Free Essay

Marketing at Vanguard

In: Business and Management

Submitted By varianceteetee
Words 668
Pages 3
What segment of customers to go after?
As a mutual fund industry's growth leader, Vanguard has targeted customers seeking low cost and long-term investing in mutual funds. Vanguard is interested in gaining long -term rather than short- term investors. Vanguard stands out from many of its competitors because it views the market by focusing just on one particular service and being better at it than its competitors. Vanguard's philosophy is about staying focused on who they are and what they are good at rather than trying to be everything to the customer.

Facing competition and market climate changes, Vanguard must now decide which segment of customers to go after and develop the best way to serve these customers, in order to keep and leverage their competitive advantage. We think Vanguard should continue with the current strategy to focus on servicing the under one million segment and providing the custom what they want. Because, the under one million segment represents over $6 trillion in potential investment dollars. Gaining 10% market share in this segment will provide for much needed growth. Specifically, Vanguard should focus on the Strivers and the Complacent Independents. Although the Strivers have limited income and holdings, their willingness to improve their situation leads us to think that the expected profitability and return on investment are high.

How to advertise to current customer/new customer?
Before, advertising and direct marketing was not a key interest to Vanguard. With competitors becoming full service financial companies Vanguard now has the increasing needs of taking control of its brand awareness. However Vanguard encountered concern of spending money on advertising and direct marketing. Since most of Vanguard’s existing customers, especially loyal customers are satisfied with Vanguard’s less advertising strategy. In other words, Vanguards low-cost position in the industry conflicts with money spent used on advertising.

To solve this dilemma, we suggest Vanguard to take different strategies to current customer and new customer. They need to concentrate on their current clients, deepen the relationship with them by focusing on client communication, customer service and technology improvement, while trying to attract new clients through mass advertising and direct marketing.

1. No mass advertising to current customer, focus on customer service and technology improvement.

Vanguard has one of the highest loyalty scores in the industry, with a redemption rate under the industry average and good reputation. The current customers are more approachable to market to and also easier to gather information on. Therefore, no mass advertising is need. Instead, Vanguard can use Internet to promote its product and improve customer service. For example, Vanguard can send out emails to targeted customers to promote its products. Meanwhile, Vanguard should enhance customer service and improve the client communication with current customer by developing a website to lower the transaction costs, and to best serve the customers that prefer to do transactions online. Using all available technologies to educate the consumers, and broaden their reach to attract new business is vital to the customers. The beauty of technology improvement is that the easier it is to use and navigate, the more likely the same client will be to explore additional options such as trying new investment vehicles with the click of a mouse.

2. Direct marketing on non-customers and turn them into future customer:

Although spending money on adverting might seem conflict with Vanguard’s low cost strategy, advertising will benefit Vanguard in the long run. Because advertising will be attracting new customers, which will then provide more profits to use for advertising and direct marketing. Therefore Vanguard should use mass advertising to inform the potential customers about Vanguard’s brand. Specifically, Vanguard can apply commercials as a tool for advertising for new customers.

By using commercials as a key tool for advertising, Vanguard can keep its reputation by emphasizing its low cost advantage over its competitors and previously high performance. Vanguard's philosophy and commercial message will stand out amongst other competitors that focus on advertising its specific products offered. Hence, attract more new customers.

Similar Documents

Premium Essay

Marketing at the Vanguard Gro

...Background: The Vanguard Group, one the most successful and profitable U.S. mutual fund providers, has been accustomed to success for decades. By 2002, the Vanguard Group boasted mutual fund assets totaling $557 billion, which accounted for 10% of the U.S. mutual fund market. Vanguard offered low-cost, long-term investing options and a consistently superior product line as compared to its competitors. By emphasizing its long-term investment strategy, Vanguard was able to outperform 88% of its competitors in the Money Market Funds, Bond Funds, Balanced Funds and Stock Funds markets combined over a 10-year period from 1992-2002. In 2002, Vanguard’s costs were 0.26% of assets, compared with an industry average of 1.36%. Such reliable returns and operational efficiency helped make Vanguard a world-class company seemingly destined to become the world’s largest mutual fund group. Challenge: Market Climate Change: In 2002, a climate shift started to take place as investment markets weakened and competition expanded. Between 2000 and 2002, the average mutual fund return was -33.7%. Also, the financial services deregulation had enabled the three largest segments of the financial services industry (commercial banks, investment banks, and insurance companies) to enter one another’s line of business. Companies like Citigroup and Merrill jumped at the opportunity to become a one-stop, full-service financial firm. Clear statement of strategies: To make sure that Vanguard is able to......

