Philpost’s competitors in the industry were private firms such as: LBC, JRS Express, FedEx, Air21 and others. Though considered as the national operator, it has nearly captured an estimate of only 20% market share of which was dominated by these heavily-advertised firms (relative to Philpost). These competitors apparently offer same mail delivery services as Philpost but with innovations as part of their differentiation strategies. They have also achieved advantages in delivery time as some are operating on a next-day delivery. Such positioning strategies were employed effectively to combat the connotations of ‘snail mail’ in consumer’s perception.
Aside from the threats of competitors, issues of fraud in mail and packages handling were proliferating the news. Some incompetent employees are alleged to open mails and packages and steal money from these. Worst is that, these packages doesn’t even get delivered. These negative publicities tainted the immaculate image of Philpost adding to the burden of their decreasing market share.
ANALYSIS OF INTERNAL STRENGTHS AND WEAKNESSES
Philpost has been in the business of mail delivery for over a century and is the national operator in the Philippines. Their core competence is having the most extensive domestic acceptance, distribution, and delivery network—in every town, city, and in many barangays nationwide. They have worldwide mail linkages that enable them to send mail to any part of the world made possible through memberships in the Universal Postal Union (UPU) and the Asian Pacific Postal Union (APPU). Another competitive edge is its mail rate charges which is currently the cheapest in the local industry.
On the other hand, certain limitations were likewise present. Philpost was subsidized by the government before R.A. 7354 known as the Postal Service Act of 1992 was mandated, making it a self-sustaining government-owned corporation. Consequently, they have to shoulder all the finances they would need in funding their operations without the aid of the government. Problems in its financial areas are magnifying each year as posted by the constant net loss at the end of each year for the past six years beginning 2000-2005 except for 2004 (as to our latest information gathered). See exhibit below
Summary of net income from 2000-2005
The net losses were result of declining revenues to cover their national operations induced by electronic mails and other substitutes to traditional mail.
Because of these financial constraint and underperformance, Philpost is not able to allocate fund for advertising their products and services and to inform people of their status, which we deemed to be essential in an industry with a very strong competition among rivals. Aside from their website (which is not customer-friendly) and rare projects, they do not have other means of informing the public of their products and services.
Another consequence of insufficient sources of funds is their outdated facilities, products and services. It was just recently that they started their modernization program which are way far below what its competitors has already achieved making them the least modernized.
Current STP: Segmentation, Targeting and Positioning
Market Segmentation
Segmenting the market is one of the basic undertakings in business and yet one of the most critical and important steps in marketing. In market segmentation, businesses try to divide the large and heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that will match their unique needs (Kotler and Armstrong 2006). With this definition, a poorly segmented market would require one company to incur a large operating cost just to “delight” their customers and will be left with big unutilized potentials and an inefficient conduct of business. In addition to this, trying to cater the needs of everybody would sacrifice the competitive advantage of the company that they might earn in the future since accommodating all of their needs might result in a mediocre way of carrying out a business-which is not good. To wit, proper market segmentation is the first step to success.
Sadly, the Philippine Postal Corporation - popularly known as PHILPOST, was not able to fully utilize the importance of such business endeavor. PhilPost was not able to define clearly its market segment. The corporation wants to serve all of its possible customers in all areas of the country and throughout the world. Such venture nowadays would be somehow problematic since “no one can please everybody”. Technology is constantly changing, this would mean that a business entity should be able to adapt to such changes and maximize those to better serve their customers. This can’t be done without clear and proper market segmentation.
As of now, PhilPost segmented the market according to institutions as to whether they are part of the general mailing public (private individuals) or of the business institutions. This segmentation however is still big and can still be further segmented. For example, they can still segment the market by geography and demography in terms of their income brackets, family life-cycle, occupation and even generation. Doing so will make their promotional activities less costly and more concentrated to their target market.
PhilPost however was somehow successful upon including business institutions as part of its market segments. Maximizing the benefits that they could get out of this segment could bring a large profit into their corporation.
