MARKETING RESEARCH CASE EXERCISE
UNITED PARCEL SERVICE: WILL BIG BROWN REMAIN THE DOMINANT PACKAGE DELIVERY SERVICE?

United Parcel Service (UPS) is one of the oldest and strongest companies in the United States, delivering over 5 percent of the U.S. gross domestic product yearly. UPS's daily delivery volume is 12 million parcels and documents, with airfreight volume estimated at 2 million parcels and documents. UPS's customer base has grown from 500,000 in 1980 to over 1.46 million daily pickup customers in 1996. "Big Brown" (as the company is called, after the color of its trucks) employs over 336,000 people. Its 1996 revenues exceeded $22 billion.

The Strike of 1997

In early August of 1997, the teamster-organized couriers at UPS went on a nationwide strike, the first national strike in the history of UPS. The parcel post segment of the business-small and medium-size packages and documents-constituted 80 percent of the total market for UPS prior to the strike. Express delivery, or overnight package delivery, constituted 12 percent of the company's volume, with freight accounting for 8 percent of total volume. The August 1997 strike was directed at the parcel post delivery group, thus affecting the largest segment of UPS's business. UPS estimated that the strike resulted in a 10 to 15 percent market share loss in the parcel post delivery market, along with a total daily performance decrease of 90 percent. Of the 336,000 employees, the 180,000 who went on strike were employed in the parcel post delivery function of UPS.

Ramifications of the August 1997 Strike

The following factors were directly attributed to the 1997 UPS strike:

1. Loss of dominance. UPS lost 10 to 15 percent of its market share in its core business of standard parcel delivery. Competitors (FedEx, Airborne, DHL, USPS, etc.) gained valuable information on UPS customers who switched from UPS during the strike, allowing them to better position themselves to retain many of the UPS customers after the strike was settled. Customers were also exposed to a variety of competitive services that offered them new options for package delivery.

2. A public relations challenge. UPS now has the difficult task of restoring the image of cheerful "Big Brown" couriers hustling down Main Street U.S.A., delivering packages like clockwork. The strike created a negative perception of UPS among many small to medium-size businesses because it directly damaged many of these businesses.

3. Loss of loyal customers. Many traditional UPS customers vowed never again to depend on one carrier for their shipping needs. Following the strike, many businesses stated that they would diversify their package shipping business among several carriers so that they would never again be victims of such an uncontrollable force.
Using as a guide the marketing research proposal provided in the Marketing Research Illustration, prepare a research proposal for UPS, specifically concentrating on the following topics:

1. Illustrate how you will attempt to measure the effect of the August 1997 strike on the current situation UPS faces.

2. Explain how you would measure perceptions of small to medium-size businesses regarding their image of UPS, as well as competing package delivery services.

3. In your proposal, be sure to identify the appropriate target groups that you would consider when developing a sample for your proposed research