Letter Volume Demand Analysis

Diversified Specifics possess extensive econometric modelling experience in the following fields:

• Domestic Small & Large Letter Volume Segments;
• International Letter Categories;
• Parcels and Express Parcels.

Our models focus on the underlying characteristics of mail to result in a series of segmented mathematical functions that can be used to explain and/or forecast volume fluctuations and allow your postal organisation to:

Explain important trends: Today’s postal environment is a dynamic one where the traditional demand drivers (economic growth, price and service quality) are being challenged by increasing degrees of letter volume substitution, rationalisation and competition.

Our models specify the demand drivers, their elasticities and provide driver rankings in order of statistical importance to make robust assessments regarding the degree to which fluctuations in certain variables have historically affected differing letter volume categories;

Formulate policy: Our models provide management with superior information channels designed to stimulate volumes by targeting specific product segments given an understanding of quantifiable historical elasticities; &

Forecast: When forecasting with our econometric models you can be confident that the results generated are the product of an increasingly scientific environment that alleviates your reliance upon gut feel predictions.

Our demand modeling process involves:

• Econometrically modeling segmented letter volume demand;
• Statistically substantiating & quantifying the intuitive beliefs of Postal Authorities pertaining to social, transactional and promotional letter volume fluctuations;
• Highlighting the relationships and underlying historical trends in letter volume fluctuations;
• Letter volume forecasting at an aggregate and segmented level; and
• Investigating the degrees of letter volume substitution, rationalisation and competition.

Practical examples:

Examples of how Diversified Specifics demand based research has been used include:

• Enhancing Australia Post’s strategic planning ability via facilitating an understanding of the factors driving letter volume demand whilst also generating increasingly reliable forecasts.
• For an example of how our research has been employed by Australia Post see http://www.majormailusers.com.au/learned.cfm?paperid=00000039
• Providing empirical evidence that was included in Australia Post’s submission to the Australian Competition and Consumer Commission (ACCC) for an increase in letter prices. See http://www.majormailusers.com.au/upload/Final_decision.pdf with the crucial finding on page 70; &
• Providing evidence to assist Parliamentary members in question time (Work undertaken by Diversified Specifics has been mentioned in the Australian Senate).

To arrange a meeting with one of our econometric postal demand experts email us at postal_demand@diversifiedspecifics.com.au.