Targeting
The next step after clearly segmenting the market would be targeting which of these segments would be profitable for the business. As defined earlier, PhilPost segmented the market according to institutions. As manifested by their current services, they also chose these intuitions as their target market. PhilPost applies an undifferentiated way of targeting strategy wherein they ignore market segment differences and target the whole market with one offer. They focus more on what is common in their chosen segments rather than their differences and pattern their product (service) design and marketing program that will appeal to the largest number of consumers. However, this way of targeting strategy is somewhat doubtful in a sense that it is difficult to arrive at one marketing strategy that would satisfy all consumers. In addition to this, there have been some observations that mass marketers often have trouble competing with more focused firms that do a better job of satisfying the needs of specific segments.
Their current target consumers are identified as the following:
- The General Mailing Public
- Banks & Financial Institutions
- Telecommunications Companies
- Direct Marketing Companies
- Publishing Companies
- Insurance Companies
- Non-Government Organizations
- Hotels and Schools
- Government Institutions
- Manufacturing Companies
- Other Business Enterprises
Of these several business institutions, there is only one approach being applied – they just deliver what they need to deliver. Though it is somewhat understandable since what they are actually offering is not a tangible product but of service, yet it might also be appealing for their different customers to treat them differently as according to their expectations out of their service. Again, the way PhilPost targeted their market is somewhat blurry in a sense that they still would want to target/serve all of the possible customers.
Positioning
Positioning one’s product in the market is a very crucial venture since this would determine how you would want your product to be perceived by your target market – this will tell a lot out of your product and speak for it. PhilPost tries to position their product as fast, secured and low priced postal services. Various efforts such as their marketing slogan/tagline “Garantisadong Makakarating Agad” was introduced in the market. There are 1,000 new mail vans purchased to cater such attempt. The price they are offering in the market is relatively low as compared to their competitors such as LBC and Fedex. This is again to support their positioning in the market as low priced but high quality (in terms of service time/delivery) postal service.
PhilPost’s slogan in their website “Linking people across the country, around the world” would also tell something about how they really want to be positioned in the mind of its consumers. Again, they still want to pursue an undifferentiated marketing and target the entire possible consumer in the market – which is really cumbersome to do.
Below is a comparative Perceptual Positioning Map of three main couriers in the country.
As can be seen above, PhilPost tries to position itself at point B, characterized as low price and yet high quality service. However, the present consumer/target market doesn’t perceive PhilPost as such. PhilPost nowadays is negatively perceived and seen by most of the populace. It is as if that Philpost = snail mail = unsecured courier = inefficiency. A total of 1,763 reported complaints were received by the customer service Unit of Philpost, among of their reports are delayed delivery amounting to 538 cases and non receipt having 880 cases (PhilPost Annual Report 2001).
These incidents are direct contradiction on the way they would want to position themselves in the market. The 1,763 unsatisfied customers must not be perceived as is since for every unsatisfied customer would amount to a big reduction in possible customers in the future. It is also important to note that the data mentioned above does not include unreported cases. Achieving the corporation’s targeted positioning is in deed a great challenge to be faced.
Current 4Ps: Product, Price, Place and Promotion
Products
The conventional products and services offered by Philpost include the following. The products/services and their corresponding descriptions are lifted from the Philpost website ().
Domestic Mail Service
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Ordinary Mail - Includes all unrecorded mail items which are charged with the basic postage rate and delivered through the regular delivery channels.
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Business Mail- Mail items posted under permit issued, either1st, 2nd or 3rd Class Mail Permit, PCA Bulk Pre-Sorted, and Meter Permit, including those that are covered by Memoranda of Agreement, Contracts, and the like. Each item posted shall bear words "BUSINESS MAIL" and indicia pertaining to the permit granted, including Collect-On-Delivery (COD) Service.
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Registered Mail - Mails that are accorded special security, with the items recorded from acceptance to delivery to the addressee. As proof of delivery, the sender may attach a registry return receipt to be signed by the recipient at the time of delivery. The sender may restrict delivery by indicating the words "Delivered To Addressee Only" on the envelop.
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Domestic Express Mail Service (DEMS)- The fastest means of sending urgent messages, documents, or goods to the addressee within its service network. Generally, DEMS items are delivered within the following day from the date of mailing provided they are posted on or before the prescribed cut-off time.
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Priority Mail - Next-day delivery of unrecorded mails in Metro Manila and in selected cities and towns nationwide if posted on or before 3:00 PM, Monday to Friday. Priority mails are given priority handling once it entered the mailstream.
