FedEx Corp.

Author:Judson Knight, Ed Dinger, Frank Caso, Susan Risland
Pages:537-550
 
INDEX
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942 S. Shady Grove Rd.

Memphis, Tennessee 38120

USA

Telephone: (901) 818-7500

Web site: www.fedex.com

BE ABSOLUTELY SURE CAMPAIGN
OVERVIEW

Founded in the 1970s, Federal Express (FedEx) quickly carved out a niche in the express package business, helped in large part by its aggressive advertising. In the early years FedEx relied on a fast-talking spokesman who anchored the "Absolutely, Positively Overnight" campaign that ran from 1978 to 1983. By the 1990s it was facing increasing competition from rival express firms offering cheaper service. Despite being far younger than United Parcel Service (UPS) and the United States Postal Service, by this time FedEx was able to portray itself in its advertising as a well-established, reliable shipper.

The "Be Absolutely Sure" campaign, which broke in January 1998, offered humorous examples of what could occur if someone relied on a cut-rate shipper rather than FedEx. In one spot a 30-something swimming-pool cleaner finally received his acceptance letter to Harvard University, news that, if received 20 years earlier, might have made a profound difference in his life. In another spot toy soldiers in a mock commercial were reduced to wearing dresses because their uniforms did not arrive on time.

The "Be Absolutely Sure" campaign ended at the close of 2000. During its three-year run it produced a number of memorable commercials. The spot "Apology," which was little more than a television test pattern and an abject apology for not having sent the tape of the real commercial by FedEx, was recognized as one of the best commercials of 1999. The toy-solider spot, "Action Figures," was nominated for an Emmy Award in 2000.

HISTORICAL CONTEXT

When Fred Smith returned from the Vietnam War in the 1960s, he entered Yale University in New Haven, Connecticut. The undergraduate Smith wrote a term paper in which he presented the idea that, with the fast-emerging service economy of the United States in the latter half of the twentieth century, what America needed was a good, reliable package delivery service. His professor gave him a C. This grade, however, did not deter Smith from raising investment capital, and by 1971 he had almost $140 million in operating funds. Bank loans accounted for $90 million of this amount, and Smith had raised another $40 million from investors. The remaining $8 million was loaned by family members. Obviously, Smith had a lot riding on this deal, and with his capital in place he proceeded to launch the largest venture-capital-funded start-up corporation in history: Federal Express. Smith reportedly chose the name because "Federal" suggested the U.S. government, a connotation that was still largely positive despite the unpopular war in Vietnam. And "Express" was chosen because it recalled the legendary Pony Express of the 1860s.

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During the 1970s Federal Express—or FedEx, as it came to be called—grew rapidly alongside competitor United Parcel Service (UPS). Both profited from the fact that airlines were getting out of the parcel service and from the bankruptcy of rival REA Express. FedEx also benefited from a 1974 strike by UPS union workers, not to mention a strong record of advertising. Years later, in 1997, writers at Entertainment Weekly voted FedEx's 1981 "Fast-Paced World" spot the second greatest commercial of all time, behind Energizer's "Escape of the Bunny." In the spot, created by Ally & Gargano, actor John Moschitta managed to say 450 words in one minute, or seven words per second, as a way of illustrating FedEx's speed.

In the mid-1980s FedEx hit on a loser when it introduced the idea of ZapMail, which promised document delivery in two hours. It might have been a success if fax machines had not begun making their appearance, thereby eliminating the need for the service. The company ended up losing $300 million on ZapMail in 1986. It recovered handsomely in the 1990s, however, greatly expanding its international service and again profiting from a UPS strike in 1997. In the following year it created the FDX Corporation as a holding company for Federal Express and its other companies.

