Charles Schwab & Co., Inc.

Talk to Chuck Advertising Campaign

Adeyemi Makanjuola Conrad Parnell Maria Mangones

OUTLINE
A. B.

Case Objectives Introduction

C.
D.

Industry Background: Charles Schwab & Company

The Talk to Chuck Advertising Campaign

Marketing at Swab - Client Segmentation

Measuring Loyalty - A Declining Brand

Talk to Chuck - Designing the TTC Test - Reviewing the Results

E. F. G.

SWOT Analysis Financial Information Conclusion & Recommendations

CASE OBJECTIVES:

To effectively evaluate the advertising campaign of Talk to Chuck for Charles Schwab Corporation

To discuss case objectives and message strategy by providing marketing recommendations

THE CHARLES SCHWAB CORPORATION

Established in 1971 by Charles R. Chuck Schwab as a traditional, brick and mortar brokerage firm and investment newsletter publisher.

May 1, 1975, the company became the first discount self service brokerage firm to allow investors to manage their assets and make transactions without the help of traditional brokerages.
In 1983, Bank of America acquired Schwab for $ 57 million , but merely four years later, Schwab Corporation managed a buy back for 280 million and thereafter went public. By 2004, Schwab offered a range of services in three sectors: Schwab Investor, Schwab Institutional, and US Trust. Schwab decided to return as CEO to replace David Pottruck.

MARKETING AT SCHWAB

Mid 2004, Chuck began reengineering the company by implementing 341 million in annualized cost reductions against an expense base of approximately 3.3 billion. As a result, Schwab trimmed down 508 million, representing a 15 % cut. Becky Saeger, previously head of marketing at Visa , joined the corporation. She oversaw Schwabs marketing organization , which evolved by 2006. The company priced its brokerage services too high which restricted customer access to research and information according to customer transaction volume.

4 Approaches to its U. S. retail customers

1. 2. 3. 4.

Investment Attitudes Life Stage Invest Style Hidden Assets

Results: Any Schwab client could placed into one of the segments in each of the four classifications. Schwabs client base was underweighted in the high touch segment and overweighed in the self assured segment.

CLIENT SEGMENTATION

MEASURING LOYALTY

Net New Assets = new assets deposited assets withdrawn Market share was declining Most frequently reason for moving assets out of Schwab:

Need money for major purchases Wanted to invest less in stocks Change in personal situation Wanted lower commissions and fees Wanted more investment advise

21% 12% 11% 9% 8%

Price reduction, by 2005 assets withdrawn were migrating in

similar percentage when compared to other competitors

A Declining Brand

Brand Asset Valuator (BAV) study Schwabs perceived differentiation declined 2002 2004

Study of Brokerage Customers by Hill Holiday

MOMENTUM

Company on the way up Company holding steady Company on the way down

11% 73% 16%

INNOVATION

More innovative than ever Innovation holding steady Less innovative than it use to be

10% 67% 23%

TALK TO CHUCK

TALK TO CHUCK

Advertising Account, competition between 4 agencies Euro RSCG: Volvo and Nestle are part of their clients Fifth-largest global advertising agency Euro RSCGs Objective: To exploit the satisfaction gap & broaden the brand beyond the discount brokerage arena. To target mass-affluent: 35-54 years old investors with $50,000 to $2 million investable assets To build a long term relationship with customers

Pitch Meeting: Talk to Chuck Tag Line Mr. Chuck work Ethics and Attitude. Euro RSCG proposed to communicate chucks core values Campaign : Original Roots ( chucks Era of running company)

Campaign Ads

TTC TEST
Designing the TTC Test Test Marketing

Goal: to measure campaign success by tracking net new assets and the number of new households investing with Schwab.

Reform: the need to reach their growth objective by prioritizing on customers. 2005 brand budget spent on Tests

26 markets were selected with at least 1% of the us population. Criteria for Cities: BDI/CDI
perspective and Strong field sales presence

3 Test Markets: Chicago, Denver and Houston (accounted for 6% of Schwabs invested asset) Considered a high concentration of $250,000 portfolio markets with efficient &affordable

media

Chucks Work Ethics: Visited Test Site to speak to Schwab field representative to make sure they were comfortable with the campaign. I talked to chuck today and I can talk to him tomorrow

Test Review

Consumer Attitudes Consumer rates Additional Tracking Consumer who recalled vs. Nonrecallers (+6 points) Unique alternative (+5points) Gaining ground (+7points)

Ranking of Financial Services Companies Based on Response to National Consumer Tracking Survey

THE CHARLES SCHWAB CORP

Financial data in U.S. Dollars Values in Millions (Except for per share items) Income Statement - 10 Year Summary (in Millions) TOTAL NET INCOME 454.0 787.0 1,230.0 1,120.0 891.0 634.0 350.0 476.0 149.0 106.0

SALES 12/10 12/09 12/08 12/07 12/06 12/05 12/04 12/03 12/02 12/01 4,176.0 4,116.0 5,117.0 4,865.0 4,164.0 3,474.0 3,277.0 3,750.0 3,815.0 4,158.0

EBIT 779.0 1,276.0 2,028.0 1,853.0 1,476.0 1,027.0 547.0 717.0 249.0 177.0

DEPRECIATION 146.0 159.0 152.0 156.0 157.0 179.0 197.0 277.0 309.0 394.0

EPS 0.38 0.68 1.06 0.92 0.69 0.48 0.26 0.35 0.11 0.08

SWOT ANALYSIS
Strengths: Diversified product range Brand image, Mr. Chuck Customer focus Opportunities: Ageing population may increase Diversification of portfolios Curtailing Attrition

Weakness Poor leadership (David Pottruck) Poor strategic planning Declined perceived customer value

Threats: Economy Matching capabilities from competitors

Conclusion and Recommendations

Focus on customers and create more value Maintain brand image and core values of the company Invest in advertising and increase marketing budget Promote growth by targeting current clients