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Collect-on-Delivery Service (COD)- Mailable articles or merchandise including books, magazines, periodicals and other printed matters where the cost of the item will be paid by the addressee, can be sent by COD, where the amount due is collected from the addressee at the time of the delivery of the item and remitted to the sender. This service is available only at Post Offices with money order service.
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Fax Mail Service- An electronic mail service which provides the fastest means of transmission and delivery of written messages or documents. This service is available in major post offices nationwide.
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Domestic Parcel Service-A convenient means of sending non-perishable foodstuffs, handicrafts, and other merchandise to the addressees within the country. Parcels may be sent either by air or surface means.
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Business Reply Envelopes/Cards- Business reply cards and envelopes may be sent back without the prepayment of postage. Postage fee shall be paid by the permit holder upon delivery. Persons and companies interested to avail of this service can apply for a BRE permit at the Mail Permit Office of the Philpost Regional office concerned.
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Unaddressed Advertising Mail- This service offers to distribute at a minimum cost advertising and promotion materials, such as, brochures, flyers , catalogues, sales letters, including product samples to specific target areas of the country. UAMS items are not affixed with postage stamps and postal charges due thereon are collected at the time of posting.
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Address Check Service e- This service offers to validate and provide business entities, especially those involved in direct marketing, with the correct addresses of their customers within a locality, region, or nationwide at minimum cost.
International Mail Service
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Letter Post- Letters, cards, and other printed matters for delivery in any part of the world.
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International Express Mail Service (IEMS) -The fastest means of sending documents, goods and other time-sensitive items abroad. Currently, the Philippines has agreements with 50 countries for the reciprocal exchange of EMS items.
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Air Parcel Post-The most convenient and economical means of sending merchandise and other bulky items to foreign countries worldwide. Air parcels are transported to the country of destination by air.
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Surface Parcel Post- The cheapest means of sending parcels to foreign countries with which the Philippines has bilateral agreements. Otherwise, parcels may be sent only through intermediary of the United States of America. Surface parcels are transported to the country of destination by interocean vessels.
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Insured Parcel Post- Parcels with a maximum insured value of P5,000.00 may be accepted for delivery in selected foreign countries. At present this service is available only in Switzerland and USA.
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Registered Mail- Letter post items destined for foreign countries may be accepted as domestic registered mail subject to the same conditions as those of domestic mail.
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International Reply Coupon- International reply coupons are sold to postal customers for use in prepaying reply postage from other countries, present rate is P45.00 per coupon.
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International Postal Money Order- Available in the following countries only: Brunei Darussalam, Hongkong, Indonesia, Japan, Korea, Kuwait, Malaysia, Qatar, Singapore, Thailand, UAE, and USA.
New Postal Products with ICT
To cope with today’s fast-paced living conditions, Philpost has incorporated various communication technology innovations into its products and services so as to suit the needs of its customers in terms of prompt and immediate delivery of its services. The following are the revenue generating postal services utilizing information and communication technologies.
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E-Post Shops – These are 1000 post offices nationwide converted into business centers which primarily offers electronic services such as: (a) electronic postal tellering systems; (b) online money order/remittance system; (c) e-mail services; and (d) track and trace system.
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Electronic Postal Money Order (ePMO) – It incorporates the functions of banking institutions and Internet technology in the postal network as it offers real time and faster transmission with hassle-free identification procedures.
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Express Mail Track and Trace System (EMS) – It is an inquiry facility that allows customers to track the locations of their packages and express mails, both domestic and international. This is done through the aid of Short Messaging System (SMS). As a result, Text-Express Mail was launched in 2003 so that a mailer can inquire the location of his incoming international express mail through SMS.
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Hybrid Mail Services (HMS) – This service provides a faster way of dispatching customer mailings for business establishments, as Philpost utilizes both electronic systems and conventional postal services.
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On-Line Philately – This involves the selling of stamps through the internet.
Private Postal Station
Private individuals and ordinary citizens can also operate postal stations for business purposes. Operations of these stations are in accordance with guidelines handed out by Philpost. Private Postal Stations are classified into three (directly lifted from the website):
- Class A--Operated by private individual or firm and authorized to sell postage stamps and other postal products including the acceptance of recorded and unrecorded (ordinary) mails.
