THE UNITED STATES POSTAL SERVICE

1. THE UNITED STATES POSTAL SERVICE

2. Introduction • Introduction - Karthik • Challenges in Current Market - Tammie • Current Strategy - Curt • Future Strategy - Rebecca & Brian • New Strategy Implementation - Dorinda

3. How Big is the Postal Service? • Daily - 250,000 Postal Service Letter Carriers deliver to the nation’s 13.5 million addresses • Postal Service’s 38,000 post offices, stations and branches provide more retail outlets than McDonald’s and Exxon Mobil combined

4. How Big is the Postal Service? • In an average week, the Postal Service mail volume matches the annual volume of United Parcel Service • In two days, the Postal Service delivers what Fed Ex delivers in a year • 800,000 career employees, one of the largest employers in the United States

5. MISSION STATEMENT To bind the nation together through the correspondence of the people,to provide access to all communities and to offer prompt,reliable postal services at uniform prices.

6. VISION STATEMENT To become an organization that can improve performance and affordability,implement innovative ways to grow both its revenues and those of the mailing industry,and find flexible, responsive solutions to the challenges raised by technology and the seismic shifts in the global postal environment.

7. The Volumes Of Various Products Of The USPS

8. The Relative Share Matrix Of Different Products Of The USPS

9. CHALLENGES IN THE CURRENT MARKET

10. Highly Regulated • Postal Rate Commission • General Accounting Office • Office of the Inspector General

11. Domestic Competition • Fed Ex and United Parcel Service (UPS) • Profitable: High Value Documents and Packages • High Density and High Volume Neighborhoods

12. Foreign Competition • Since 1986 - Monopoly protection for outbound international mail was eliminated • Global Competitors have entered the traditional letter and print market - Deutsche Post (Germany) and TPG (Netherlands)

13. Technological Competition • Over 1/2 of US households have Internet Access • New Technologies - Direct Deposit, EDI (Electronic Data Interchange) and EBPP(Electronic Bill Presentment and Payment) • (1999) 2/3 of the 880 million Social Security checks, tax refunds, and other payments sent by the Department of the Treasury were sent electronically

14. The Projected Usage Of E-bills & Payments By 2004.

15. Technological Competition • Postal Service - long- term projections indicate that approximately 50% of the bills and payments that are currently mailed will be replaced with electronic alternatives. • The Postal Service forecasts in its 5-Year Strategic Plan for total First-Class Mail volume to decline at an average annual rate of 3.6% (Fiscal Years 2004-2008)

16. Delivery Costs • Daily - 680 million pieces of Mail to more than 135 million addresses • 2000 - Added 1.7 million new delivery points - equivalent to the city of Chicago

17. Reduced Mail Volume • First Class Mail Growth rate is diminishing • 1980 to 1989: 48 Percent • 1990 to 1999: 19 Percent • First Class Mail comprises 50% of total mail volume but accounts for 69% of current postal revenues

18. Consequences • Growing Organizational Debt • Could exhaust the Postal Service’s statutory $15 Billion borrowing limit by the end of fiscal year 2003 • Constricted by the Universal Service Mission • Increasing Costs • Lower Mail Volume

19. USPS CURRENT STRATEGY

20. Market Growth Defender Strategy • Stability – Secure position in First Class & Standard Mail delivery • Limited Scope – strategy and design • Price leader – future plans aimed at efficiency, profitability • Technology – lags behind competitors

21. CORPORATE MESSAGE Focus • Efficiency • Emotional link with customers

22. Efficiency • Technology – Employee productivity and accuracy • Eliminate Bureaucracy 1999 2000 2001 Revenue ($mil) $62,726 $64,540 $65,834 Employees 797,796 787,538 775,903

23. Efficiency • Flexibility – Fed Ex agreement • Share air-fleet • Doubles reach of most profitable services • Online Services • Consumers – Bill pay, money sending, personalized postcards, zip-code finder, change of address, postage calculation • Small Business – Secure e-documents, certified mail, tracking and confirmation, direct-mail kit

24. Emotion • Patriotism • 9/11 and Anthrax Scare • American Institution • Mail must go through • US Cycling Team • Corporate Citizenship • Diabetes, Adoption, Breast Cancer awareness • Issue commemorative stamps • Environmental responsibility – “Closing the Circle”

25. FUTURE STRATEGY &RECOMMENDATIONS

26. Marketing Strategies in a Declining Market • Harvesting • Maintenance • Profitable Survivor • Niche

27. Four Niche Segments • Personal Correspondence • Legal • Bill Paying • Advertising

28. Personal Correspondence • Development of Individualized Products • Promotion of Current and Future Products • Distribution

29. Legal Niche • Development of Services • Promotion of Services • Increased Quality of Service

30. Bill Paying & Ad Segment • People who use the post office for sending bills personally and for business. • Companies that use the Post Office for advertising.

31. How Psychological Constructs Shape Positioning Bill Paying Segment: • Need: Reliability • Want: Dependability • Value: Feeling of confidence. • Macro to Micro

32. How Psychological Constructs Shape Positioning Advertising Segment: • Need: Quality • Want: Dependability • Value: Success and Effectiveness

33. Used to exploit the constructs of the Value Chain VC constructs: Marketing Distribution & Logistics Government Regulations & Protection Labor Pool. Harvesting Strategy

34. Harvesting Results • Post Office has alienated customer segments. • Competition in otherwise protected market.

35. Niche Strategy • Have message and products satisfy the needs, wants, values of your target. • Innovate product to satisfy specific constructs.

36. Bottom Line • Identify constructs at the macro and micro level. • Better understand the target segment. • Resulting product innovation will lead to a more satisfied consumer base.

37. RECOMMENDED IMPLEMENTATION OF NEW STRATEGY

38. Implementation of New Market Strategy • Organizational structures • Functional organization of an SBU • Product management organization • Market management organization • Matrix organization

39. Functional Organization of an SBU • Simplest design • Best suited for stable and slow-growth industries where environments are predictable

40. Market Management Organization • Single product targeted to a large number of markets • Popular with consumer goods companies in their efforts to increase geographic segmentation and cope with the growing power of regional retail chains

41. Matrix Organizations • Least bureaucratic or centralized and the most specialized type of organization • A product team is formed which consists of representatives from a number of functional areas assembled for each product or product line

42. Product Management Organization • Decentralizes decision making while increasing the amount of product specialization within the SBU • Entails the development of marketing plans for product with centralization of common supports such as marketing research, sales, advertising, and sales promotion

43. Transformation Plan • Growth through added value to customers • Operational efficiency • Performance-based culture • Enabling functions • Regulatory and legislative reform