Documente Academic
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Arief Suripto
(08/279814/PEK/13273)
Ayu Suryani
(08/279818/PEK/13277)
Brando Lubis
(08/279820/PEK/13279)
D. Denny K
(07/266113/PEK/12022)
DHL used a hub system to transport shipment around the world. In 1991 the company operated 12 hubs. Within Europe, the U.S, and the Middle-East, DHL generally used owned or leased aircraft to carry its shipments, while on most intercontinental routes it used scheduled airlines. In 1991, 65% of DHL shipments were sent via scheduled airlines and 35% via owned or leased aircraft. In 1990 DHL had 900,000 accounts of which the top 250 account represented 10% of revenues and 15% of shipments. DHL had only about 10 global contract with customers
The annual report also stated: The evolution of our business into new services, markets, or products will be completely driven by our single-minded commitment to anticipating and meeting the changing needs of our customers.
B. Main Issue
DHL wanted to make recommendations on pricing strategy, structure and decision making. Whether to use price leadership strategy or market response strategy.
C. Problem Statement
1. Should any difference in price charged for documents and parcels? 2. Should any difference in price across different industries?
PRISM was not used extensively by All DHL offices sometimes DHL Estimating demand curves by survey and statistical analysis for simple pricing structure. DHLs base prices were calculated according to the product (service), weight, origin and destination. In all country markets served, DHL followed one of three pricing approaches: monthly handling fee, frequency discount, and loaded half-kilo. A frequency discount structure under which a discount was provided based on number of units shipped. The more often a customer used DHL during a given month, the cheaper the unit shipment cost. DHL sales reps could negotiate discounts from book price up to 35% after calculated fixed and variable costs, net profits by geographic lane and product line, and overall contribution margins. DHL have pricing flexibility. They can customize the table to the customers needs, because this customization is really helps negotiations.
PRICING
Evaluation of Pricing Policy As DHL expanded service into new countries throughout the 1970s and 1980s. It developed many different pricing strategies and structures. DHL country managers had almost total control of pricing. They typically set prices based on four factors: what the market could bear, prices charged by competition (which was often initially the national post office), DHLs initial entry pricing in other countries, and DHLs then current pricing around the world. DHLs prices were historically 20% to 40% higher than those of competitors. Competitors who followed DHL into new markets often patterned their pricing structures after DHLs. Since 1987, DHL use PRISM (Pricing Implementation Strategy Model) software to analyze their profitability at the country, customer segment and individual customer level. The inputs to the model were cost data along competitive price information based on historical data
RECOMMENDATION
DHL have a good strategies for the pricing policies. Although have a highest price, DHL can hold out the market share by improve the quality of their service, so DHL should continue this strategy. But, DHL still have an attention with the competitor do and to the customer needs. Pricing Strategy Price Leadership Past and current DHL charge premium price for delivering superior service. Maintain image in the eyes of customers DHL delivers superior value. Decline in price might be seen as decline in quality of service may switch to other provider. Pricing structure
Difference in price charged for documents and parcels. Should be differentiated because of additional costs incurred for parcel shipping. Difference in price across different industries. Shipping fee should be the same for customers across different industries Offer special price for multinational corporation seeking to cut deals if they allow DHL to handle all of their express shipping accounts.
Should be exercised and must help retain and gain large accounts for DHLs marketing team.