Words: 1479 - Pages: 6

Premium Essay

Vanguard Case

...| Marketing the Vanguard Group | Marketing 532 | | Karen Garcia | 11/29/2011 | | Executive Summary Vanguard group is a Mutual Funds sales company who specializes in offering low cost and long-term investments. Sixty percent of their assets are held by retail consumers, and the remaining forty percent is held by institutions through corporate retirement plans. In 2003, although Vanguard had one of the lowest operating costs in the industry as a percent of average net assets, the firm also experienced a significant amount of churn, or customer loss. To address strategic issues such as maintaining a low cost structure, customer churn, and profitability across target markets. The firm implemented a reorganization plan which measured quantitative as well as qualitative aspects in their operations. Metric system tools were put in place to measure how the firm operated in the different business segments they serviced. A special emphasis was placed in how marketing efforts should be concentrated to increase growth, how value propositions could be improved, and how costs could be minimized without sacrificing service and product qualities. Service Description Vanguard group provided low-cost long-term mutual fund investments to consumers. Although the two major business categories were retail clients and institutional private retirement funds. Within the two major categories Vanguard had three consumer groups: Core clients who held up to $250,000 in assets,......

Words: 2449 - Pages: 10

Premium Essay

Swot Vanguard

...Marketing at the Vanguard Group 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. SITUATION ANALYSIS Highlighted SWOT Strengths • 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. Weaknesses • 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. Opportunities • 80 to 90% of Vanguard clients have funds in other organizations; • Investment opportunities with...

Words: 334 - Pages: 2

Premium Essay

Beta Management

...Wolfe (The founder and CEO of the Beta Management Group) in 1988. Ms. Wolfe follows a market timing investment strategy based on two portfolios; the Vanguard index and money market instruments. The goals of Beta Management were to enhance returns but reduce risks for clients via market timing. Ms. Wolfe would keep the vast majority of Beta’s funds in no-load, low-expense index funds; and, the rest of the money would go into money market instruments. Keeping the market exposure between 50% and 99%, she eventually established the limited use of Vanguard’s Index 500 Trust because it had a very low expense ratio and its success resembled the S&P 500 Index’s return. By January 4, 1991, Beta had 79.2% of its $25 million in assets ($19.8 million) invested in the Vanguard index fund. Wolfe had been quite successful in 1990. She had reduced Beta’s equity position to 50% in June, partially missing a large two-month market decline. The company’s success had brought in enough new money to double the size of Beta in under six months. But she had lost some potential new clients who had thought it unusual that Beta Management used only an index mutual fund and picked none of its own stocks. In order to solve the problem of losing potential client, it decided to add individual stocks to its equity portfolio for diversification and also for marketing purpose. She preferred to pick smaller companies because larger stocks are thoroughly analyzed which leads to the fact that the......

Words: 838 - Pages: 4

Free Essay

Mutual Funds, Vanguard Paper

...Vanguard Mutual Fund Evaluation FIN/420 1/26/2014 The Vanguard Group The Vanguard Group offers an array of mutual funds, exchange-traded funds, brokerage, and asset management. When choosing and comparing mutual funds, there are characteristics that you need to first evaluate. This paper will review five different categories of mutual funds that Vanguard Group offers its investors. Actively Managed Common Stock Fund The Selected Value (ticker VASVX) is an actively managed common stock fund with a 4 star Morningstar rating with a minimum investment of $3,000. This fund does not have a front or rear load fee. The total annual fund operating expenses are 0.41% which means that for every $100 you invest, $.41 goes to paying the person who sold you the fund. VASVX is a mid-cap value investment with a low fee level. The fund seeks to provide long-term capital appreciation and income. The fund invests mainly in the stock of mid-size U.S. companies, choosing stocks considered by an advisor to be undervalued. Securities include stocks, bonds, and money market instrument, totaling 132 holdings and ten industries. The five largest holdings as of September 29, 2014 are Micron Technology Inc., Hanesbrand Inc. Common Stock, Royal Caribbean Cruises Ltd. Co, Omnicare, Inc. Common Stock, and Discover Financial Services Com. The fund inception occurred on February 15, 1996 and has been managed by Barrow since 1999. The fund inception date tells us that the mutual fund...

