After completing a $150 million brand-awareness campaign at year-end, the company will focus next year's marketing approach on flexible customer service and could also increase spending on TV, according to its top marketing executive. The forthcoming spots will depict a treatment that differs from that offered by DHL's rivals, UPS and Federal Express. WPP Group's Ogilvy & Mather, New York, handles the account.
The efforts are part of DHL's attempt to grow in the U.S. following the 2003 purchase of Airborne Express. DHL is trying to gain ground with small- and medium-sized customers, who have larger revenue per shipment and are more profitable, said Dick Metzler, executive VP-marketing at DHL Americas.
"Because we're a challenger, we're just willing to flex our policies, procedures, systems and processes around the customer," according to Mr. Metzler. "The weakness in these leaders' strengths is that they've got a bazillion packages and they can't afford to flex anything."
Asked about Federal Express' offerings, spokesman Jess Bunn rattled off a list of services, from scheduled home delivery to less-than-a-truckload shipments.
"This is a case of `If wishing could make it so,"' he said of DHL's claims.
DHL is an acknowledged leader globally, but trails both UPS and Federal Express in the U.S. In June, DHL's parent company, the private German post office Deutsche Post, revealed plans to spend $1.2 billion over the next three years to expand its U.S. network to eat into Federal Express and UPS's combined market share, which by some estimates is 70%. DHL's is about 6%.
chinks in the armor?
"[FedEx and UPS] really haven't done anything wrong," said Larry McNaughton, chief operating officer of the consultancy CoreBrand. "There's no obvious openings. There aren't any chinks in the armor."
Despite this, companies may want another viable competitor for no other reason than to keep prices down, said observers.
"Shippers want a DHL in the market," said Jon Langenfeld, VP- senior research analyst at the investment bank Robert W. Baird & Co. "They don't want two strong providers, because the pricing power that creates in the marketplace is dangerous."