MARKETING - II
A REPORT ON
Merrill Lynch: Integrated Choice
Prof. Jayasimha K. R.
Integrated Choice is a bundle of product offerings by Merrill Lynch comprising of a continuum of products with self-directed products on one end and delegated products on the other. As per the needs, the clients could opt for a unit or a combination of the products at their own discretion.
The Following chart depicts the offering:
1. ML DIRECT
This was meant for those who wanted to invest online without seeking any advice from the consultant. The client was charged at the rate of $29.95 per equity trade. Other features of ML Direct are as under:
✓ Free access to ‘Proprietary’ – a Merrill Lynch’s research work and many other premier sources of information.
✓ Access to special discounts and bonus reward points through Cash Management Account (CMA), Visa Signature Card and Merrill Lynch’s e Shopping sites.
✓ Bill Management through company’s electronic bill payment service.
2. INVESTOR SERVICES
Under this, a representative could be accessed 24 hours a day, seven days a week – for information, advice and transaction via a toll free number. It also involved representatives contacting clients at designated intervals to serve any client needs. This service was available to both online as well as direct interface customers.
3. TRADITIONAL SERVICE
This implied traditional selection of products and services on a pay-as-you-go basis through brokerage commissions. Other services such as CMA, Checking Facilities and Visa Credit Cards were also available.
4. FEE BASED RELATIONSHIP
This was designed to deliver the ML value proposition to the mainstream clients through a core service and planning process. It was more of an unlimited advantage account in which the client received personalised service from a Financial Consultant, a Financial Foundation, Virtually unlimited trading, CMA, Check and bill payment and the like. While ML had offered asset priced products for individual investors as a part of its traditional offering, the scope of Unlimited Advantage and its value proposition was vastly different.
5. DISCRETIONARY SERVICE
The option of discretionary services was for those clients who wanted decisions made with the advice of a financial services consultant but wanted to minimize their involvement with investment decision making. Such clients received customised asset based pricing.
The Strategy of Merrill Lynch was to provide ‘Flexibility and More’ to their clients. Irrespective of the option chosen, the clients were given access to a wide range of products and services, including an extensive electronic shopping site. The crux of the strategy was to come up with a ‘Horizontally Integrated Offering’, catering to diverse client needs so as to give maximum value and capture maximum value from the client.
Implications of the Integrated Choice for Various Constituents
The various constituents for Merrill Lynch are Financial Consultants, clients and other employees.
a. Financial consultants
✓ With the use of internet it would be difficult for the financial consultants of Merrill Lynch because their sales force had been successful with traditional business model and were relative neophytes to the internet and its potential.
✓ Financial consultants could experience a near term decline in compensation (of 10-15%). So they were apprehensive of this program as they could earn easy money at competitor’s firm. However Merrill Lynch tackled this very nicely and told their financial consultants about long term gains. There were very few senior consultants who left...