Charles Schwab & Co

Inc: The Talk to Chuck

Advertising Campaign
About the company
Bank of America acquired Schwab & Co. at $57 million
Schwab management bought Schwab back at $280 million
The company went public
Reached Milestone of Millionth customer account
Online Trading Platform was launched
2.2 million clients were using the website
Equity trade price=$29.95 (industry low)
Company was declared-King of Online Brokers
Schwabs relative prices increased
Investor services, Institutional, U.S. Trust
7 million accounts, $1.2 trillion client base, $4.4 billion revenues, $725 million net income and 14,000 employees
Target Market
Mass Affluents
35 54 years old
$50,000 million to $2million investable asset
8% of U.S. population
20% of U.S. investors
Target market is confident and financially concerned
Test Market
26 markets with atleast 1% of U.S. population
6 cities- Chicago, Denver, Houston, Washington D.C. , Phoenix & Dallas.
No headquarters on any company
Strong field sales presence
Matchable from BDI/CDI perspective
Geographic dispersion
Demographic composition
Efficient and affordable Media
Company Analysis
What went wrong?
Deepening rift between company and its retail customers, decline in profitability and market
share
The companys relative price has increased; no longer perceived as low-cost service provider
Outcome of investigation:
Skewed client base: High touch is underweight, self-assured overweight
9% clients wanted lower commission fees
Unfavorable brand asset value: Differentiation factor missing
Paint points: excessive broker commission on stock trade, overwhelming mutual fund selection
option, stock recommendation on the basis of opinion rather than fact
Reasons for moving assets out of Schwab
Need for money for major purchases 21%
Wanted to invest less in stocks 12%
Change in personal situation 11%
Wanted lower commissions and fees 9%
Wanted more investment advice 8%
Way ahead strategies:
Re-invest in central brand building campaign
Position Schwab as company from which mass affluent investor 50,000$ to $2million
investable assets could comfortably seek reasonable priced advice fro long-term relationship
Emphasize approachability as brand equity
Q.1 Circumstances motivated
development of TTC campaign
Companys cut into online brokerage market share and transaction fees
Not providing good values to the clients company lost connection with customers
Company failed to do indifferent from other brokers
To increase revenue and market share
To reduce customer attrition
To increase competitiveness
(Exhibit 7) To increase brand equity and loyalty BAV reveals that there was a decline in
customer perceived differentiation
 Q.2 Evaluate company strategy behind the
TTC campaign
'Personifying' Chuck, The Company
Used all marketing touch points billboards, print ads, direct mail, online, sales training and television commercials
Used rotoscoping technique made actors animated and approachable
Scripted the actors to talk candidly about their relationships and paint points e.g. wisdom of paying high commission,
how to deal with low performing stocks
Approachability was the brand equity
To revitalize brand image to reinstate differentiation and regain position as the premier discount brokerage provider
via:
Renewing Brand Awareness, Brand Equity and Loyalty Growth Objectives Targeting mass affluence aged 35-54
To Launch an Advertising Campaign - TTC: using non-traditional forms of Marketing, such as the Rotoscope technique in
their TV ads:
Use of traditional forms of advertising such as billboard and print ads in more easily communicable formats
Non-traditional forms such as print ads in elevator trollies and on coffee sleeves
 Q.3 How effective was the TTC test
market? Evaluate the test results.
Test markets; Market received ads Chicago, Denver, and Houston

Control markets; Washington, Phoenix and Dallas

Consideration to open new accounts was majorly observed in Denver

Popularity and value for money perception are becoming more positive in Chicago

Brand awareness, correct offers and brand momentum was gained in Houston

Drastic increase in ad recallers for awareness, purchase consideration and company hearing a lot about.

Schwab ranked in top 3 in all financial service companies

The TTC Test Market had controls which adds credibitility

Tested markets where there wasnt a strong/solid customer base

Conducting the Test Market in both low sales and high sales returns periods

All Test Markets received the same types of Marketing Mix

Exhibit 1: Return On Equity ratio increased by 16%

Schwab reported a 5 % Reduction in Customer Attrition between April - September 2005

Exhibit 9a, 9b, 11

 Q.4 Would you support Saegers TTC
budget request for 2006
2000 sales rep instead of competitors 14000

11% increase in new accounts

105% increase in net new assets

Growing popularity, and increase in momentum

Curtails attrition in 6 months by 5%

Effectively communicated Chuck's core values

Favourable Test Market results

Call center customer contacts and field sales activity were increased

Investment in a successful Advertising Campaign would continue to Improve and Maintain Brand equity

The benefits that could result from advertising or marketing investments

Marketing indices are pointed in the right direction (Exhibit 9a, 9b)

Thus to continue with the same momentum and high potential in US market ads investment amount should be approved