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Situation Analysis
Vanguard is a mutual funds company which sold mutual funds to customers interested in low cost, long term investing and is the industry's growth leader. In early 2003 Vanguard recognized the need to improve its customer management, consolidating disparate marketing function. They have also commissioned a major client segmentation study in order to identify potential new segments and devise new approaches to market more effectively in order to retain existing customers buy recognizing their needs. But some managers were in disorientation regarding the emphasis given on customer segmentation and suspected that it would complicate the company's operations and take away from its basics. But nevertheless the client segmentation is necessary as well feasible in the light of maturation of mutual fund market and the company's growth. The market is evolving with new competitors and after the careful analysis of their current customers the company realized that they must restructure its complete marketing strategy. Also they should target the most profitable customer segment in order to best serve them in order to leverage their competitive advantage which is low management fee and optimize the loyalty that their customers have demonstrated over the years
Vanguard needs to clearly define its offerings so as to avoid confusion among investors. Appropriate schemes for low cost offering as well as schemes for the mass affluent level have to be offered without any confusion among them. Despite being a small segment, the growth potential in the mass affluent level is tremendous. Targeting this relatively smaller share of market fits in with Vanguards tendency to focus very tightly. The under $1 Million marketplace is expensive to serve and Vanguards positioning will have to be tweaked to suit them. Similarly, while tweaking, both the categories can be addressed.
3. Was reorganization of Vanguard a right decision? Yes. - Brought about consolidation of operations - Centralized CRM - Offer extended services and cover all investment needs - Clear ownership and accountability for the objectives - Put focus on sales, marketing and managing the brand - Integrate the corporate dashboard and the marketing dashboard - Roll out proactive and direct marketing which increased the brand & ad awareness levels
Alternative Solutions
Introduce attractive schemes for emerging mass affluent level segment ($50K $1M assets) as well as for under $1 Million segment Tie-up with brokerage firms to attract new businesses Use aggressive marketing to create brand awareness, reach out to more consumers Update their website to include more information and offer more portfolio management services through it International expansion Restructuring of price