Euchner’s main concern is whether Stamp Expression was the right product to promote to market. Based on analysis below, it is found that Amita project has several pitfalls which led to the slow initial sales and possible failure in growing this product. It would be better if Pitney Bowes uses acquisition to grow the small business segment.
Analysis
Innovation Process and personnel
One major issue that Pitney Bowes had is the total separation between their two essential roles, product engineering and future-scanning, in innovation process. For Amita’s innovation process, all concept development and commercial feasibility are being done in AC&T without engaging product engineering team. If product engineering team has been involved earlier,
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Only senior support can safeguard the critical value proposition for the product.
Target markets
Since Stamp.com has already held 85% of market share, Stamp Expression should be used as a disruptive innovation in order for Pitney Bowes to enter the market. Stamp.com charged a premium of 130% over postage value to provide full-colored self-adhesive stamps. One possible strategy for Stamp Expression is to target those customers who require less featuring stamps and those who like to pay less. Only if Pitney Bowes enters as a lower-cost supplier can it get business from existing stamp.com customers.
As mentioned in analysis, residential service is a growing segment. Pitney Bowes should investigate the requirement in this segment and see whether Stamp Expression is suitable for them. Besides, as low-cost meters were stacked in inventory due to short-term rental agreement, these meters can be offered to residential families at minimal price. If these meters are offered during Christmas for example, when all families send Christmas cards to others, Pitney Bowes can probably make a seasonal profit.
Sales channel
As seen from slow initial sales, telemarketing may not be a good channel for selling Stamp Expression. Pitney Bowes should try retailing as another channel. Although retailing was proven not working for those old postage meters due to the procedures customer needs to follow, the company
Another point the USPS should take into consideration when restructuring, is that it is too easy for most Americans nowadays to forget the significance of a hand written letter or card, when we can communicate within seconds through technology. Come to think of it, I remember running to the mailbox in excitement every November to collect a special, pink birthday card from my grandma with her messy cursive scrawled across the envelope. Now, my “special” birthday wishes are in a 30 second voicemail she leaves from her cell phone every year. The USPS must remind us of the significant difference it can make in communication by recapturing its emotional importance through advertising.
Franking machines can be used in companies with high postal levels to minimise costs, these are usually leased from suppliers like Pitney Bowes.
The Express mail industry in the United States had a volume of $16-17 billion on expedited shipments in the year 1996. In the years before shipment volumes has risen 15-20% per year. However due to higher competition prices have fallen which resulted in a rise of only 10-15% in total revenues. As an example of this stands the revenue and the operating margin of the biggest player that make up 45% of the market. Federal Express’ revenue has more than quadrupled in the ten years prior 1996, however its operating margin has more than halved. (Exhibit 2) The
The industry is defined as the Domestic US Express Mail industry. This includes overnight and second day delivery. In order to assess the attractiveness of the industry, a Porters' Five Forces analysis has been conducted as follows.
Established an internal design division reducing “time to market” for new products; cross-functional integration required for successful development of new products [Grant p 135].
By 1906 Sears was operating the largest mail order plant in the world, but that necessitated that the company’s focus shift from design dominance to products and process. Sears has entered the transitional stage of the Abernathy - Utterback Model. Sears is tasked with the need to handle mass orders economically and efficiently, and develops the ‘time scheduling system’, which brings chaos to the mail order industry and defines a significant core competence (Sears Archive, 2012). Around the same time, Sears’s customers are shifting their focus to quality, which drives the need to replace the fancy Sears catalog with a factual based catalog. Sears’s core competencies are innovation, mail order process, quality products, perceived value, and factual based advertisement (catalog).
Postal Service is facing a major financial crisis and imminent collapse due to new technologies coupled with national economic struggles that have led to an incredible drop in mail and postage revenue (USPS receives no money from taxes). On top of these revenue drops, the Postal Service is burdened with unfair and difficult financial obligations that were imposed by Congress. This dangerous combination has sent the Postal Service into an economic downward spiral.
In Daniel Stone’s editorial article, “Flying Like an Eagle”, he advises the USPS some guidance to boost up their profit and their usage to the community. One of his inputs on the
Royal Mail is the largest provider of postal services in the United Kingdom and one of the largest postal service providers in the world. This paper analyzes
The Postal Service cannot continue to provide affordable, universal service to all areas of the country while maintaining mandated inflation-based prices without an increased ability to generate revenue and control costs. Therefore, bold changes to the business model are needed. All options – even those that have been dismissed in the past – need to be considered as part of the national discussion. In order to choose the best business model for the Postal Service, it is important first to establish the future role of the Postal Service and the mission the nation needs it to fill.
This is the first case study report for the course ED5317: Strategies for Managing Innovation that is based on the Harvard Business School case titled ‘Design Thinking and Innovation at Apple’. The report consists of the following question:
The USPS is at a point where it does not have the financing available to maintain its operations. One reason for the annual net losses is due to the declining rate of first-class mail. The second reason has to do with the required prepayment of $5.5 billion per year toward retirees’ healthcare costs. In order for the USPS to overcome this deficit, they will need to consider their short time frame, government restrictions and labor union backfire in considering the best alternative. One alternative would be to privatize postal services operations which would allow the USPS to change its pricing structure, yet it would potentially significantly reduce market share. A second alternative would be to undergo a system-wide
Trends and opportunities of the parcel service industry include globalization, e-commerce, and supply-chain management. Internet logistics was FedEx and UPS’s fastest growing business. The internet enabled customers to link directly to retailers and their manufacturers. In 2001, parcel carriers served almost all of the online market. They were able to provide information on packages to customers through tracking systems on the web. This allowed customers to plan ahead and decrease delays in deliveries. It also allowed for faster transactions and lower communication costs. Parcel companies created partnerships with large Internet retailers. These partnerships allowed parcel service companies to expand its overall delivery volume. Parcel companies improved tracking by implementing several technological innovations. These included “laser scanners and bar codes, state of the art software programs, satellite and cell phone communication equipment, electronic information interchanges, and the Internet.”
The express mail industry can easily be considered an inherently tough industry to operate within given the myriad of factors that come into play, such as unions, government regulations, cost of technological advancement, and international borders to name a few. Despite this, the industry could be seen as offering opportunities, which could be seized by attracting customers based on the quality of the service being offered. Consequently, this also encouraged mimicking between
The strength of the unit is based on the fact that the company is built on an innovative and entrepreneurial culture with a decentralized management philosophy with Knowledge sharing and dissemination as a key part of Art’s business philosophy. Despite the high level of decentralization and profit accountability, technology and human capital were both widely shared among divisions. The company also moved quickly to bring products to market. An idea which showed promise was funded as funds were always available for small beta batch productions. This allowed market testing to achieve proof of concept within ART. Investment funds were readily available to fund an investment once an innovation has been approved.