Charles Schwab

& Co
SANCHITA BOHRA I017
AKSHIT GUPTA I022
VAIBHAV KALRA I029
SUMIT SINGH I
SHIVAM TOMAR G059
AKASH TRIPATHI
 INDUSTRY OVERVIEW
 In 2004, US financial services industry comprised three major industries –
banking, securities and commodities, insurance
 It was a $356 billion industry in 2004
 Two kinds of brokers in the market – discount and full-service brokers
Major players in the market - Ameritrade, Schwab, E*Trade, Fidelity Investments,
and Merrill Lynch..
 Noteworthy happenings : Passage of Gram- Leach Bliley Act in November 1999
 Emergence of Internet and personal computers
Company OVERVIEW

 Charles Schwab & Company charged as much as 75% less per stock transaction
than brokerage firms.
 In 1995, it reached the milestone of opening of its millionth customer account
 Three major business divisions – Schwab Investor Services, Schwab Institutional,
US Trust
 In July 2004, Schwab’s position as the low-cost industry provider had been
 trumped by Ameritrade, E*Trade, TD Waterhouse
Marketing at Schwab

 Mistakes
 The company had priced its brokerage services too high against its
low-cost competitors and on the other hand restricted customer
access to research and information
 Creating direct-mail and e-mail campaigns for specific products
and services with minimal and inconsistent investments in
corporate brand advertising
 Using multiple advertising agencies that were tripping over each
other
Challenges
 Until 2004, the company’s brand advertising had been haphazard
 Schwab’s top competitors were increasing their marketing budgets, and
on the other hand Schwab was reducing their corporate brand
marketing budget
 Most marketing expenditures were channeled through the business
units
 Saeger had a tough task of convincing executives to reinvest again in a
central brand-building campaign
Client Segmentation
1 Investment attitudes
Self confidence levels regarding their ability or manage or
delegate asset decisions

2 Life stage
Financial objectives and risks according to age

3 Investment style
According to mix of assets and investments, finding consumers
receptivity to risk

4 Hidden assets
Schwab consumers investable assets that were not invested
at Schwab.

Any Schwab client could be placed into one of the segments in

each of the four classifications, and their combined profile would
suggest the appropriate marketing initiatives.
Segmenting Schwab client base
according to different Investment
Attitudes

Schwab’s client base was underweighted in the high-touch segment and

overweighed in the self-assured segment.

Schwab market researchers commissioned segmentation studies of sub segments to

guide communications that might further deepen Schwab’s customer relationships

Conversion rates for offers mailed for each

subsegment were tracked closely, and marketing budget allocations were fine-tuned
based on the
results.
 Measuring Loyalty
If a company’s share of net new assets did not match the overall growth of net new
assets for the industry, its market share is declining.

A 2005 survey of Schwab clients found the most frequently cited reasons for moving
assets out of Schwab:

- Needed money for major purchases(21%)

- Wanted to invest less in stocks(12%)
- Changed in personal situation(11%)
- Wanted lower commissions and fees(9%)
- Wanted more investment advice(8%)
 A Declining Brand
Brand Asset Valuator(BAV) study

• Differentiation and relevance were considered measurements of brand strength

• Esteem and knowledge are the measurements of brand stature.
• A 2004 Survey on Momentum and Innovation Results were:
Innovation
• More innovative than ever 10%
• Innovation holding steady 67%
• Less innovative than it used to be 23%
Momentum
• Company on the way up 11%
• Company holding steady 73%
• Company on the way down 76%