their item delivered faster by flight instead of having waiting for the regular ways of shipping.

Target Market Segments

Demographic

The targeted demographic for the UPS Drone service will be working professionals between the ages of 25-55. They will most likely be single or married with no children, who live a high paced life. They do not have time to pick up products or wait for their packages to be delivered within the normal 5-7 business day shipping window. The consumers will live in one of the highly populated US cities and have a high yearly salary.

Psychographic

Gitman and Zutter (2014) state that the psychographic segmentation is based on a belief that “birds of a feather flock together”; which means that people who live similar lifestyles will want to have and do what others around them do. The UPS Drone service will be targeted to these types of innovators who want the best of everything and are always looking for the next "big thing". This type of mentality will assist UPS in the marketing or advertising of their new service. If a consumer did not know about this service and saw that their co-worker was using it, they will then begin to use it as well.

Geographic

UPS has a wide range of customer and the UPS drone delivery service promises delivery of any product, if in stock, within 24 hours or less. Because of this, the demographic will need to be limited to populated areas located in the most populated US cities. This service would not be successful in a small or rural town, as the demographic would not use the service, as it is not needed. The cities that would be offer this service would include New York, Los Angeles, Houston, Nashville, Phoenix, Atlanta and Chicago. The UPS Drone service will service these highly populated areas as to the consumer’s home or place of business.

Behavioral Factors

UPS will use the behavioral factors of the consumers they target who show impulse buying patterns as well as consumers who have high profile jobs. UPS offers many economical shipping options for consumers to choose from. Since the behavioral patterns of the targets consumers have in influx of monthly/yearly income, the targeted consumers will have no problem paying the higher shipping price. The behavior of the target consumers will always pay more for a better service then less.

Positioning Statement

The UPS drone delivery system is a new and innovative technology that guarantees the fastest delivery time for all parcels anywhere in the United States. The drones will ensure that the parcels are delivered in perfect condition by the unmanned drones.

Conclusion

Airdrop packages have been around for decades. UPS is seeking to revolutionize this process by making it readily accessible to the average citizen. Today’s technology provides us with the capability to do just that. The UPS drone delivery system will allow their customers to receive their parcels at their doorsteps in record time. While our competitors still utilize delivery by fleet as their only source, UPS will have expanded the market by providing their customers with an added luxury and opening the doors for a potential explosion in profits.

References

Ferrier, S. (2016, Feb 15). Australia Post to trial drone parcel delivery of online shopping. ABC News. Retrieved on 17/4/2016 from http://www.abc.net.au/news/2016-04-15/australia-post-to-trial-drone-parcel-delivery-of-online-shopping/7331170

Fleisher, C. S., & Bensoussan, B. E. (2015). Business and Competitive Analysis: Effective Application of New and Classic. Washington, DC: FT Press.

Gitman, L. J., & Zutter, C. J. (2014). Principles of Managerial Fiance (14th ed.). Upper Saddle River, New Jersey: Pearson Education, Inc.

Kerin, R. A., Hartley, S. W., & Rudelius, W. (2015). Marketing (12th ed.). Retrieved from The University of Phoenix eBook Collection database.

Moon, M. (2016, Mar 25). Nevada gets first FAA-approved urban drone delivery. Engadget. Retrieved on 17/4/2016 from http://www.engadget.com/2016/03/25/nevada-gets-first-faa-approved-urban-drone-drone-delivery/

Pandit, V. & Poojari, A. (2014, November). A Study on Amazon Prime Air for Feasibility and Profitability-- A Graphical Data Analysis. IOSR Journal of Business and Management, 16(11), 6-11. Retrieved from http://www.iosrjournals.org/iosr-jbm/papers/Vol16-issue11/Version-1/B0161110611.pdf

Risen, T. (2013 Dec 26). UPS Gifts Delayed by Snow, Online Orders. U.S. News & World Report. Retrieved on 17/4/2016 from http://www.usnews.com/news/articles/2013/12/26/ups-gifts-delayed-by-snow-online-orders

Saivezzo, M. (2016). COMPETITIVE ANALYSIS. Retrieved from http://http://www.referenceforbusiness.com/small/Bo-Co/Competitive-Analysis.html

Treacy, M. (2013, Dec 11). Amazon Drones: A Look at the Pros and Cons. Treehugger. Retrieved on 17/4/2016 from http://www.treehugger.com/gadgets/amazon-drones.html#14608865168151&action=collapse_widget&id=0&data=