- Class B--Operated by private individual or firm and authorized to sell postage stamps and other postal products but limited to acceptance of ordinary mails.
- Class C--Operated by an educational institution (campus postal station) for the purpose of selling postage stamps and accepting ordinary mails only.
Price
The pricing of Philpost’s products and services depend mainly on location and the type of service availed.
Domestic Postage Rates
The following price rates apply for domestic postal services.
International Postage Rates
The following price rates apply for international postal services.
International Express Mail Service
The following price rates apply for international express mails.
Parcel Post Services
Prices for parcel post services depend on weight and mailing location. (See Appendix for parcel rates for different countries and weight of materials).
Place
The Philippine Postal Office extends its services to the various provinces in the country. As its competitive advantage over its direct and indirect competitors, it is able to cater to even the remotest and unprofitable areas. Such advantage of PHILPOST is made possible through its numerous postal outlets all over the Philippines. These offices are categorized as regular post offices (PO), extension offices (EO), satellite post offices, postal stations, and Barangay post offices (BPO) (Philippine Postal Office Annual Report, 2005).
In 2001 alone, the total number of postal network or outlets totaled to 3, 171. Of these, Region 4 had the highest number of regular post office followed by Region 6 with 171 post offices, and Regions 7 and 8 with 158 post offices each. Meanwhile, the least number of regular post offices was found in the National Capital Region (86) and CAR (95) (Philippine Postal Office Annual Report, 2001). (see table below for more details)
In terms of the number of Barangay Post Office, Region 12 had the greatest number of BPO followed by Regions 10 and 7 with 108 and 107 BPOs respectively. For the postal stations, NCR had the biggest number of Postal stations followed by Regions 4, 3, 11, and 5 with 20, 19, 16, and 15 postal stations respectively. On the other hand, Region 2 had only 1 postal station (Philippine Postal Office Annual Report, 2001).
However, in 2004, the number of PHILPOST ‘s postal outlets decreased to 2,665 postal outlets nationwide compared to 3,171 in 2001. Of the 2,665 postal outlets, 1,757 were regular post offices, 396 were postal stations, and 180 were Barangay Post Offices (Philippine Postal Office Annual Report, 2005). Two other postal outlet categories were added in this year such as extension offices at about 260 and satellite post offices at 68. Specifically, the greatest number of regular post office was in Region 4 with 219 regular post offices followed by Region 10 (163), Region 3 (156), and Region 6 (152). Meanwhile, the least number of regular post office was found in Regions 12 (78), 2 (81), NCR (85), and CAR (91) (Philippine Postal Office Annual Report, 2004).
In addition, in terms of Extension Post Office, Region 10 had the greatest number of EPO at 51 followed by Region 5 at 44. In terms of Satellite PO, only NCR and CAR had these kind of postal outlet. NCR had the greatest number of postal stations (Philippine Postal Office Annual Report, 2004). (see the table below for reference)
On to the latest update as of 2006, the number of PHILPOST’s postal outlets nationwide continued to decline. As of December 31, 2006, there are only 2, 399 postal outlets left all over the country. This time, Region 4 still has the highest number of regular post offices in the country at 170 followed by Region 7 at 153 and Region 3 at 137. Meanwhile, Region 12 has the least number of regular post offices. In terms of Extension post office, it is also Region 4 which has the highest number of EPO at 75 followed by Regions 1 and 10 at 57 and 54 EPOs respectively (Philippine Postal Office Annual Report, 2006).
It can be observed that as years pass by, the number of PHILPOST’s postal outlets continue to decrease.
They also have delivery vans which serve as a distribution channel for delivering mails and other packages. So far, they have more than 2, 500 mail delivery vans distributed all around the country to deliver mails and other packages to millions of Filipino households (Philippine Postal Office Website ).
Promotion
PHILPOST undertakes promotional strategies to make their target market aware of their product and services and to entice them to patronize or avail these products and services.
In the past years, PHILPOST had undertaken promotional strategies and in fact, some of these strategies are still employed nowadays by the PHILPOST marketing department.
In 2003, the Philippine Postal Corporation “entered into a memorandum of agreement with the Department of Tourism for the printing of WOW Philippines Postal Cards”. (directly lifted from the PHILPOST Annual Report, 2003). These cards are pre-paid and can be mailed to any part of the world. The card has eight designs which are the “Rice Terraces, Vigan Houses, Mayon Volcano, Taal Volcano, Boracay, Chocolate Hills, Palawan Underground River, and Philippine Eagle”. (directly lifted from the PHILPOST Annual Report, 2003).
