Short Range Drone Based Services: Soaring into the Future of Hyperlocal Delivery

Assignment Taken

Marketing Plan and Brand Journey Projection for Establishing Short Range Drone Based Services

Case Understanding

The courier company has a strong presence in India. The company has decided to venture into the hyperlocal delivery space using drones. This new venture, called "Short Range Drone Based Services" (SRDBS), will focus on short-range deliveries. The company has conducted successful test deliveries and is confident that SRDBS can be profitable. The goals of the SRDBS division are to achieve break-even within the first year of operations, establish the SRDBS brand as a leader in the drone delivery market, and continuously innovate in processes and products to maintain its competitive edge. The company has allocated a budget of Rs. 10 crores for the SRDBS division for the financial year 2023-2024. This budget will be used to cover the costs of drones, drone operators, management team, software, software development team, and support staff. The marketing strategy for SRDBS is to be focussed on highlighting the benefits of SRDBS to end users, offering faster delivery times, and a more environmentally friendly option than traditional delivery methods. The target audiences are the businesses likely to benefit from its services, such as food delivery companies, pharmaceutical companies, and retailers. By implementing a well-crafted marketing strategy and brand journey projection, the division can achieve its goals and become a leader in the drone delivery market.

BCS Solution Summary

The solution outlines a marketing plan and brand journey projection for implementing short-range drone-based services (SRDBS) in South Kolkata for food, pharmaceutical, and local delivery. The estimated market demand and break-even points for each sector are calculated based on costs, pricing, and potential repeat customers. The plan includes a SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. The PESTEL analysis is done to understand the potential business landscape. The marketing strategy involves content marketing, social media marketing, SEO, public relations, partnerships, and a referral program. A brand journey projection for the first year is detailed month-wise for the first year, covering planning, brand launch, partnerships, customer acquisition, brand reinforcement, innovation, and continuous growth and expansion. Porter's Five Forces analysis is done to complement the brand projection. Overall, the plan aims to establish a strong presence in the emerging drone delivery market, leveraging the company's reputation, experienced management team, and strategic marketing initiatives.

Solution

Total Budget for the Plan for the financial year 2023-24: 10 Crore

Considering, there are only 4 short-range drones, the company can target penetrating into South Kolkata due to the population density of the region, level of traffic congestion in the region, availability of landing pads for drones, and regulatory environment for drone delivery and it will be much helpful for companies to make the last mile delivery hassle-free within the region.

Also, a few pharmacy chains eyeing drone delivery options for their day-to-day delivery operation at Kolkata [1]. The budget plan for the short-range drone-based services is given in the PDF named Solution 1.

The total marketing budget is estimated to be Rs. 100,00,000. The focus of the target customers is currently on the B2B market, another 40 Lakhs has been invested in B2C to start promoting the services in a small scale, and once the break even is achieved and B2B becomes profitable, B2C can be taken forward with more aggresive marketing and promotional opportunties. The marketing budget plan is for illustrative purposes based on the secondary data available on the internet and thorough market analysis to be conducted for the accurate budget values.

The estimated total number of food delivery companies, pharmaceutical companies and local delivery companies present in South Kolkata that needs drone delivery services is 15 namely food delivery companies like F4U FOODFORU FRESH FOOD DELIVERY, Roopa's Cuisine - Home Delivery Food Service, Agarwal's Food Delivery, Food Home Delivery Services, FooDoo Home Delivery, then Pharmaceutical companies like Sanvi Pharmaceuticals, A. B. Roy's Pharmaceutical, Gena Pharmaceuticals Limited, East India Pharmaceuticals, G. D. PHARMACEUTICALS PVT. LTD. Finally local delivery companies like Overseas Courier Service, Garudavega International Courier Service, City Courier Service, International courier, and New Super Fast Courier.

Estimation of Total Market Demand:

The total number of target customers are 15.

The Total Market demand for a service is the total volume that would be bought by defined customer groups in a defined geographical area in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort.

• Q = total market demand
• n = number of companies buying the drone delivery services
• q = quantity of number of times person buying the services per year
• p = price of the service

The total market demand would vary for food delivery businesses, pharmaceutical businesses and local delivery businesses.