Words: 1367 - Pages: 6

Free Essay

Vanguard Group Inc. Swot Analysis

...Harvard ManageMentor — MARKETING ESSENTIALS TOOLS | MERC 6541 Análisis SWOT Prof. Víctor Quiñones | Utilice el análisis SWOT para identificar las fortalezas, debilidades, oportunidades o amenazas relacionadas al producto, línea de producción, programa de mercadeo, o la compañía en general. El análisis SWOT permite enfocarse en áreas específicas y descubrir acciones que puedan ayudar a edificar sobre las fortalezas, minimizar las debilidades, maximizar las oportunidades y lidiar o vencer a las amenazas. | Fecha de Análisis: | 23 de noviembre de 2011 | Por: Mariangelí Lugo Zayas | Nombre de la Compañía Analizada: | The Vanguard Group, Inc.: Is Advertising Really Needed? | | Análisis IntenoEnumera factores internos a ser analizados. | Fortalezas (Strengths) | Ideas para edificar sobre las fortalezas | * Líder en la industria de fondos mutuos * Oferta de gastos mínimos, productos de alta calidad * Tomar ventaja de publicidad boca a boca o mercadeo gratis * Baja proporción en gastos * Excelente servicio al consumidor | * Mantener diferenciación de producto frente a los de la competencia * Continuidad con la baja proporción de gastos a través de la inversión interna | Debilidades (Weaknesses) | Ideas para minimizar o fortalecer las debilidades | * Gasto mínimo en mercado, lo que lleva a no alcanzar aquellos clientes que no han escuchado de la compañía * Gasto mínimo en investigación y desarrollo | * Establecer programa......

Words: 862 - Pages: 4

Free Essay

Buzz Just Happens. facilitate the discussion. Pfizer, the maker of Viagra, faced an uphill battle when trying to generate buzz for its breakthrough drug, because impotence was a taboo subject. But by pop- ularizing the medical terms “erectile dysfunction” and “ED,” the company transformed the undiscussable into fodder for the bedroom and backyard alike. Myth 2: Buzz just happens. Many people believe that buzz is largely serendipitous. Not so. We have found that buzz is increasingly the result of carefully managed marketing programs. Savvy managers have a portfolio of marketing tactics from which they assemble just the right sequence to generate and sustain buzz. Here are some of the most powerful tactics we’ve identified from our research. Seed the vanguard. All customers are not created equal. Some – the vanguard – have a disproportionate ability to shape public opinion. Increasingly, managers are recognizing that getting their products into the hands of the vanguard can pay off exponentially in how the mass market ultimately responds. Abercrombie & Fitch, for example, recruits college students from popular fraternities and sororities to work in its stores, know- ing that they will then probably wear A&F clothes...

Words: 415 - Pages: 2

Premium Essay

Bus 640

...Appalachian Coal Mining believes that it can increase labor productivity and, there- fore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction the marginal increase in revenue (MR) is MR 1,000 10P How much pollution reduction should Appalachian Coal Mining undertake? Appalachian Coal Mining decided to install additional capital equipment, they would decrease the amount of pollution that their company produces. This installation of additional capital equipment will also lead to an increase in labor productivity. However, when assessing the benefit that this equipment will produce, one must also take into consideration the additional costs of such activity. When assessing this situation, one must make sure hat the costs are not greater than or equal to the benefits, thus offsetting any benefit from installing the equipment and the pollution reduction. In order to determine whether or not the cost of installing the capital equipment outweighs the benefits of the equipment, one must fix the level of pollution reduction and determine the optimal level of pollution reduction. According to our text, “the optimal level of the activity—the level that maximizes net benefit—is attained when no further increases in net benefit are......