TARGET MARKET

Federal Express attained its position by appealing to businesses both big and small. The 1990s saw two opposing trends: the continued growth of large corporations through acquisitions and mergers and the concomitant growth of small business. As corporations became bigger and more impersonal, it seemed that more and more people were leaving salaried employment and setting up new businesses in their homes. At the same time, corporations outsourced more of their work and also allowed many employees to work from their homes. FedEx, like its competitors, benefited both from large corporate business and the growth of small business, which meant that more businesspeople were sending more packages.

The growth of telecommunications and a global economy helped spur an increase in international business, and here, too, FedEx was poised to reap a bountiful harvest. During the 1980s it expanded its international service greatly by acquiring companies in Italy, Japan, and other countries, and in 1995 it became the first U.S. express carrier to establish direct service to the People's Republic of China—perhaps the world's fastest-growing economic powerhouse. The mid-1990s also saw the creation of Latin American and Caribbean divisions, and in 1997 FedEx established a service hub in Miami to lead the way for greater Latin American expansion. It also set up its first hub in Europe, at Charles de Gaulle Airport in Paris.

FedEx illustrated the breadth of its customer base with 1997 ads that showed a wide array of people, separated by gender, race, ethnicity, and nationality, but united in their use of FedEx as a preferred service. According to Dottie Enrico in USA Today, a consumer poll conducted in 1997 found that FedEx's advertising was most popular with people in the 30 to 49 age group. The poll also showed that the advertising had proven particularly well received by African-American consumers, with 45 percent of black respondents judging the FedEx ads "very effective."

Later executions of the "Be Absolutely Sure" campaign had more specific targets. The 1999 television spots were aimed at companies doing business with Internet companies. A year later the campaign touted FedEx's new direct routes to China, targeting companies that were shipping to and from China.

COMPETITION

In the express-delivery market segment, FedEx's two largest competitors were UPS and DHL Worldwide, but by the mid-1990s it faced a new and formidable competitor: the United States Postal Service (USPS). The latter was a hybrid: formed as a part of the U.S. government, it became an independent entity in 1970, but it still maintained a monopoly over door-to-door mail delivery in the United States. Its dimensions dwarfed those of any competitor: as the USPS had often noted, it delivered more mail in a week than the combined forces of FedEx and UPS did in a year.

Yet as an independent entity, the USPS sought to go after the competition in its advertising to promote its Priority Mail service. There ensued a lengthy battle between FedEx and the Postal Service over ads that compared USPS's and FedEx's prices and asserted that it was cheaper to send packages through Priority Mail. FedEx took the Postal Service to court, and in April 1997 a Memphis federal judge, in the first ruling in the case, overturned an appeal by the USPS to throw the suit out of court. The USPS had claimed that, due to the Lanham Act, which protected certain federal agencies from lawsuits, it could not be sued, but the judge ruled that "by placing its no-holds-barred advertisements on national television, USPS embarked on an excursion into the commercial world unique to a federal entity."

Then there was UPS, which was nearly shut down between August 4 and 18, 1997, because of a strike by 185,000 of its employees, members of the Teamsters union. "When the Teamsters walked out on Atlanta-based United Parcel Service," wrote Tim Triplett in Marketing News, "they delivered an unexpected windfall

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to the U.S. Postal Service and Memphis-based Federal Express Corp., among other parcel shipping competitors. But whether UPS's rivals can hang onto that newfound business remains to be seen." UPS, the world's leading package delivery service, estimated that it permanently lost 5 percent of its business due to the strike, but it sought to recover its position with an advertising campaign in which it apologized for the strike. Meanwhile, FedEx reported that it delivered an extra 9.5 million packages during the period of the strike.

MARKETING STRATEGY

FedEx began the "Be Absolutely Sure" campaign by airing a TV spot called "Apology" during the Super Bowl in January 1998. It proved to be one of its most notable commercials of the year. The Super Bowl, with more than 100 million viewers, was always a prominent arena in which companies advertised their wares, and many opted for a glitzy approach to build on the hype. Not so with FedEx and BBDO: their spot consisted simply of a test...

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