Charles Schwab

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Charles Schwab & Co., Inc.: The “Talk to Chuck” Advertising Campaign

1. What circumstances motivated development of the TTC campaign?

The Charles Schwab & Company was founded shortly after the U.S. SEC deregulated brokerage commissions in 1975. The company differentiated itself at the time by becoming a self-service brokerage house that put the power in investor’s hands to make critical decisions while paying up to 75% less than traditional brokerage firms. This established the brand as a trend setter, which it further cemented by becoming a technological leader in 1996 when it introduced an online trading platform. Schwab then began to further cut prices and offer financial services through three different market segments: retail storefront, fee-based advisor firms, and affluent customers. Schwab had built one of the most successful brokerage firms by sticking to his core competencies and offering a value to his customers while keeping fees down. The brand seemed untouchable, but as with any business enterprise the competition was fast on their heels.

The creation of “Talk to Chuck” campaign was motivated through a decline in the brand caused by three different factors: technology, competition, and mismanagement. During the dot com boom of the late 90’s technology was at the forefront of business growth. For the first time personal computers were financially attainable to the general public. Coupled with the widespread availability of fast networking systems, there was a relatively inexpensive entry point for competitors into the marketplace. Following the commoditization of basic brokerage trades due to the passing of the Gramm-Leach-Bliley Act, Schwab began losing its edge as the low cost leader of trades. Companies such as Ameritrade, E*Trade, and TD Waterhouse undercut Schwab’s low prices becoming the cost cutters of the segment. Schwab countered by offering financial services to differentiate themselves from that segment. In doing so Schwab further alienated themselves by becoming too expensive to be a low cost provider, while not offering the full array of the financial services that the full service brokerage houses provided. They were straying from their core competencies as a low cost brokerage house that offered value to its customers. Their pricing woes were further magnified with a discombobulated marketing approach. Accounts with several ad agencies led to a lack of a focused marketing approach. There were as many as six different major marketing campaigns occurring at once and none of them focused on branding the Schwab name. Furthermore Schwab was not effectively utilizing the vast amounts of data that were collected by these agencies.

Charles Schwab returned from retirement to facilitate a plan to restore the brand’s perceived value and hopefully regain valuable market share. All budgets were scrutinized and prices were cut. The marketing budget was cut by 3% from 2004 to 2005 when Chief Marketing Officer Becky Saeger felt that a reinvestment in a central brand-building campaign was necessary. Segmentation studies were conducted to refine their marketing approach and several ad agencies were brought in to compete for the sole branding voice.

2. Evaluate the company strategy behind the TTC campaign.

After losing a large portion of its market share to other discount brokerage firms like E*Trade and Ameritrade, Schwab found itself in a desperate situation. The Brand Asset Valuator (BAV) study conducted by Landor Associates explained a few of the possible reasons for this and pointed towards the declining trends in Schwab’s brand strength and stature. The strength of the Schwab brand had been hit the worst as the company was quickly losing its differentiating factors in the minds of its customers, who now saw the company as more of an expensive full-service broker rather than a discount broker. A further study by advertising agency Hill Holiday indicated that brokerage...
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