Charles Schwab & Co. Talk To Chuck Campaign

Submitted by:RAHUL CHANDA

160103106

U.S. FINANCIAL INDUSTRY OVERVIEW Compromised of three major sectors: Banking, Securities & Commodities, and Insurance Total client asset net worth of the industry is US$49 trillion Price competition intensive market due to evolution of Internet and Gramm-Leach-Bliley

Act,1999 Major players are:

Full Commission Brokers: Merill Lynch, Ameritrade Discount Brokers: Charles Schwab & Co, TD Waterhouse and E*Trade Mutual Fund houses: Fidelity

Shift in business of charging commissions on individual brokerages to service-based or asset management fees

BRIEF HISTORY ON CHARLES SCHWAB & CO

1971:

Charles Schwab & Co

is founde

d

1975:

Becomes the first

discount self-service brokerage firm

1983:

Acquired by

Bank of Americ

a

1987: Firm bought back from

Bank of Americ

a

1995: one million accoun

ts reache

d

1997:

Offered lowest equity trade price“King

of Online Brokers

”

1998: 2.2

million accoun

ts reache

d

2004: Broade

n busines

s throug

h Schwa

b Investo

r Service

s, Schwa

b Instituti

onal and US Trust

SCHWAB’S BUSINESSES

Schwab Investor Services• Served to

company’s retail investors

Schwab Institutional• Served

independent fee-based advisor firms

U.S. Trust• Served affluent

individuals, families and institutions

SCHWAB’S CLIENT SEGMENTATION

Investment

Attitudes:

Depends on self-

confidence on asset

management

Life Stage:Different

aged customers

have different financial

objectives

Investment Style:Depends on consumer’s receptivity

to risk

Hidden Assets:

Depends on the

investable assets of consumer

not invested in Schwab

PAIN POINTS

Client satisfaction gap

Excessive broker commission on

stock trades

Overwhelming mutual fund

selection options

Stock recommendation

-ion based on opinion

REASONS FOR DEVELOPMENT OF TTC CAMPAIGN

The firm performed poorly on Brand Asset Valuator (BAV) study

The brand scored low on differentiation since it was no more the leading-edge discount broker

Even brand relevance and esteem showed a declining trend

The company was out on customers

2000.5 2001 2001.5 2002 2002.5 2003 2003.5 2004 2004.5 2005 2005.56.6

6.8

7

7.2

7.4

7.6

7.8

8

8.2

Active Client Account(millions)

SCORES ON MOMENTUM & INNOVATION

11

73

16

Momentum%On the Way Up Company holding steadyOn the way down

10

67

23

Innovation%More Innovative than everInnovation holding steadyLess Innovative than it used to be

MARKET DETAILS

• Target Market• Mass Affluent• 35 – 54 years old• US$50,000 million to US$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 at least 1% of U.S. population• 6 cities- Chicago, Denver, Houston, Washington

D.C. , Phoenix & Dallas.• No headquarters on any company• Strong field sales presence• Match able from BDI/CDI perspective• Geographic dispersion• Demographic composition• Efficient and affordable Media

COPY STRATEGY

Consumer Benefit: Customers can directly connect to Chuck for any investment related advice at discounted brokers’ price

Reasons Why: Discount brokers offered little assistance beyond the execution of transaction, thereby creating confusion and dissent

Supporting Evidence: Chuck’s high level of involvement with field representatives to make sure they can sell Talk To Chuck well

Tone of Voice: Communicate Chuck’s core value and make field representatives build close relationship with the customers

Target: Target the 35-54 years age group with an investable amount of US$50000 to US$ 2 million and having a confident and financially concerned attitude

TTC TEST MARKET EFFECTIVENESS

• Test markets; Market received ads – Chicago, Denver, and Houston• Control markets; Washington, Phoenix and Dallas• All Test Markets received the same types of Marketing Mix and tests were conducted in both low sales and high

sales returns periods• Observations:

• 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• Schwab ranked in top 3 in all financial service companies• Schwab reported a 5 % Reduction in Customer Attrition between April - September 2005

WOULD YOU SUPPORT SAEGER’S TTC BUDGET REQUEST FOR 2006

Yes Reasons:

YoY growth: 6% on revenue 153% on net income

QoQ (IV) growth: 11% on revenue 253% on net income

THANK YOU