Words: 803 - Pages: 4

Premium Essay

Vanguard Group Case

...1. What do you think of the Vanguard group as a firm? What is the Vanguard group investment philosophy? 2. What are the key differences between Life-Style funds and Life-Cycle funds? 3. Discuss the pros and cons of Life-Style funds. Explain their rationale. 4. Discuss the pros and cons of Life-Cycle funds. Explain their rationale. 5. Are the Life-Style funds or the life-Cycle funds consistent with the theory (MeanVariance approach)? 6. Would you invest in either Life-Style or Life-Cycle funds? Why, why not? Question 1: What do you think of the Vanguard group as a firm? What is the Vanguard group investment philosophy? Vanguard was founded by John C. Bogle (Princeton University B.A., 1951) in 1975. Prior to The Vanguard Group, John Bogle was part of Wellington Management Company. The Vanguard Group currently manages about $3,148,496 million in assets (according to Northern Trust “Asset Management Ranking Highlights: The Largest Money Managers”), which makes it the second largest money manager after BlackRock ($4,651,896M). The company is mostly focused on mutual funds and ETFs. Index funds were created and offered to individual investors, which introduced significant cost-savings benefits. Their trademark way of doing business is by heavily investing in technology, reducing management fees, and lowering marketing costs. Providing exceptional and exemplary client service has also been part of Vanguard’s repertoire. Mr. Bogle strongly believes in......

Words: 1432 - Pages: 6

Premium Essay


...Strategy To enhance returns and reduce risks is a general objective of risk-averse investors and shouldn’t be considered an investment strategy proper. BMC follows a market timing investment strategy based on two portfolios: the Vanguard Index and money market (i.e., short-term) instruments. When BMC expects the market to rise, it transfers its assets from the money market to the Index (up to a maximum of 99% of total assets), seeking to obtain capital gains; when BMC expects the market to fall, it transfers back the assets from the Index to the money market instruments (down to a minimum of 50%), so as to avoid capital losses. By setting a floor of 50% on the investment on the Index, BMC endeavours to maintain at all times a return spread so as to “enhance returns”, while seeking to partly capitalize on unpredicted rises (at the cost of losses if the market behaves as predicted). By setting a very high ceiling for the investment in the Index (99%), BMC is willing to take on extra risk to try to fully capitalize on predicted rises. The investment strategy has thus some aggressive elements in it. The objective of “risk reduction” might better accomplished by setting both a lower ceiling and, particularly, a lower floor. Advantages of the Vanguard Index: - Low transaction costs (important in a market timing strategy, which involves frequent transactions). - Well-diversified portfolio and good proxy for the S&P 500 Index, which is itself a proxy for the market......

Words: 1082 - Pages: 5

Premium Essay

Disney Research Project

...| The Walt Disney Company | | Business Research Project | | The Walt Disney Company | | Business Research Project | Contemporary Business 2012 Authored by: **** Contemporary Business 2012 Authored by: ***** "The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world." The Walt Disney Company started on October 16, 1923 as the Disney Brothers Cartoon Studio, a joint venture of brothers Walt and Roy Disney. Three years later the company had produced two movies and purchased a studio in Hollywood, California where the company nearly sank due to pitfalls in distribution rights, but was saved by the creation of Mickey Mouse. The company released their first full-length feature film, Snow White and The Seven Dwarfs, in 1932 which became the highest grossing film of its time. But afterwards, the expenses of production caused difficulties with the next few animated films; then the advent of World War II halted the production of films as the Walt Disney Company contributed its skills to the war effort. After the war it was difficult for the company to pick up where it had left off, but the 1950s proved a turning point with the production of movies such as......

Words: 3090 - Pages: 13

Premium Essay

Term Paper

...ALLIANCE_UNIVERSITY, BANGALORE SUBJECT NAME & CODE: Business Ethics and Corporate Social Responsibility, MGT A-510 BATCH: 2013-2015 DSA ASSIGNMENT Sustainability, environmental responsibility, and Business. Submitted To: Dr Soumen Mukherjee Associate Professor Alliance Business School Submitted by: PENMETCHA BHASKAR VARMA Course & Section: MARKETING Roll No.: 13010221085 Date of Submission: 10-09-2014 SUSTAINABILITY:- Sustainability refers to ‘Continued development or growth, without significant deterioration of the environment and depletion of natural resources on which human well-being depend.’ * (source)Business Dictionary Every organization has an opportunity to build value using sustainability as a tool. As there are many ways to follow sustainability but not all lead to value generation. Vanguard companies throughout the globe are making sustainability as key priority for their organization, some are updating policies and revising programs, some companies are making employee functions responsible for sustainability. In middle of this, many companies are confused either sustainability activities make sense are not, sustainability in the sense, much depends on what an organization has accomplished and has to accomplish. Pointing, at what stage an organization is in and what are the challenges it face in implementing sustainability program, can clarify an executive confusion in establishing plans for sustainability and......