Aside from WOW Philippines Postal Cards, they also launched a raffle promotion dubbed as “Pamasko sa Card at Selyo-Maghulog at Manalo” in partnership with Filstar Distribution Corporation. (Philippine Postal Office Annual Report, 2003) The said raffle promotion aimed to revitalize the art of sending Christmas cards during Christmas because PHILPOST believed that although the Philippines is the “texting capital of the world”, there is still no substitute for a more personal way of sending Christmas cards to loved ones. Also, they launched a promotional strategy that encouraged parishioners, students, and catholic organizations to send their love and prayers to the Holy Father, Pope John Paul II. In partnership with Hallmark, they published commemorative stamps for the occasion. (Philippine Postal Office Annual Report, 2005)
They also held International Year of the Eucharist National Commemorative Stamps Design Contest which was opened to elementary, high school, and college students, seminarians and professionals nationwide in partnership with the catholic Bishop’s Committee for International Eucharistic Congress (CBCP-PCIC). (Philippine Postal Office Annual Report, 2005)
They also sponsored the cycling Search Invitational Criterium Race held Intramuros, Manila on June 24, 2005. In addition, they launched a Valentine Service which offers delivery of flowers, greeting cards, chocolates, and other valentine gifts on the 13th and 14 of February. They dubbed this service as PAG-IBIG NG BULAKLAK NG MAYNIL A (Philippine Postal Office Annual Report, 2005). Other promotional strategies employed by PHILPOST are the following:
- GREAT SUMMER ESCAPADE- a nationwide photo contest which aims to promote various tourists attractions of the Philippines. The said contest also promotes the use of domestic express mail service in sending the entries. (directly lifted from Philippine Postal Office Annual Report, 2005)
- WOW PHILIPPINES POSTAL CARDS-Series 2- second series of the first WOW PHILIPPINES POSTAL CARDS launched in 2003 but this time, it features 10 tourist attractions in the country. (directly lifted from Philippine Postal Office Annual Report, 2005)
- “UNANG HAKBANG SA KABATAAN”-in support of the GMA 7 education advocacy program, Philpost donated 50,000 pieces of pencils that were distributed to different schools in the country. (directly lifted from Philippine Postal Office Annual Report, 2005)
- TURISMO SA KOREO, Boracay, Malay, Akalan- a symposium that aims to provide the image of Philpost in Boracay and to regain the confidence of the public, educate the participants on postal matters and to establish business rapport with tourism stakeholders and the community. (directly lifted from Philippine Postal Office Annual Report, 2005)
- EXPRESS MAIL MO-PANALO-a nationwide EMS raffle promotion where a customer gets a raffle ticket every time he sends a mail through the Express Mail Service. (directly lifted from Philippine Postal Office Annual Report, 2005)
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International Day Against Drug Abuse: BATANG PINOY LABAN SA DROGA-2ND NATIONAL PHILATELIC AND ART EXHIBIT-aims to highlight the corporate social responsibility of Philpost in supporting the government’s program on anti-drug (directly lifted from Philippine Postal Office Annual Report, 2005)
- EXPRESYONG PINOY NA PINOY-National Greeting Cards Design Contest-national contest on greeting cards design which is open to elementary, high school, and college students. This aims to gather artworks which could be used in the production of a new product line, the PHILPOST GREETING CARDS (directly lifted from Philippine Postal Office Annual Report, 2005)
- WORLD YEAR OF PHYSICS-2005 NATIONAL POSTAGE STAMPS DESIGN CONTEST-nationwide contest for elementary, high school, and college students wherein winning artworks will be featured in special stamps. (directly lifted from Philippine Postal Office Annual Report, 2005)
- UNWORKS@60-NATIONAL PHILATELIC AND PHOTOEXHIBIT- a philatelic and photo exhibit in tribute to the 60 years of the United Nations works in peace and justice, social, economic, and human development. (directly lifted from Philippine Postal Office Annual Report, 2005)
In an interview with ____________, she said that Philpost does not advertise in television, print, and other forms of media due to lack of funds or limited budget.