As per the budget sheet provided in the PDF named Solution 1,

In Year 1 as company is looking for break even in first year of operations, Fixed cost= Rs 3832000 Variable Cost= Rs 6168000, Investment Required= Rs 10,000,000

Total Cost for year 1 = Rs 38,32,000+ Rs 61,68,000= Rs 10,000,000

The total estimated number of target customers in year 1 will buy services in the website (100% as there are only 15 companies which is sufficient for the penetration) = 15

• Fixed Cost per hour = 3832000/8766 = Rs 437 (1 Year = 8766 Hours)
• Variable Cost per hour = 6168000/8766 = Rs 704 (1 Year = 8766 Hours)
• Total cost per hour= 10000000/8766 = Rs 1141 (1 Year = 8766 Hours)
• Variable cost per hour per customer = Rs 704/15 = Rs 47

As per the current market scenario and price charged by the competitors, the price charged for the drone delivery services categorized for food delivery businesses, pharmaceutical businesses, and local delivery businesses is Rs 1200, Rs 2000, and Rs 1500 per hour respectively(Initially the business may be in loss but with the expansion and acquisition of more companies, company is expected to reach its break even within a year). The price has been set in such a way as to cover extra costs including of training costs, IT infrastructure costs, etc and prices charged by the competitors. The other factors affecting the pricing strategy are distance of the delivery where for the longer the distance, the more expensive the delivery will be. This is because drones have a limited range and will need to refuel more often if they are flying long distances. The comes weight of the package where the heavier the package, the more expensive the delivery will be. This is because drones have a limited payload capacity and will be able to carry fewer packages if they are carrying heavier items. And lastly, type of business where the type of business that is requesting the delivery can also affect the price. For example, pharmaceutical companies may be willing to pay more for drone delivery than food delivery companies, as drone delivery can help to ensure that medications are delivered quickly and safely.

BEP(break-even point) and Total Market Demand Calculation in South Kolkata

1. For Food delivery:

   BEP simply shows that all the costs have been covered.

   BEP = Fixed cost per hour / (Price per hour per customer – variable cost per hour per customer) = 437/ (1200-47) = 0.379 which signifies that the company will be in profit even after covering all the costs. So, from the start, 5 companies can overall ensure good prospect and company will be profitable after a year.

   A study by Zipline, a drone delivery company, found that 73% of customers who tried drone delivery once were likely to use it again. Let us assume that out of total target customers, there are an average of 70% repeat customers buying at least twice.

   Total Market Demand in South Kolkata every hour= 4*1200*(2*0.7+1*0.3)= Rs 8160 (4 companies out of 5 are considered in the analysis because of the limitations of only four short range drones given in the case and every hour, maximum four companies can be allocated four different drones)

2. For Pharmacy delivery:

   BEP simply shows that all the costs have been covered.

   BEP = Fixed cost per hour / (Price per hour per customer – variable cost per hour per customer) = 437/ (2000-47) = 0.224 which signifies that the company will be in profit even after covering all the costs. So, from the start, 5 companies can overall ensure good prospect and company will be profitable after a year.

   A study by Zipline, a drone delivery company, found that 73% of customers who tried drone delivery once were likely to use it again. Let us assume that out of total target customers, there are an average of 70% repeat customers buying atleast twice.

   Total Market Demand in South Kolkata every hour= 4*2000*(2*0.7+1*0.3)= Rs 13600 (4 companies out of 5 are considered in the analysis because of the limitations of only four short range drones given in the case and every hour, maximum four companies can be allocated four different drones)

3. For local delivery:

   BEP simply shows that all the costs have been covered.

   BEP = Fixed cost per hour / (Price per hour per customer – variable cost per hour per customer) = 437/ (1500-47) = 0.301 which signifies that the company will be in profit even after covering all the costs. So, from the start, 5 companies can overall ensure good prospect and company will be profitable after a year.

   A study by Zipline, a drone delivery company, found that 73% of customers who tried drone delivery once were likely to use it again. Let us assume that out of the total target customers, there are an average of 70% repeat customers buying at least twice.

   Total Market Demand in South Kolkata every hour= 4*1500*(2*0.7+1*0.3)= Rs 10,200 (4 companies out of 5 are considered in the analysis because of the limitations of only four short range drones given in the case and every hour, maximum four companies can be allocated four different drones)

Situation Analysis (SWOT Analysis)

Strengths of the company

• Strong brand reputation and established presence in India
• Successful test deliveries demonstrate feasibility and viability and approval from DGCA
• Experienced management team with expertise in logistics and technology

Weaknesses

• New venture in a relatively new market
• Limited awareness of SRDBS among potential customers at South Kolkata
• Regulatory concerns surrounding drone operations

Opportunities

• Growing demand for hyperlocal delivery services and pharmaceutical delivery services at South Kolkata
• Increasing adoption of drone technology for commercial applications

Threats

• Competition from other drone delivery companies like Zipline, Wing, Matternet, Flytrex etc.
• Regulatory changes that could restrict drone operations
• Technological advancements that could render current drone models obsolete

