Marketing at the Vanguard Group - July 20, 2004
Marketing Audit---> Measuring, Evaluating, Monitoring and Enhancing.....
The case tells us how Vanguard is doing well working with the competencies.
Situation at the hand
1. Market leader - Ranked first or second in the net cash flows for last 8 or 10 years
2. Low Cost
3. High Quality
4. Reliability and Reputation- Vanguard enjoyed a good reputation in highly cluttered market.
5. Increased Competition
6. High Operational Efficiency
Problems at the hand
1. Market Deregulation:- Market deregulation involved major financial industry such as commercial banks, investment banks and insurance companies to enter into one other's territory
2. Capital Market:- Capital markets are dynamic in nature and fluctutation is high
3. Higher redemption rates in institutional investor segment
4. US Market saturation
5. Less evolved Marketing strategy
6.Vanguard operates on operational efficiency rather than market efficiency- When advertised, it focus on the long term investment rather than current performance of its bonds
6. Vanguard followed a efficient balancescore card and dashboard for its operations but lacks marketing initiatives for growth oppurtunities.It should update its BSC and Dashboard according to marketing efficacy
7. They segmented their market with confidence in investment and find out the profile of each segment and they have the mind set of each segment.
8.They segmented their market according to their core competencies
9. The driver in a Corporate Dashboard is an output for marketing dashboard.
Leverage Strategy
.Low Cost High Performance Model
Exploit Opportunities
1. Special Marketing Campaigns for targeted customers
2. Exploit cooperation with brokerage and financial advisors
3. Become one shop for mutual funds and retain the existing customers.
4. Welcome active traders - a profitable segment
5. Offer new products and services that allow Vanguard to attain higher returns
Risks
1. Abrupt marketing efforts may hurt existing effective cost business model
2. Some customers may not like promotions as it doesnot go well with the image of Vangard- as low cost is its major brand equity
Action Plan
1. Focus on Core Competancy- Mutual Funds
2.Introduce attractive schemes for emerging mass affluent level segment( 50k - 1M ) Assets
3. Tie up with brokerages and financial advisors to attract new business
4. Build up the consensus and address concerns on the effectiveness of marketing within the company.Educate its various department on the marketing and implement marketing strategies at all levels.
5. Change the redemption aversion policy with the focus on investment retention policy
6. Pricing restructuring - Use of new customer's fund to pay for administrative costs of existing customers is completely flawed.
Aggressive Marketing
Do aggressive marketing otherwise competitors can take advantage of any loopholes in the strategy.
-> Use Customer care for advertising new products- Proactively solicit customers
-> Use recent performance and performance for last 10 years as a highlight in the marketing campaign.
-> Diversify portfolio
-> Enter into international markets and increase your market share as in Australia
-> Make use of target segments to segment the market according to segmentation..For instance targeting the segment that is less confident in going for financial services
-> Make use of technology to offer quality services online at lower cost.
-> Make use of proper technology to felicitate data collection and offer customized solution to the clients according to their needs and suggest appropriate investment solutions
Incremental Advertising :- Spending your revenues into marketing according to increase or decrease in sales
-> Budget allocation that allows for increased or decreased spending on media for advertising in direct proportion to sales. The problem with allocating funds in this manner is that rarely is budget size tied in with the advertising objectives and, therefore, it is difficult to evaluate the success or failure of the advertising in terms of expenditure
->Redemption rate is defined as return of client's principal before maturity.Some mutual fund companies attach a certain fee for redemption requests..
->Vanguard reorganized its activities into four client-service areas—full-service institutional,investment-only institutional, core retail, and high-net-worth retail
Other useful posts:-
1. http://knowledgeaction.blogspot.com/2008/05/analysis-of-marketing-at-vanguard-group.html
2. Check this out!!
Marketing Audit---> Measuring, Evaluating, Monitoring and Enhancing.....
The case tells us how Vanguard is doing well working with the competencies.
Situation at the hand
1. Market leader - Ranked first or second in the net cash flows for last 8 or 10 years
2. Low Cost
3. High Quality
4. Reliability and Reputation- Vanguard enjoyed a good reputation in highly cluttered market.
5. Increased Competition
6. High Operational Efficiency
Problems at the hand
1. Market Deregulation:- Market deregulation involved major financial industry such as commercial banks, investment banks and insurance companies to enter into one other's territory
2. Capital Market:- Capital markets are dynamic in nature and fluctutation is high
3. Higher redemption rates in institutional investor segment
4. US Market saturation
5. Less evolved Marketing strategy
6.Vanguard operates on operational efficiency rather than market efficiency- When advertised, it focus on the long term investment rather than current performance of its bonds
6. Vanguard followed a efficient balancescore card and dashboard for its operations but lacks marketing initiatives for growth oppurtunities.It should update its BSC and Dashboard according to marketing efficacy
7. They segmented their market with confidence in investment and find out the profile of each segment and they have the mind set of each segment.
8.They segmented their market according to their core competencies
9. The driver in a Corporate Dashboard is an output for marketing dashboard.
Leverage Strategy
.Low Cost High Performance Model
Exploit Opportunities
1. Special Marketing Campaigns for targeted customers
2. Exploit cooperation with brokerage and financial advisors
3. Become one shop for mutual funds and retain the existing customers.
4. Welcome active traders - a profitable segment
5. Offer new products and services that allow Vanguard to attain higher returns
Risks
1. Abrupt marketing efforts may hurt existing effective cost business model
2. Some customers may not like promotions as it doesnot go well with the image of Vangard- as low cost is its major brand equity
Action Plan
1. Focus on Core Competancy- Mutual Funds
2.Introduce attractive schemes for emerging mass affluent level segment( 50k - 1M ) Assets
3. Tie up with brokerages and financial advisors to attract new business
4. Build up the consensus and address concerns on the effectiveness of marketing within the company.Educate its various department on the marketing and implement marketing strategies at all levels.
5. Change the redemption aversion policy with the focus on investment retention policy
6. Pricing restructuring - Use of new customer's fund to pay for administrative costs of existing customers is completely flawed.
Aggressive Marketing
Do aggressive marketing otherwise competitors can take advantage of any loopholes in the strategy.
-> Use Customer care for advertising new products- Proactively solicit customers
-> Use recent performance and performance for last 10 years as a highlight in the marketing campaign.
-> Diversify portfolio
-> Enter into international markets and increase your market share as in Australia
-> Make use of target segments to segment the market according to segmentation..For instance targeting the segment that is less confident in going for financial services
-> Make use of technology to offer quality services online at lower cost.
-> Make use of proper technology to felicitate data collection and offer customized solution to the clients according to their needs and suggest appropriate investment solutions
Incremental Advertising :- Spending your revenues into marketing according to increase or decrease in sales
-> Budget allocation that allows for increased or decreased spending on media for advertising in direct proportion to sales. The problem with allocating funds in this manner is that rarely is budget size tied in with the advertising objectives and, therefore, it is difficult to evaluate the success or failure of the advertising in terms of expenditure
->Redemption rate is defined as return of client's principal before maturity.Some mutual fund companies attach a certain fee for redemption requests..
->Vanguard reorganized its activities into four client-service areas—full-service institutional,investment-only institutional, core retail, and high-net-worth retail
Other useful posts:-
1. http://knowledgeaction.blogspot.com/2008/05/analysis-of-marketing-at-vanguard-group.html
2. Check this out!!