Words: 551 - Pages: 3

Premium Essay

Hca vs. Tenet Healthcare

...done is to send customers that are not profitable to neighboring public health hospitals. This has increased their profits as well as their wait times in emergency rooms. On the other hand, Tenet Healthcare Corporation is a competitor to HCA, but has been slower to develop in the profitable ways of HCA. Tenet has taken a diversification approach recently in the urgent care business. They have recently opened 23 urgent care facilities, the first company in the hospital sector to do so. Many competitors, including HCA, are waiting to see how TCA does before also going this route. As of now Tenet owns the market in urgent care facilities but as profits increase, other hospital companies may go this route as well. The deal Tenet made with Vanguard is the biggest transaction Tenet has made and signals a shift from the company's problems over the past 10 years. Several Tenet-owned facilities underwent investigations in the early 2000s for alleged unnecessary heart surgeries. In 2006, Tenet paid $900 million in cash and returned Medicare payments to settle claims it overbilled Medicare throughout the 1990s in one of the largest settlements ever recorded in the hospital sector. Tenet also went through a messy lawsuit with CHS a few years ago after CHS unsuccessfully attempted to take Tenet over. On the other hand HCA...

Words: 4688 - Pages: 19

Premium Essay

Patient Safety

...E-Loyalty Your Secret Weapon on the Web In the rush to build Internet businesses, many executives concentrate all their attention on attracting customers rather than retaining them. That's a mistake. The unique economics of e-business make customer loyalty more important than ever. by Frederick F. Reichheld and Phil Schefter L OYALTY MAY NOT BE THE FIRST * idea that pops into your head when you think ahout electronic commerce. After all, what relevance could such a quaint, oldfashioned notion hold for a world in which customers defect at the click of a mouse and impersonal shopping hots scour databases for ever hetter deals? What good is a small-town virtue amid the faceless anonymity of the Internet's HARVARD BUSINESS REVIEW July-August 2000 glohal marketplace? Loyalty must he on a fast track toward extinction, right? Not at all. Chief executives at the cutting edge of e-commerce-from Dell Computer's Michael Dell to eBay's Meg Whitman, from Vanguard's Jack Brennan to Grainger's Richard Keyser-care deeply about customer retention and consider it vital to the success of their on-line operations. They know that loyalty 105 E-Loyalty: Your Secret Weapon on the Web is an economic necessity: acquiring customers on the Internet is enormously expensive, and unless those customers stick around and make lots of repeat purchases over the years, profits will remain elusive. They also know it's a competitive necessity: in every......

Words: 6083 - Pages: 25

Premium Essay


...handles production, development, marketing and sales of both hardware and software for its Sony PlayStation line of video game system products and services. Sony computer Entertainment Inc. also has subsidiaries in North America, Asia (Japan, Korea, and China) and in Europe. Gaming industry has been gaining momentum with the gaming market more open now than ever since the boom of the gaming industry in late 80s and 90s and technological advancements today enabled SCEI to make use of its vast resources to innovate its gaming products and services. For the past decade SCEI has been excellent in terms of innovative and cutting edge technological advancements in making home consoles reflecting the company’s most recent mission statement. "We make advanced hardware that enables the most talented developers to produce vanguard titles and set new standards in interactive entertainment. Our goal is to make a family of products that completely changes the definition of home entertainment. It doesn’t matter if you’re a hard-core gamer whose thumb calluses can deflect machine gun fire or if you just love Blu-ray movies, PlayStation® entertainment products have something for you.” Sony PlayStation line of products include PlayStation (PSOne), PlayStation 2 (PS2), PlayStation 3 (PS3), PlayStation Portable (PSP), PlayStation Vita (PSVita) and the upcoming PlayStation 4 (PS4). SCEI has made several technological advancements and several changes in marketing strategies since the launch......

Words: 313 - Pages: 2