Situational Analysis
Nature of Demand
At its start Federal Express Inc. was classified as an air-taxi operator. Being classified as this set the company into the aircraft transportation industry. The air-taxi segment in the aircraft transportation industry was around for some time prior to Federal Expresses entry into the industry. As of 1973, when Federal Express first started up, there was close to 1,000 different airfreight forwarder salespeople in the country. With close to 1,000 different options for airfreight forwarding services there was still very few well known names in the industry. According to a random polling the only companies that people where able to recall where the ones that heavily advertised in all media fashions. Of these 1,000 different options all where still able to be divided into three main competitive sections.
Delivery Service – Delivering packages door-to-door usually in a certain mile radius.
Messenger Service – Usually handling small parcels no larger then 2-5 pounds.
Air Cargo Service – Routing air cargo across different states.
The three sections above where able to still be furthered classified into four smaller sections. Three of the four smaller sections relate to air freight.
Emergency – service with maximum speed and the highest priced.
Rush – Generally next-day delivery and somewhat price sensitive
Routine air – the largest airfreight category and very price conscientious
Routine – the largest of the four freight categories and the most price sensitive.
Of the four categories listed above the routine category is the only one that handled mostly surface freight transportation
In exhibit 1 shown below the three airfreight categories are compared using shipment numbers, average dollar per shipment, and total dollar volume as variables. These numbers are based off of 1974 data.

Estimated size of three air markets - 1974

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Even with these numbers all three markets where seen to be growing rapidly and on average were experiencing 20% increases collectively each year.

Extent of Demand
As stated above on average the airfreight markets see an increase of 20% annually. This includes all modes and price ranges encompassed in the entire airfreight industry. With Federal Express however data is shown in exhibit 2 that shows a 50% minimum increase annually through 1976. Exhibit 2, shown below, also shows that not only does Federal Express hold an above market increase annually but also shows a 15% increase monthly. This shows that demand for Federal Express services steadily increase month to month.

Federal Express Volume/Revenue Analysis 1974-1976

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Nature of Competition
In the airfreight industry competition is intense, with close to if not exceeding 1,000 different airfreight options. No clear cut dominant company was set in first in terms of competition. However, the airfreight segment grew faster then any other segment in freight transportation and doubled in revenue between 1965 and 1970. With revenues doubling and market segments growing companies like Federal Express were eager to jump in. Federal Express recruited people for UPS to serve as managers as well as consultants that were hired for contract work were recruited to fill accounting positions within the company. With competition so intense there are several risk factors associated with this market in this industry. • Competition recruiting top management from inside the company • Bankruptcy • New to market company comes up with a better idea for air freight delivery • Federal regulations hindering expansion opportunities

Problem.
How does Federal Express market their courier paks?
Alternative
Mass market using all forms of media including social media.

Alternative
Heavily advertise courier paks in store displays as well as on company website