Marketing Strategy for Short Range Drone Based Services (SRDBS) keeping into consideration the above SWOT analysis:

The marketing objectives for SRDBS are to:

• Achieve increasing brand awareness and recognition among target audiences
• Generating leads and inquiries from potential customers based on the booking services
• Drive sales and adoption of SRDBS services at South Kolkata and later expand it to other regions when the company will be having adequate resources to cater to the demand of the market

PESTEL Analysis

1. Political Factors
   • Government regulations: The established courier company will need to comply with government regulations related to drone operations, such as airspace restrictions and safety requirements as per the DGCA rules. These regulations may change in the future, which could impact the company's business to a greater extent.
   • Taxation: The company will be subject to taxes on its profits and on the use of drones. The government may change tax rates in the future, which could impact the profitability of the company.


2. Economic Factors
   • Inflation: Inflation can increase the input costs for the company, such as drone parts and labor when the company would look for expansion. This could impact the company's profitability.
   • Economic growth: Economic growth can increase demand for the company's services, as businesses as potential customers have more disposable income. This could benefit the company's profitability.


3. Social Factors
   • Public perception of drones: The public's perception of drones can impact the company's ability to operate its business in the long term. If the public is concerned about the safety or security of drones, it may be difficult for the company to obtain the necessary permits and approvals to operate. Hence, an innovative approach in running the business is crucial.
   • Environmental concerns: Though as mentioned before that drones might help to curb the emissions to a greater extent but the company's use of drones may be subject to environmental concerns, such as noise pollution and bird strikes. The company will need to take steps to mitigate these concerns in order to maintain its social license to operate.


4. Technological Factors
   • Advances in drone technology: Technological advances in drone technology can benefit the company by improving the efficiency and reliability of its services from a long term perspective. However, these advances can also create new competitors for the company. So proper competitor analysis and innovative environment is required.
   • Cybersecurity: The company's drone systems may be vulnerable to cybersecurity attacks. The company will need to take steps to protect its systems from cyberattacks in order to protect its data and its reputation.
5. Legal Factors
   • Intellectual property: The company may need to protect its intellectual property, such as its drone designs and software. This could involve patents, copyrights, or trademarks.
   • Data privacy: The company will need to comply with data privacy laws and regulations. This could involve obtaining user consent before collecting data and taking steps to protect user data from unauthorized access.

Marketing Strategies

1. Content Marketing
   • The company has to create informative blog posts, articles, and infographics that educate potential customers about the benefits of SRDBS including that of shorter delivery times and reducing the environmental footprint to achieve 2030 SDG goals.
   • Engaging videos needs to be produced that demonstrate the capabilities, USP, efficiency of drone delivery and how it will be useful for them in the area of their operations like now we are considering South Kolkata area


2. Social Media Marketing to enhance reach
   • Establishing a strong presence on social media platforms like Facebook, Twitter, LinkedIn, and Instagram which businesses usually follow and will be helpful to expand the business in other regions in India and sharing engaging content that highlights the benefits of SRDBS and promotes the brand.
   • Engage with potential customers by responding to comments and messages promptly which enhances good image in the minds of the customers


3. Search Engine Optimization (SEO)
   • Optimizing website content and landing pages for relevant keywords related to drone delivery and hyperlocal services at South Kolkata
   • Submit the website to search engine directories and local listings like justdial, sulekha, indiamart etc.


4. Public Relations (PR)
   • Monthly press releases have to be issued announcing new developments, partnerships, and customer success stories to enhance brand image
   • Participating in various industry events and conferences to network with potential customers and partners who will be interested in enhancing operational responsiveness, and looking to achieve zero carbon emissions


5. Partnerships
   • Collaboration with complementary businesses, such as food delivery platforms or pharmaceutical companies, to cross-promote services.
   • Partner with local influential leaders who can promote the services offered as well build trust on the local businesses
   • Working with technology companies to develop innovative drone delivery solutions to cater to the competition from competitors who are established or potential competitors


6. Referral Program
   • Implementing a referral program that rewards existing customers for bringing in new business-like offering incentives, such as discounts or free services, to encourage referrals.
   • The success of the marketing campaign will be evaluated based on website traffic and user engagement, number of leads generated and inquiries received, sales and revenue generated and customer retention.

Brand Journey Projection for Next 1 Year(Further Projections Might be Carried Out Depending on the Competitive Landscape and Innovation Opportunities and the PESTEL Analysis Described Above)

1. Month 1: Planning and Development: Laying the foundation for SRDBS(Short Range Drone Based Services) by establishing a clear brand identity, defining a target audience, and developing a comprehensive marketing plan.

