8/4/2019 DHL Worldwide Express Final
1/14
Aniruddha KulkarniAbhay KamathIshwar Saxena
J DeepakJ Suresh
K Pavan KumarKrishnadas Dhake
Sushanth GVivek Jain
8/4/2019 DHL Worldwide Express Final
2/14
Pioneers of Air Express Industry and worlds leadinginternational express delivery network
Presence in over 70,000 cities and towns
Over 25,000 employees trained in over 100 languages
Comprises of DHL Airways and DHL International Major Revenue from DHL International
Offering two services: Worldwide Document Express andWorldwide Parcel Express
Numerous VAS, computerized tracking LASERNET ,24 hr
customer service every day of year and proof of delivery Market share of 44% in terms of revenue.
8/4/2019 DHL Worldwide Express Final
3/14
44
7
18
4
27
Market Share
DHL
FedEX
TNT
UPS
Others
8.4
7.77.8
8.18
7.3
7.5
8
6.6
6.8
7
7.2
7.4
7.6
7.8
8
8.2
8.4
8.6
DHL TNT FedEx UPS
Reliability
Value For Money
Ratings of AirExpress Carriers
8/4/2019 DHL Worldwide Express Final
4/14
1989 were $3.4 billion which increased to $4.3 billion in
1990
2 main products: document delivery and parcel deliverywith a split of roughly 25:75
1989 parcel sector grew by 40% while document by 15%.
Industry is expected to grow at 28% compound annualrate.
8/4/2019 DHL Worldwide Express Final
5/14
Strengths Strong Network Brand Image Capacity Utilization Experience Customization of rate
Weaknesses Complicated PriceStructure Headquarters vs Region
Opportunities Improvements in PRISM Increase contracts withMNCs Heavy freight corridor Domestic US market New markets
Threats FedEx undercutting DHL Internet boom Customers usingmultiple carriers
8/4/2019 DHL Worldwide Express Final
6/14
Pricing Strategy : Price leader vs Market Response
DHL charges average 10- 20% more fee than competitors
Increased competition from FedEx, TNT, UPS
8/4/2019 DHL Worldwide Express Final
7/14
Pricing Structure: Current Structure
Fixed Monthly Fee
Volume based discounts
Weighted half kilogram Complexity of pricing structure
Different weight breaks across geographies for parcels
Discount structures
Local profit- cost analysis
8/4/2019 DHL Worldwide Express Final
8/14
Price Setting Responsibility: Centralized vs Decentralized vs Hybrid
Regional manager responsible for regional profits
Most of the price discount negotiations happen at locallevel
Uniform structure across organization will improveinformation systems effectiveness
8/4/2019 DHL Worldwide Express Final
9/14
PRISM (Pricing Implementation Strategy Model):
Software to analyze costs, determine prices
Historical pricing data analysis for future profitability
Not able to consolidate profits for customers spread across
countries Managers perceive it as complex, avoid its use
8/4/2019 DHL Worldwide Express Final
10/14
Pricing strategy
Continue to be Price Leader
Charge premium prices & deliver a superior value.
Communicating value proposition to customers
Mixed pricing structure Merging the monthly handling fee with a discount
structure.
Discounts
Based on volume
Based on revenue contributed by the customer.
The parcel delivery and document delivery should havedifferent rates,
8/4/2019 DHL Worldwide Express Final
11/14
A subsidized pricing strategy for the MNCs Costs for different lanes are different, the pricing and
discounts for specific routes should be different.
Special services -urgent or secure deliveries for
nominal fee. The price setting responsibility adopted should be
composite having
Region managers for local market conditions,
Representative of Head quarters
8/4/2019 DHL Worldwide Express Final
12/14
DHL could acquire local courier services in new markets. PRISM
needs to be modified
Use at all DHL offices.
should be made simpler
DHL should try to convert more handshakecontracts toformal contracts
Increase penetration in customer segment of monthlybilling > $15000 [Exhibit 8]
8/4/2019 DHL Worldwide Express Final
13/14
8/4/2019 DHL Worldwide Express Final
14/14
Group 9