Fred Smith conceived of an overnight delivery service and started “Federal Express” in 1973. By then, UPS had already been in business for 65 years, but it was primarily a ground delivery service in the United States. A little known fact is that UPS offered “Blue Label” air express service even before Federal Express got its start. But, as Mike Brewster says in his book Driving Change, Federal Express boasted “an innovative business model that would ultimately redefine the airfreight industry, encroach on UPS’s core businesses, and force UPS to rethink fundamental strategic assumptions.”

According to Brewster, UPS wasn’t particularly concerned about Federal Express in its early years, because it didn’t directly compete with UPS’s ground service. The problem was that Federal Express identified a market that was much larger than anyone anticipated, including UPS. Brewster says: “By the early 1980s, customers were beginning to ask UPS drivers and sales professionals why UPS wasn’t offering next day delivery. UPS, a company that had built its reputation and name on the high standards of its service, had been outplayed at its own game.” UPS did eventually respond to the challenge. Like its competitors, UPS today offers worldwide overnight delivery.

DHL’s story is quite different. Founded in the United States in 1969, the company quickly became known for international door-to-door service in the Pacific Basin. Even as Federal Express was starting to grow its business in the 1970s, DHL was expanding to Europe, Latin America, the Middle East, and Africa. DHL was the first to bring air express to the Eastern Bloc countries in 1983 and the People’s Republic of China in 1986. In 2003, DHL acquired Airborne, another air delivery service. Now, with the deep pockets of its parent company, Deutsche Post World Net (Germany’s private postal service), DHL is fast becoming a formidable competitor.

So how do these brands compete on the global marketing stage? Federal Express, officially re-branded FedEx, has adopted a naming strategy, complete with color coding that distinctly segments its services. While “Fed” always appears in corporate purple, “Ex” changes colors based on the service; for example, in “FedEx Express,” the company’s core overnight delivery service, “Ex” and “Express” are orange, while in “FedEx Ground,” the service that most directly competes with UPS, “Ex” and “Ground” are green.

In brand advertising, FedEx became widely known for its defining 1980s slogan, “When it absolutely, positively has to get there overnight.” Currently, the company uses “Relax, it’s FedEx” as an overall theme. FedEx tends to take a humorous approach to advertising; its television ad featuring a prehistoric shipper who gets fired for not using FedEx (even though it didn’t exist yet) won a Bronze Lion at the Cannes Advertising Festival.

The UPS brand tends to be positioned in a more business-like manner. The positioning theme, “What Can Brown Do for You?” capitalizes on the UPS brown trucks and drivers’ uniforms. A current television advertising campaign utilizes a whiteboard to demonstrate in simple terms some of UPS’s service offerings, many of which reflect the company’s use of innovative technology. A sophisticated interactive online experience accompanies the advertising.

DHL, with its bold yellow and red corporate colors, initiated a major marketing campaign about two years ago with the pitch, “Competition. Great for you. Bad for them.” While some advertisers shy away from attacking their rivals by name, DHL did exactly that. Some television ads showed DHL drivers and trucks out-maneuvering FedEx and UPS. Obviously, DHL believed acknowledging its two larger competitors created an opportunity for the upstart brand to be seen as a credible third member of the pack. DHL has moved into the next phase of its branding campaign with current advertising that focuses on superior customer service.

According to BusinessWeek, DHL had about 40 percent market share in both Europe and Asia, but only 7 percent market share in the US before it launched the campaign. Overall awareness of DHL by its target customers in the US is today at 60 percent, according to BtoBOnline.com.

All three companies know their business audience well. They each use print ads that target business readers, business-focused online media, and television advertising placed during sports events. Each company also has relationships with major sports. FedEx has a significant NFL sponsorship this year, as well as deals with the NBA, NASCAR, and the PGA, according to BtoBOnline.com. UPS sponsors car racing organizations NASCAR and NHRA. DHL leverages its sponsorship agreement with Major League Baseball for advertising and promotion.

Which brand delivers? While FedEx and UPS are better known, it was DHL that won “the Great Package Race” of 2007. The Supply Chain & Logistics Institute of Georgia Institute of Technology sponsored a contest in which all three competitors were given packages to deliver to five obscure worldwide locations, such as Apia, the only city on Upulu, a Samoan island with no street addresses. The “race” was held on April 13, 2007 and the companies were not aware they were competing. According to the Institute, DHL was able to deliver three out of the five packages successfully (including the package to Apia). FedEx and UPS each successfully delivered one of the five packages.

It remains to be seen which of the three competitors will win the Great Branding Race of 2007.

(Source: Interbrand)