Modelling the Demand for Postal Products

Background

Postal markets, in the UK and across the world, have experienced significant changes over recent years. Letter volumes have declined in the face of electronic substitution, markets have been opened up to create greater competition, and the definition of what is meant by the Universal Service Obligation and how that is delivered under evolving market conditions has been the topic of some debate.

Against this backdrop, businesses are facing new choices when considering how to communicate with their customers and suppliers. Communication by letter remains important, but the options available for sending letters have changed as the market has evolved. Postal providers therefore have an ongoing need to update their insight into the factors underpinning the choices that business customers make between different products.

Goals

RAND Europe, in collaboration with Accent, are conducting research to gain a more detailed understanding of how business customers choose between different letter products under current, and a range of possible future, market conditions.

Methodology

Discrete Choice Experiments are being used to explore how a range of product attributes influence business managers’ decisions of how to assign postal volumes across products. This includes products that may be offered by Royal Mail and products that may be offered by other providers within the market. By varying both price and other product characteristics it will be possible to estimate models to provide insight into the influence that a range of factors have on sending decisions. The models will also examine whether there are differences in behaviour between customer types, and will help identify the likely impact that could follow from changes in the products that are available.

Project Team

Peter Burge
Hui Lu
Charlene Rohr

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