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Q Do you think Courier Pak is a good fit or a bad fit for Federal Express Why The Courier Pak was a good fit for Federal Express FEC from an environmental company cost and competitive standpoint The business environment of the mid 1970s airfreight industry played almost directly into the relative strengths of a small-package air service like FEC As stated in the case study Bulk products and commodity goods were rarely sent by air Indeed most air shipments were rather small This type of environment combined with FECs unique flight routes and reliable pick-updelivery system created an opportunity that the company wisely seized with Courier Pak In 1975 and 1976 a majority of FECs shipments were for next day delivery Exhibit 4 So from a company perspective Courier Pak fit perfectly into FECs product mix On the one hand you had Priority One package delivery price based on weight and distance Average price in 19762356 which guaranteed overnight delivery anywhere in the FEC system and on the other hand you had Courier Pak a special 12 in x 1512 in waterproof tearproof envelope which guaranteed overnight delivery of documents or other items up to two pounds anywhere in the FEC system--all for a fixed price of 1250 Rounding out FECs product line you had Standard Air Service price based on weight and distance Average price in 19761262 which guaranteed two-day package delivery and Economy Air which guaranteed three-day package delivery From a cost perspective the size of the Courier Pak as well as the manner in which consumers underutilized this product in terms of weight also fit FEC As stated in the case study the variable costs associated with the average Priority One package totaled 1061 for the average Standard Air Service package they were 921 and for Courier Pak 425 Combine this with the fact that consumers were only sending on average a pound of goods through the
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