   Necessary Activities to be Carried Out:

   • Conducting thorough market research to understand the competitive landscape and identifying potential customer segments. Initially they can penetrate the South Kolkata market and further perform the market research to penetrate other markets
   • Developing a comprehensive marketing plan outlining strategies for brand awareness, customer acquisition, and retention.


2. Month 2: Brand Launch and Awareness: Generating initial brand awareness and excitement for SRDBS through targeted marketing campaigns.

   Necessary Activities to be Carried Out:

   • Launch a dedicated SRDBS website apart from the usual website used for courier operations showcasing the service's benefits and highlighting successful test deliveries.
   • Utilizing the social media platforms to engage with potential customers, sharing informative content and engaging posts.


3. Month 3: Partnerships and Pilot Programs: Establishing strategic partnerships with potential customers and initiating pilot programs to demonstrate SRDBS capabilities.

   Necessary Activities to be Carried Out:

   • Identifying key businesses in target market, such as food delivery, pharmaceuticals, and local delivery companies.
   • Approaching potential partners with tailored proposals highlighting the benefits of SRDBS for their specific needs.
   • Initiating pilot programs with selected partners to showcase the effectiveness and efficiency of SRDBS


4. Month 4: Customer Acquisition and Expansion: Now it’s the time to expand SRDBS's customer base by actively acquiring new clients and expanding service coverage.

   Necessary Activities to be Carried Out:

   • Engaging in direct promotions, showcasing SRDBS's capabilities and addressing potential customer concerns.
   • Expanding service coverage to additional geographic areas based on demand and operational feasibility.


5. Month 5: Brand Reinforcement and Innovation: Reinforcement of SRDBS's brand positioning and maintaining a competitive edge through continuous innovation.

   Necessary Activities to be Carried Out:

   • Monitoring of brand perception through surveys and customer feedback to identify areas for improvement. Tools like sentiment analysis can be used for the same.
   • Continuously innovate in processes and products to maintain a competitive edge and address evolving customer needs and through collaboration with technology companies to develop technological innovation


6. Month 6-12: Continuous Growth and Expansion: Maintaining a steady growth trajectory by expanding service offerings, refining operational efficiency, and strengthening brand recognition.

   Necessary Activities to be Carried Out:

   • Introduction of new SRDBS offerings based on market demand and customer feedback. Optimization of operational processes is required to improve delivery times and cost reduction.
   • Continuation of brand reinforcement efforts through targeted marketing campaigns and industry engagement and partnerships with influential leaders in the penetrated market.

Porters Five Forces Analysis to Complement Brand Projection:

1. Threat of new entrants:

   Moderate to Low: The barrier to entry for new entrants into the drone delivery market is moderate to low. Though there are several established players, but company's strong brand and track record could give it an advantage.

2. Bargaining power of suppliers :

   Moderate: The company could also develop its own drones. The company could also switch to a different supplier if necessary.

3. Bargaining power of buyers :

   Moderate: The bargaining power of buyers is moderate. The company's target customers are businesses that are likely to benefit from its services, such as food delivery companies, pharmaceutical companies, and retailers. They have several delivery options but drone delivery service could offer them several advantages, such as faster delivery times and a more environmentally friendly option.

4. Threat of substitute products or services:

   Low: The threat of substitute products or services is low. There are a number of existing delivery options, but drone delivery has the potential to offer a number of advantages over traditional delivery methods, such as faster delivery times and a more environmentally friendly option. But in future, things might change, so continual innovation is required.

5. Competitive rivalry :

   Moderate: The level of competitive rivalry in the drone delivery services market is moderate. Though there are several established players, but company's strong brand and track record could give it an advantage.

