Charles Schwabb

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Questions:
1. What circumstances motivated development of the TTC campaign? In 1975, Schwab had entered the financial services market to ‘reshape the whole industry,’ entering as the first discount self-service brokerage firm to allow investors to manage their assets and make transactions without the help of a traditional broker. Schwab grew quickly and in just over 20 years, the company had set an industry-low equity trade price. After broadening their services, in 2004 Schwab had become the one of the largest financial services in the world. Although revenues were at their peak, the relationship between the company and its retail customers was beginning to slip, causing a decline in profitability and market share. In large part, this was because of the entry of other low-cost industry providers, Ameritrade, E*Trade, and others, while Schwab’s relative prices had increased. Because the company seemed to be out of touch with their customers and was also not acquiring as many new customers as hoped, Schwab was motivated to get back to its sincere routes with the development of the TTC campaign.

2. Analyze the advertising expenditures for retail brokerage firms found in Exhibit 5. Calculate the "share of voice (SOV)," the percentage of total category advertising expenditures, for each advertiser in 2004 and 2005. How does the Charles Schwab SOV compare to the Merrill Lynch SOV and Fidelity SOV? Why is the Fidelity SOV so much larger than Schwab while Merrill Lynch is so much smaller? In 2004, Share of Voice (SOV) calculations were as follows: Fidelity (8.86%), TD Waterhouse (5.57%), Charles Schwab (8.26%), E*Trade (2.79%), Merrill Lynch (1%), and others (64.29%). By 2005, Fidelity’s SOV had increased to 9.38%, TD Waterhouse’s had increased to 6.34%, Schwab’s had decreased to 6.26%, E*Trade’s had doubled to 6%, and Merrill Lynch’s had increased to 1.74%; all others in the industry accounted for a little over 70%. Schwab’s SOV fell in the middle of Merrill...
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