Charles Schwab & Co. Inc: The ‘Talk to Chuck’ Advertising Campaign
Integrated Marketing Communication Charles Schwab & Co. Inc: The ‘Talk to Chuck’ Advertising CampaignGroup 3ShwetaZachariaKernRachitaSwarooparani
Problem StatementTo reconnect with Self-directed and Unsure investors by demonstrating that we understoodtheir unique issues and concerns, and again position Charles Schwab as an approachableand understanding place where investors can get the respect they deserve.What went wrong at Charles Schwab & Co.?In 2003-04, the Board noticed: A deepening rift between the company and its retail customers, which was causing a decline in profitability and market share. The company’s relative prices had increased- it was no longer perceived as the low- cost industry provider and a provider of good value.Investigation by the company revealed: Skewed client base- Schwab used different approaches to segment its customers and accordingly suggested appropriate marketing initiatives as per the profile. However, it was discovered that on the ‘investment attitude’ parameter, Schwab’s client base was underweighted in the high-touch segment and over-weighted in the self-assured segment. 9% of clients wanted lower commissions and fees- One of the most important reasons cited by clients for moving assets out of Schwab was that they wanted lower commissions and fees. Assets withdrawn by clients were migrating to its competitors. Unfavourable Brand Asset Value- Schwab’s perceived differentiation had declined considerably. It looked less like a leading-edge discount broker and more like a full- service broker. Pain Points- The pain points included excessive broker commission on stock trades, overwhelming mutual fund selection options, and stock recommendations based on opinion rather than fact. There was client satisfaction gap with both individual brokers and the industry as a whole.Why did this happen? Faulty brand advertising- The Company’s brand advertising had been haphazard. The emphasis had been on creating direct-mail and e-mail for specific products and services. At one point, it had six major marketing campaigns running simultaneously. Multiple advertising agencies- It was using multiple advertising agencies that were tripping over each other. Improper handling of data- It was collecting enormous amount of data, but wasn’t using it strategically. High prices- It had priced its brokerage services too high vis-à-vis its low-cost competitors. Erroneous approach to customer education- The Company had erred by restricting customer access to research and information according to a customer’s transaction volume.
What needed to be done? Brand-building initiatives would have to play a role in driving future growth and brand revitalization. Thus, there was an urgent need to reinvest in a central brand- building campaign. The advertising goal was to position Schwab as a company from which ‘mass- affluent’ investors could comfortably seek reasonably priced advice that could be the basis for a long-term relationship. They wanted to emphasize “approachability” as brand equity to differentiate Schwab from competing brands.How was it done? An advertising agency- Euro RSCG, decided to try to leverage Chuck the man by casting that informality more broadly to Chuck the company. It proposed a new tagline- ‘Talk to Chuck’ which contrasted with the formality of traditional Wall Street advertising. The corporate brand marketing budget was $16 million. The company decided to spend almost the entire budget on test marketing. This was needed to justify a higher level of funding. Chicago, Denver and Houston were selected as test markets. The test ran from April 2005 through September 2005. Chuck himself got involved in the test.What were the results? On most measures, consumers rated Schwab more favourably in the test markets as the campaign progressed. The company had a 5% reduction in attrition in six months between April and September. Both call-centre customer contacts and field-sales activities increased. There was a 6% increase in revenue from year-end 2004 to 2005 and 153% increase in net-income for the same period. Net new assets increased by 10% over the previous month.Should the company maintain a steady level of spending or increasethe investment for the campaign?The company should increase the investment for the campaign.