Assignment 3

In session 23, you have learned about product distribution and effective promotions. Here is the case
that requires your response to reflect your understanding of the learning topic. Post your Assignment by
Wednesday (January 12, 2022) at 11.00 PM Western Indonesia Time.

Case

FedEx is the world’s largest express delivery company. Every day the Memphis-based freighter moves
more than 4 million packages to 220 countries. All told, the company’s annual payload weighs in at a
gargantuan 11 million pounds. By getting products to businesses and consumers quickly, FedEx thrives in
its role as a marketing intermediary.

Despite its success, FedEx isn’t as self-sufficient as it might appear. After all, much of FedEx’s income is
dependent on other businesses using the freighter to ship their wares. If these clients become big
enough, though, they could start to look for ways to consolidate their business. Oftentimes that means
getting rid of intermediaries like FedEx. Once these outside ties are cut, the companies are then free to
establish their own in-house distribution systems.

However, companies like FedEx provide businesses with more than just delivery services. Although
marketing intermediaries do not create stand-alone value for their clients, they add vital utility to
existing products and services. In fact, many companies find that they’re better off improving their
current services with the help of outside firms rather than build their own departments from scratch.

For instance, a shipping company that specializes in transporting massive loads of raw materials may try
to cut costs by taking control of its small-scale shipping as well. Items on the large-scale side of the
supply chain are normally freighted by trains or cargo ships, which are a far cry from the small,
individually driven trucks that FedEx uses. Because of this huge difference in operations, even the most
efficient freighters would be hard pressed to juggle both large- and small-scale shipping successfully. In
this way, FedEx’s ability to ship lots of smaller-volume orders quickly makes it an ideal partner.

A typical transaction works like this: Manufacturers purchase a label from FedEx’s website and place it
on their VIDEO CASE shipment, which can be anything from a single box to a whole palette full of
products. A company driver then picks up the delivery at a scheduled time and scans it into a tracking
system. She then takes it to the nearest FedEx processing center to be flown to a transport hub. The hub
sends the package to another airport, which sends it to another FedEx processing center. From there,
it’s put on a truck and delivered to the wholesaler who ordered it. The process is so efficient that a
product ordered in the evening may be at the wholesaler’s door by the next morning. And throughout
the process, the package’s location can be tracked, the shipment insured, and the time of delivery
predictably guaranteed and protected by a requirement of face-to-face delivery.

This fast-acting infrastructure is FedEx’s greatest asset. Because of its speed, its retail clients don’t need
to waste precious sales floor space by overstocking products. What’s more, FedEx can keep its prices
below what it would cost the wholesaler to maintain its own fleet of delivery vehicles. That’s because
FedEx controls each step of the process from pickup to dropoff. Through its strong commitment to
logistics, FedEx stands to be successful for a long time.
THINKING IT OVER and WRITE YOUR RESPONSE AT LEAST IN 250 WORDS IN EITHER ENGLISH OR
BAHASA INDONESIA

1. Why would companies choose to use an intermediary like FedEx instead of taking on
distribution responsibilities themselves?
2. Significant numbers of consumers are choosing to do their shopping online. Will this decision
most likely hurt or help FedEx’s business?
3. What utilities does FedEx provide for its customers? Which utility is probably the most
important to its customers?

1.The reason why companies would outsource this to a company like FedEx is due to the fact that
FedEx has better resources that would help them to take on the distribution.

If the companies should try to do this on their own, they would have to incur higher costs. Given
that they would have to get the vehicles they would use for delivery and also get fuel to power the
vehicles, and employ a driver.

2. If significant people are choosing to do their shopping online, it would have a significant positive
effect on FedEx, they would benefit because more customers would be in need of their services.

3. The utilities that FedEx provides for its customers includes

 Form
 Time
 Place
 Information
 Service
 Possession

1) Companies would choose an intermediary like FedEx to handle shipping, because it is cost effective to
do so. When companies assign certain business activities to other entities outside of its own, it is called
Outsourcing. Outsourcing is an important business strategy which businesses deploy in order to allow
them focus on their core strategy/areas of strength.

2) Online shopping is made possible because there are intermediaries who take the products purchased
from the sellers (who receive orders online) to the buyers (who demand or buy online). It therefore
follows that increase in online shopping will most likely translate to increase in the demand for FedEx’s
services. As the demand for FedEx’s services increases, do does its sales and most likely its profits
increase. Profits is good for any business. Therefore, increased shopping online is not going to harm
FedEx’s business but it will help it.
3) FedEx provides packaging, shipping, design and printing of banners, posters, floor graphics, custom
branded boxes etc, ability to track shipped items, and small business support such as occasional
business grants.

4) Of all the services mentioned above, the core and most critical to the customer is the shipping and
delivery. This is because, it involves a lot of logistics, allowing FedEx handle that service removes the
burn of risk of damage from both shipper and recipient to FedEx at least until it leaves the senders
warehouse and it is off loaded at the recipients premises.