Behind every successful business is marketing. This involves helping to develop product and services, branding, sales and advertising, gathering information needed to anticipate consumer needs as well as maintaining relations with both customers and suppliers.
According to Phillip Kotler: “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”
Standing Room Only: Strategies for Marketing the Performing Arts, Harvard Business Press, 1997
In order to illustrate the importance of a marketing department and its impact on an organisation’s competitiveness I have explored the marketing of the logistic company DHL International GmbH.
DHL was founded in 1969 and provided international mail service in the USA. Since 2002, as DHL Express, along with DHL Global Forwarding, DHL Freight, DHL Supply Chain and eCommerce Solutions of Deutsche Post DHL forms Deutsche Bank DHL, global logistic market leader and one of the world’s largest private employers. DHL is operating in over 220 countries on all continents. The company vision is:
“To be the logistic company for the world.”
In their mission statement, DHL express their customer centred approach, but also emphasise the importance of stakeholders and employees.
Definition of Marketing and Its Roles in the Organization
Marketing departments use different tools and techniques to create, advertise and sell products and services that will meet and exceed customer expectations as well as commitments to their shareholders. Below is the American Marketing Association’s definition of marketing.
“Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives.”
This definition describes various roles of the marketing department. One of the other roles is developing and defining the brand and making sure all services and products are representing company’s mission statement.
The diagram above presents the different aspects of marketing. A marketing department’s role is to bring their products or services to market which they feel are most desired by the consumer and are profitable for the organisation. They use what is called a ‘Marketing Mix’ to do this through a cycle of planning, market research, analysis, and innovation.
The ‘4Ps’ is one way of defining the marketing mix and was first expressed in 1960 by E. J. McCarthy in his book, ‘Basic Marketing – A Managerial Approach.’
The 4Ps are:
- Product (or Service).
By examining theses aspects of your business, organisations can, in simple terms, define their target audience and bring the right product/service to them in the right way and for the right price.
The diagram also shows that as much as the company is in control of the different parts of their ‘Marketing Mix’, the external environmental variables are not controllable by organisations but by using analytical tools they can anticipate changes which may impact their business.
Marketing in DHL
DHL use marketing tools which allow them to find the best possible strategies to keep them as one of the market leaders in the logistics industry.
DHL’s Four 4Ps
Company products (DHL Express, DHL Express Worldwide, DHL Express Envelope and DHL Economy Select) and services (insurance, duties and taxes paid, Saturday pick-up, shipment and delivery to residential addresses), due to differentiation, can satisfy large group of customers. DHL has long-term partnerships with a variety of businesses, which gives them a competitive advantage.
DHL has a competitive price policy based on product differentiation, which allows them to charge premium prices to customers, that value quality and at the same time offering budget product to others.
The company uses both ‘Above the line’ marketing through tv, radio and internet, and ‘Below the line’ marketing through their sponsorships and events.
To improve brand recognition, DHL sponsor many events around the globe like F1, Fashion Week in Milan and football, and rugby clubs. Innovation centres are not only for the customers to further advertising, but also for stakeholders to show the future possibilities.
DHL uses online services as well as retail shops. With a presence in over 220 countries and offering services to individual customers as well as other businesses, DHL is aiming to be within easy access to most of their customers.
DHL successfully uses AIDA model with tirelessly working on their brand recognition. Through their innovation centres the company gets customer interest and changes it into a desire by showing how the product will impact the customers. DHL is a worldwide company which gives them competitive advantage, and this ties closely with their strategy to gain attention. As DHL is widely available and easily accessible it is easier to turn potential customers into clients.
With the costumer being the focus of the company. DHL uses Key Performance indicator, surveys and Net Promoting Score to measure customer satisfaction.
“DHL measures customer satisfaction in different ways and sometimes it even differs between regions and countries. We measure how fast we pick up the phone, first time resolution of customer query and customer satisfaction” – from Sara Arrhenius DHL
In B2B (business to business) sector the company is building strong relationship with their customers, so they can understand their needs and make the service personal.