References

1. https://www.linkedin.com/posts/kolkata-it-hub_technology-pharmacy-drone-activity-7065301405313503232-1hGH/
2. Drone Delivery Market Size & Growth Report - 2033 - Fact.MR: https://www.factmr.com/report/commercial-drones-market
3. Drone Pharmacy Delivery Market Size & Growth Report - 2033 - Fact.MR: https://www.factmr.com/report/drone-pharmacy-delivery-market
4. 12 Drone Delivery Companies to Know | Built In: https://www.linkedin.com/pulse/2023-ranking-top-drone-delivery-companies-drone-industry-insights-3kiae?trk=article-ssr-frontend-pulse_more-articles_related-content-card
5. Drone Delivery: Benefits, Use Cases, & Retailer Examples - Insider Intelligence: https://www.insiderintelligence.com
6. Drone Delivery: Benefits, Use Cases, & Retailer Examples: https://thenextweb.com/news/amazon-drone-delivery-out-of-stealth-and-the-future-is-skyward
7. Innovative marketing strategies for the successful construction of drone food delivery services: Merging TAM with TPB: https://ideausher.com/blog/courier-app/how-to-start-drone-courier-delivery-business/
8. Marketing and brand strategy to make logistics easy via Drone deliveries: https://www.slideshare.net/ColinSnow/drone-delivery-bythenumbers
9. Global Drone Delivery Services Market Size, Trend & Outlook by 2033 | 2022 | Report by Market Insights Reports: https://www.linkedin.com/pulse/drone-delivery-market-insights-research-report-2023-2030-vz6he?trk=article-ssr-frontend-pulse_more-articles_related-content-card
10. https://www.snsinsider.com/reports/delivery-drone-market-1123#:~:text=The%20Delivery%20Drone%20Market%20size,during%20the%20period%202023%2D2030.
11. https://www.linkedin.com/pulse/five-steps-success-using-drones-enterprise-paul-pocialik/
12. https://dronedj.com/2020/09/15/50-million-in-series-b-for-volansi-inc-and-its-vtol-drones/
13. https://blog.hubspot.com/marketing/product-launch-checklist
14. https://smallbusinessbc.ca/article/how-to-identify-partnership-opportunities-for-your-business/
15. https://www.devicemagic.com/blog/step-by-step-guide-to-running-a-pilot-program/
16. https://www.productmarketingalliance.com/7-strategies-for-new-customer-acquisition-in-2023/
17. https://www.indeed.com/career-advice/career-development/expanding-into-new-markets
18. https://www.frontify.com/en/blog/brand-perception/
19. https://www.linkedin.com/pulse/comprehensive-business-innovation-guide-2021-beyond-eugen/
20. https://growthidea.co.uk/blog/8-sustainable-business-growth-strategies-you-can-use
21. https://vera.staff.unri.ac.id/files/2015/11/Cost-Accounting-A-Managerial-Emphasis-by-Horngren-Datar-Rajan-14th-Global-Edition.pdf
22. https://www.mordorintelligence.com/industry-reports/delivery-drones-market
23. https://www.verifiedmarketresearch.com/product/delivery-drones-market/

Conclusion

In conclusion, the venture into the hyperlocal delivery space using drones, known as Short Range Drone Based Services (SRDBS), has a great opportunity for a strategic move for the courier company to capitalize on the growing demand for efficient and innovative delivery solutions as well as ensure zero carbon emissions in daily operations to meet 2030 SDG goals. The proposed focus on South Kolkata, driven by factors such as population density, traffic congestion, landing pad availability, and regulatory environment, indicates a good market entry strategy. By targeting food delivery, pharmaceutical, and local delivery companies in the region, the company will tap into a diverse market with considerable demand for drone-based services. The estimated marketing budget of Rs. 10,000,000 reflects a commitment to creating awareness and promoting the benefits of SRDBS in the B2B market, emphasizing faster delivery times and environmental sustainability. The estimation of market demand for each sector – food delivery, pharmaceuticals, and local delivery – provides a clear understanding of the potential customer base and revenue opportunity for the company. The calculations for break-even points and total market demand in South Kolkata showcase a realistic and profitable outlook, especially considering the assumed repeat customer rate based on Zipline's findings. The SWOT analysis identifies the company's strengths, such as a strong brand reputation and successful test deliveries, while acknowledging weaknesses, including limited awareness and regulatory concerns. The company recognizes opportunities in the growing demand for hyperlocal and pharmaceutical delivery services but is mindful of potential threats from competitors and regulatory changes in the Indian market. The marketing strategy outlined for SRDBS(Short Range Drone Based Services) covers content marketing, social media engagement, SEO, public relations, partnerships, and a referral program. These strategies are tailored to address the specific challenges and opportunities identified in the SWOT analysis, aiming to build brand awareness, generate leads, and drive sales. After that, the brand journey projection for the next year provides a roadmap for planning, launching, and expanding SRDBS for the next one year. The Porter's Five Forces Analysis is provided to complement the brand projection. In essence, the courier company's venture into drone-based hyperlocal delivery services appears well-founded, provided that the calculations created in this solution are just for the illustrative purpose based on the secondary data available on the internet and require thorough market analysis from the company, strategic budget allocation, and a comprehensive marketing plan. The success of SRDBS will hinge on effective execution, adaptability to market dynamics, and the ability to deliver on the promises outlined in this detailed plan.

Attached File Details

View Attachment file (Solution 1.pdf)