Talk to Chuck Advertising Campaign - Assignment Example

The paper 'Talk to Chuck Advertising Campaign' is a wonderful example of a Business Assignment. Customers in the brokerage industry have faced a number of challenges. Charles Schwab & Co., Inc was not immune to these challenges. For instance, the company grappled with the perceived differentiation which went down to about 66%. This also affected the Company’s relevance which also went down by a margin of 40%. The data analysis representing these changes is available in appendix 1. Another key motivator for the TTC campaign was the brand name that began losing its credibility. This was complicated by its diminishing profitability and market shares as well as growing doubt about its brand by its customers. It is described that the Company erred when it decided to restrict the amount of information customers could obtain and this further complicated its transactions thus need for the TTC campaign.

• Evaluate the company strategy behind the TTC campaign.

For the sake of the existence of the Company as well as trying to save it from the issues discussed above, new campaign was officially launched by Schwab where investors aggrieved were given opportunity to have a talk with Chuck. One of the key elements of the Company’s strategy was to focus on its strong point. That is, the age group chosen (35-54) was the baseline of its investment, and trying to reach out for these ages could ultimately save when most of its competitors were escalating their budget on the same (see appendix 2). Another way the campaign regained its position was through focussing on unsure and high touch segments of people who invested in it thus making Charles Schwab approachable and ‘Mr. Fix-It All’ in front of investors (see appendix 3 for campaign strategy and responsibility allocations)

• How effective was the TTC test market? Evaluate the results.

Basing on popular market reaction, the campaign was a success. After the end of the TTC test campaign, comparative analyses on clients’ assessment pitted the Company at a place where one could get good value for money, a good source of information as well as a place where to get a substitute account opening among others (Exhibit 7). Other notable changes included field sales, call centers, and customer contacts. In terms of data results, fresh accounts escalated by an average of 111% and with a lift of 98% on the already existing households. There was also a remarkable increase in net new assets that stood at about 205%. The ultimate effectiveness of the TTC test on the market was done through the above metrics.

• Would you support Saeger’s TTC budget request for 2006?

The budget estimate as presented is strongly recommended and I would give it a go-ahead. The $200 million fits well with the marketing budget for the year. This support follows an increase in the TTC campaign affairs such as new assets (increased by 10%) and revenue increases. Looking at the figure cited, approximately 50 million will be used in the TTC campaign which is actually a realistic figure. As also seen, there is an increase in marketing expenditure in 2005 which has already been approved (figure rose from $160-198). This brings the confidence that new incomes and assets in 2006 will be enough to allow the expansion of the budget to the quoted figure ($200 million) (see appendix 4)

APPENDIXES

Appendix 1:

Appendix 2: U.S. Advertising Expenditures for Retail Brokerage Firms, 2004-2005($ millions)

 

Top Advertisers                                2004 ($)          2005 ($)                      % Difference

 

Fidelity Investments                          $89                  $108                            21

TD Waterhouse                                    56                      73                            30

Charles Schwab                                   83                       72                           -31

E*Trade Securitites, Inc.                     28                        69                          146    

Merrill Lynch                                       10                         20                         100

All other brands                                 740                       809                            9

            Category Total                      1,005                    1,151                          15

Source: Adapted from case writer from Competitrack/company documents

Appendix 4: Selected Financial and Operating Data for Schwab 2001-2005

           

Year Ended December 31

2005

2004

2003

2002

2001

 

 

 

 

 

 

Results of Operations (In millions except as noted)

 

 

 

 

 

Revenues

 

 

 

 

 

Asset Based and other  revenues

       3,685.0

       3,117.0

       2,706.0

       2,603.0

       2,685.0

Trading Revenue

           779.0

       1,025.0

       1,190.0

       1,341.0

       1,383.0

Total Revenue

       4,464.0

       4,202.0

       3,896.0

       3,944.0

       4,068.0

 

 

 

 

 

 

Expenses

 

 

 

 

 

Compensation and Benefits

       1,902.0

       1,877.0

       1,685.0

       1,846.0

       1,895.0

Occupancy and Equipment

           331.0

           389.0

           430.0

           456.0

           470.0

Professional Services

           253.0

           245.0

           175.0

           172.0

           196.0

Depreciation and Amortization

           208.0

           226.0

           277.0

           317.0

           331.0

Communications

           192.0

           223.0

           228.0

           256.0

           331.0

Advertisement and Marketing Development

           179.0

           184.0

           139.0

           208.0

           243.0

Restructuring Charges

             17.0

           214.0

             76.0

           358.0

           402.0

Impairment Charges

                  -  

                  -  

                5.0

             37.0

                  -  

Other

           198.0

           199.0

           184.0

             45.0

             73.0

Total Expenses excluding Interest

       3,279.0

       3,557.0

       3,179.0

       3,695.0

       3,941.0

Income from continuing Operations

           730.0

           414.0

           476.0

           149.0

             75.0

Net Income

           725.0

           286.0

           472.0

           109.0

           199.0

Basic earnings per share

                0.6

                0.2

                0.4

                0.1

                0.1

Dividends declared per common share

                0.1

                0.1

                0.1

                0.0

                0.0

Performance Measures

 

 

 

 

 

Revenue Growth

                0.1

                0.1

             (0.0)

             (0.0)

             (0.2)

Pretax profit

                0.3

                0.2

                0.2

                0.1

                0.0

Return on stockholders’ equity

                0.2

                0.1

                0.1

                0.0

                0.1

financial condition at year end

 

 

 

 

 

Total Schwabs assets

     47,351.0

     47,133.0

     45,866.0

     39,705.0

     40,464.0

Long-term debt

           514.0

           585.0

           772.0

           642.0

           730.0

Stock holders’ equity

       4,450.0

       4,386.0

       4,461.0

       4,011.0

       4,163.0

Client information (at the yearend)

 

 

 

 

 

Client assets under management(billions)

       1,199.0

       1,081.0

           967.0

           765.0

           846.0

Net new clients accounts (millions)

             75.0

             50.3

             56.2

             47.6

             73.6

Active clients’ accounts (billions)

                7.1

                7.3

                7.5

                8.0

                7.8

independent investment advisor clients asset (Billions)

           406.0

           348.0

           287.0

           222.0

           235.0

independent investment client account (thousands)

       1,413.0

       1,316.0

       1,239.0

       1,182.0

       1,082.0

number of domestic offices

           328.0

           273.0

           376.0

           422.0

           429.0

Daily average revenue trades (thousands)

           198.0

           156.0

           141.0

           134.0

           160.0

Average revenue  earned per traded

             15.6

             26.3

             34.1

             37.8

             35.0

Accounts that traded during the year (millions)

                2.7

                2.7

                2.7

                2.9

                3.0

Employee information

 

 

 

 

 

Full-time equivalent employees (at year end, thousands)

             14.0

             14.2

             16.0

             16.4

             19.2

Revenue per average full time equivalent employees thousands)

           323.0

           269.0

           245.0

           214.0

           183.0

 

 

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