“Yes. We want to be the first choice for our customers every time. Therefore, we constantly strive to make our customers more successful – helping them grow and realize their business aspirations. Further, we also conduct Global Customer Solution for top 100 customers.” -DHL website
For DHL, marketing does not end with the marketing department. It starts with the employee training through First Choice initiative which plays an important role in building reliable brand by continuously improving process at vital points of customer contact and it is carried through at every customer contact point.
Effect on Competitiveness
DHL brand is highly recognisable, with positive image and good reputation which has beneficial effect on the company. Each year DHL scores high in customer survey. In 2001 Frederick F. Reichheld in his article, The One Number You Need to Grow, described the dependency between willingness to recommendation a product or services and company growth. The only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department. DHL Net Promoter Score in 2019 was 74 in a scale -100 to 100 which is extremely high.
According to Dennis Adcock and Al Halborg Marketing audit is: “A systematic appraisal of the strengths and weaknesses of a company in relations to its market place, and the evaluation of the opportunities and threats in that market” Marketing: Principles and Practice,2001
External and internal analyses are needed to be able to place the company within their market. There are many tools available to define business position like SWOT, PESTEL, Porter’s Five Forces and others.
SWOT analysis is one of the techniques that assess strengths, weaknesses, opportunities and threats in given company. This is an internal analysis where the factors are controllable by the business.
- Leading position in the global market.
- Innovative approach. DHL recognises the need of innovations and uses connections and resources to find new solutions.
- Large network connection. Over 220 countries worldwide.
- Good financial position.
- Strong brand recognition.
- High Net Promoting Score 74/100
- Skilled workforce. DHL highly invest in employees’ programs like First Choice.
- Network of reliable suppliers.
- Market share growth is limited. There are few key players that make up the top 10 companies.
- Dependability on external local companies. DHL uses contractors in the local areas.
- Dependability on local authorities. DHL success depends on local authorities due to numbers of legislations.
- Strong culture which makes it hard when acquiring companies with different culture. Each time DHL acquire new company they try to implement DHL culture within it, this is not always easy process.
- Lack of clearly defined USP. Products and services are similar in the logistic market.
- New technologies. Innovation centres and huge investments in e-commerce.
- Investing in the financial market.
- Global expansion.
- Declining cost of transportation. GOGREEN and Zero emission 2050 programs to source alternative ways of transportations.
- Currency fluctuation.
- Natural disasters. Recent Coronavirus pandemic had devastating impact on DHL.
- Reduction in the traditional service like letters. The use of technology in exchanging information.
- Changes in customer buying behaviour.
DHL’s main competitors are FedEx, Royal Mail, XPO Logistics, United Parcel Service and CEVA as well as local companies. In 2018 DHL was a leader in contract logistic market. Data from DHL 2019 report.
Although it is hard to define DHL’s Unique Selling Proposition, as most of the 3LP businesses offer similar products and services, DHL strategy is to be the best at what they do. Following their mission:
According to Michael Porter: “Competitive advantage grows fundamentally out of value a firm is able to crate for its buyers that exceeds the firm’s cost of creating it. (…) There are two basic types of competitive advantage: cost leadership and differentiation.” Competitive Advantage: Creating and Sustaining Superior Performance,1985.
DHL has Deutsche Post DHL as a mother company which is a global leader not only in logistic but also in shipping and mail services. Different division of Deutsche Post DHL can accommodate the needs of a bigger market. Having partnerships in different sectors like automations, manufacturing, engineering and energy helps DHL to keep their position as a market leader.
The Boston Matrix is a tool developed by the Boston Consulting Group in 1970. Through the categorisation of products or services by their potential market growth and market share, it allows organisations to make decisions on how to allocate future investment. See the picture below for the BCG Matrix Model.
- E-commerce with a potential market grow is a Star.
- DHL Procurement Services, Sourcing & Managing Product & Suppliers with “Just in time” as one of the industry sector solution is a Cash Cow.
