In light of an evolving market, faced with new competitors, and after a careful analysis of their current customers, the Vanguard Group (hereinafter referred to as “Vanguard”) realizes it must rethink its entire marketing strategy. However, in order to protect and leverage their competitive advantage, which is their low management fees, and to optimize the loyalty that their customers continuously demonstrate toward their organization, they must now target the most profitable segment for them, and develop the best way to serve and delight these customers.
• Low fees strategy;
• Consistently above average performance and competitiveness of the majority of Vanguard funds (Exhibit 2);
• Quality driven corporate culture;
• One of the highest loyalty scores in the industry, with a redemption rate under the industry average; and
• Good reputation.
• Low brand and advertising awareness;
• Under-exploited customer database;
• Vanguard sees marketing strictly as an expense, rather than a long-term investment;
• Website is geared towards providing information instead of selling Vanguard products; and
• Excessively low fee pricing policy doesn’t allow higher revenues when they perform better.
• 80 to 90% of Vanguard clients have funds in other organizations;
• Investment opportunities with pension plan members to offer them additional services (cross-over), as well as to reinvest their pension plan earnings after they retire (roll-over);
• Competitors are fleeing the under one (1) million dollar segment, which represents 8.9 million households;
• New opportunities for online transactions, which are low cost; and
• Brokerage firms would be willing to sell Vanguard products in exchange of a fee/commission.
• Two (2) major competitors in the below one (1) million dollar market (Vanguard’s relevant market segment), which are Fidelity... [continues]
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