Marketing can benefit all aspects of a company, as recent developments at FedEx make clear. Led primarily by an executive, Raj Subramaniam, who started with an entry-level marketing analyst position, the company is forging new paths in its supply chains, many of which reflect a clear awareness of some foundational tenets of marketing.
For example, Subramaniam knows that relying too much on one type of customer can be problematic, because it limits its power. If FedEx only served Amazon, for example, the retail giant likely could demand concessions and price cuts, because it would have substantial power over its logistics partner. Exclusive targeting also is risky, because if Amazon sells less and needs fewer services in a particular period, or switches to a competitive service provider, FedEx would have no other options for making up the losses to its sales.
Therefore, FedEx has explicitly announced that it is cutting its close ties with Amazon and seeking to enter into closer relationships with the wide variety of retailers that sell their products online and need help getting those items into consumers’ hands.
With his marketing background, Subramaniam also recognizes the ongoing trend toward increased multichannel and ecommerce markets, so he is pushing FedEx to take over the entire delivery channel. Previously, if the situation warranted, FedEx would move a package from its source to a regional destination, then hand it off to the U.S. Postal Service for the final delivery to a home or business. But as more and more consumers seek direct deliveries to their homes, it realized that it cannot ignore this important step. Thus, it also is phasing out its reliance on this competitive, government-run service provider, determined to leverage trends in the marketplace to its benefit.
Another revision reflects Subramaniam’s knowledge of the benefits of efficiency for containing costs. Whereas FedEx has long kept its Express and Ground services completely separate, it recently has shifted its tactics, to allow some Ground services to complete Express deliveries, as long as the timing demands can be met that way. In so doing, it saves money and thus can ensure stronger revenues, without diminishing its service quality.
Reflecting these contributions, observers predict that the one-time marketing analyst, who is currently FedEx’s chief operating officer, will take over the company once its founder retires. The real-world example reflects a belief that we strongly endorse: Marketing can make everything work better.
- What other marketing concepts might drive the reorganization of FedEx?
- Can you think of any other well-known firms that could apply marketing ideas to enhance operations in other divisions?
- If you enter into a marketing career, would you want to move up in a firm and eventually become an executive, as Raj Subramaniam has done?
Source: Paul Ziobro, “The Man Behind the Plan to Remake FedEx,” The Wall Street Journal, March 12, 2020