- With consumers concentrating on local food markets, DHL FINE FOODS LOGISTICS Michelin Star Logistics is a Question Mark
- Due to growing use of the digital media DHL Express Envelope is a Dog.
PESTEL analysis is a tool, that helps the company to assess the business environment with political, Economic, Social, Technological, Environmental and Legal factors.
This is an external analysis and these factors are not controllable by the company.
- Pressure groups.
- Government policies in different countries.
- Tensions in political environment.
- Trade restrictions.
- Exchange rate.
- Conditions in labour market.
- Interest rates fluctuation
- Coronavirus outbreak.
- Changes in demographic.
- Societies culture.
- Class distribution.
- Online shopping.
- Coronavirus outbreak.
- Industrial innovations.
- Social media.
- Environmental regulations in different countries.
- Waste control.
- Renewable technologies.
- Intellectual property laws
- Data protection laws
- Health and Safety laws
- Discrimination laws
Porter’s Five Forces of Competitive Position Analysis
Porter’s five forces ware developed by Michael Porter from Harvard Business School in 1979 as a tool that is necessary to define the competitive environment of the business.
- Threat of new entry helps to establish how easy it is for a new business to enter a marketplace.
- Threat of substitution helps to show how easy it is for a competitor to deliver the same product or service to the customer.
- Supplier power determines how easy it is for the supplier to raise prices.
- Competitive rivalry checks the market competitors.
- Buyer power shows the customer possible impact on prices.
Each of the forces work either in the advantages or disadvantages a business.
DHL Five Forces analysis:
The threat of new entry:
- High costs to entry.
- High research and development cost.
- Easy access to distribution network.
- Strict government policies.
- High technology protection.
- Small number of competitors.
- Each of the companies is trying to become the market leader.
- Small differentiation of products and services within the market.
- Customers within the lower bracket pay will look for budget alternatives.
- Easy access to new suppliers.
- Importance of the quality of the product makes the buyer less sensitive to prices.
Power of suppliers:
- Higher numbers of suppliers within the industry in compare to buyers.
- Standardised and small product diversity offered by suppliers.
- Lack of substitution for the products offered by suppliers.
The threat of substitute:
- Limited number of alternatives available within the market.
- High quality substitutes are at much higher cost.
Analysis shows that, if DHL continues investing in innovation and continue their acquisition strategy, the company will keep their position as a leader within the industry.
With the presence in over 220 countries DHL customers and target customers and their need vary. To find the best product for everyone and advertise it through the right channels DHL sectionalise its clients and potential customers. This process allows the management to understand their needs and deliver tailor fitted service or product. Brand recognition, reliability and easy access helps the company getting new customers, and strong relationship, support and ability so find solutions is essential in keeping the old ones.
To address this assignment, the marketing of DHL has been explored by looking at its 4Ps and using a number of analytical tools.
DHL is one of the leading businesses in the logistics industry for both B2B and business to consumer markets. Since it was founded, it has developed into a worldwide business employing over 380,000 people in 220 countries. According to its 2019 annual report, it made around €63.341 billion in revenue before taxes. Which is a 2.9% grow from the year before.
- It is a very well-known brand within the UK and internationally which most people will have heard of and can recall, to some extent, what they do.
- They have consistent branding with a very strong visual identity using the distinctive colours of red on yellow and incorporating a highly recognised logo.
- Their advertising has adapted over the years using various promotional methods such as outdoor advertising and digital.
- They have clearly invested in marketing over the years and developed their product portfolio to suit the changing external environment.
- They compete against very few businesses internationally, but they are all very competitive brands.
- Although there is evidence that DHL USP is not clear, but the company invests into branding and excellent service to get new customers.
Marketing is critical to any organisation if it wants to survive and grow its business. Marketing departments play a crucial role in delivering the organisation’s objectives. The performance of an organisation is closely linked to its marketing strategy and the delivery of the 4Ps.
Also, external factors can’t be ignored as part of a marketing strategy and by using analytical tools such as SWOT, PESTEL, and Boston Matrix etc., businesses are able to monitor the performance of its organisation, competitors and help develop products and services for the future.