• on Jan 28th, 2015 in Products & Services | 5 comments

    The sometimes elusive concept of “brand” is very real and useful to businesses and organizations of all kinds and sizes. A brand encompasses an array of tangible and intangible elements, from a company’s name and logo to consumers’ expectations of a particular product or service. For instance, the names and logos of Mercedes Benz and Lexus usually make people think of reliable, well-built, luxury cars. Wal-Mart and Target are most often associated with large inventories of everyday goods at discounted prices.

    The U.S. Postal Service has a brand, too. Its attributes include reliability, convenience, value, and tradition. Where the Postal Service differs from many other businesses and organizations is in the management of its brand: To get the most financial value out of their brands, successful firms treat them like other assets and carefully measure and monitor them. Brand valuation is an important management tool used to do this. But while the Postal Service has worked to enhance some of its brand attributes, it has never conducted a formal brand valuation.

    We worked with Premier Quantitative Consulting (PQC), experts in brand valuation, to develop an estimate of the Postal Service’s brand value. Based on extensive research and analysis detailed in our new white paper, The Value of the U.S. Postal Service Brand, PQC conservatively estimates the Postal Service brand value is $3.6 billion, based on fiscal year 2013 financial data (the most recent available when PQC performed its study). This means the Postal Service would forego at least an additional $3.6 billion in future cash flows if it had no discernable brand. In other words, if the Postal Service were indistinguishable from a generic delivery brand, it would not realize these significant cash flows.

    PQC also suggested some ways the Postal Service could further enhance its brand. For example, the organization could (1) aggressively respond to inaccurate “doomsday” reports and predictions about its future, (2) involve employees – who are truly “the face of the brand” – in implementing brand strategies, and (3) expand licensing activities.

    Do you think the Postal Service brand is important? What could the Postal Service do to enhance its brand? What are some attributes you associate with various brands? 

  • on Jan 26th, 2015 in Pricing & Rates | 3 comments

    Steve Jobs was famous for the ingenious simplicity of his designs. And, of course, his single button iPhone, now the standard in smart phoning, is a great testament to the value of simplicity.

    As in design, simplicity in pricing, and a related simplicity of choices, are appealing to consumers. There is even empirical evidence that consumers will buy more when they aren’t overwhelmed with too much clutter and too many choices.

    The U.S. Postal Service has enjoyed some success with simple pricing. The best example is the Flat Rate Box. The combination of uncomplicated messaging – “If it fits, it ships” – and ease of use – a handful of shape offerings, each with a single price attached to it – have made the Flat Rate Box a critical piece of the Postal Service’s growing package business.

    And so far, the Postal Service is sticking primarily with weight-based pricing for packages, and not introducing any further dimensional (DIM) weight package rates. FedEx and UPS both just moved to the more-difficult-to-calculate DIM weight pricing scheme on ground shipments.

    Still, most Postal Service pricing is far from simple. There were 8,779 different package prices alone in fiscal year 2014, up 22 percent from two years earlier. Of that total, a quarter are retail prices and three-quarters are commercial prices. Furthermore, nearly 1,100 Parcel Select prices are not used, and 5,840 prices for packages weighing more than 20 pounds are never or rarely used. We recently looked at package pricing at the Postal Service and found its complexity might intimidate customers. We urged the organization to consider eliminating prices that are rarely or never used. We also suggested periodic evaluation of market demand to see if it makes sense to introduce other Flat Rate products.

    But, it’s also worth considering whether pricing can be too simple, at least for commercial customers. While individuals welcome pricing that’s easy to calculate, businesses that ship large volumes can benefit from a range of options, which gets them closer to customized pricing. It also helps them shave off every possible penny of shipping expenses. And, of course, some degree of complexity is necessary so prices appropriately reflect costs. Such is the case with zoned rates for Priority Mail, because packages traveling across regions or zones cost more to deliver than those moving within a zone.

    So, turns out pricing simplicity may not be quite that simple.

    Do the Postal Service’s pricing options meet your shipping needs? Do you find pricing too complex? Or, do you wish there were more options? Should the Postal Service introduce more Flat Rate Box or other specialty packaging items? 

  • on Jan 19th, 2015 in Finances: Cost & Revenue | 36 comments

    For the first time in years, the U.S. Postal Service has money to invest in its future. Postal officials have said they expect to spend about $2 billion on capital projects in 2015.

    There’s a good chance most of that investment will go toward revamping the 190,000-vehicle fleet – one of the Postal Service’s most pressing needs. Our audit work found that the Postal Service’s vehicle fleet is adequate for delivery needs only until about 2017.

    Another area overdue for investment is facility maintenance and improvements. An earlier audit report found that budget constraints have hindered the Postal Service’s ability to fund facility repairs and alterations. About half of its incomplete repairs in fiscal years 2011 and 2012 were potential safety and security problems, our report noted.

    While $2 billion is a nice chunk of change, it’s a relatively small capital investment for a $68 billion organization. Still, the Postal Service has had so little available money for capital projects over the past few years that $2 billion seems like a bonanza.

    So this week, we are asking you to weigh in with your suggestions on how the Postal Service should invest its $2 billion. Should vehicle fleet replacement be the number one priority? Or facilities? Where else is capital investment needed? What else would be on your wish list if extra funds were available? 

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