OBJECTIVES by ert554898

VIEWS: 2 PAGES: 69

									Understanding the
   Customer


                    1
    Philosophy of BBD&O
    (a leading advertising agency)

   Know your customer

   Know your customer’s problem(s)

   Satisfy the customer’s problem
    better than any other competitor
                                       2
Consumer Behavior Analysis
(a few often relevant questions)
   What are the key product
      attributes/benefits?
     Search
     Experience
     Credence attributes


   Which benefits are functional vs.
    psychological -social considerations?


                                            3
        Relevant Questions about
           Consumer Behavior (Cont’d)
   What are the levels of:
        brand awareness,
       product knowledge, and
       brand loyalty?

   How many:
       stores are shopped?
       brands are considered?

   What sources of information are used?
                                            4
    Relevant Questions about
       Consumer Behavior (Cont’d)
   Is this a new purchase decision?



   If not, how often is the decision made?



   How long is the decision process?


                                              5
Relevant Questions about
   Consumer Behavior (Cont’d)
   Where are decisions made about the
        product and brand?
       at home?
       in the store at the point of   purchase?
       elsewhere?


   How involved is the buyer in the
    purchase decision?


                                                   6
Consumer Involvement: Importance
of and concern about purchase and use of
the product
Varies with:
    Financial risk
           price and search costs
      Functional risk
           Perceived product variability among brands
      Social risk
           Relationship of product with self-concept
           External visibility of product purchased
           Social situation

   Results in more active search for and
       processing of marketing information
                                                         7
        Relevant Questions about
           Consumer Behavior (Cont’d)
   Individual or group decision?

   Who makes the product/brand decision?
       husband, wife, child
       purchasing agent, CEO, engineer, etc.


   How does all the preceding vary for different
    members of the Decision Making Unit (DMU)?


                                                    8
 Potential Members of the
     DMU
BUILD

 Buyer
     User
        Influencer
           Lodge (gate) keeper)
              Decider
                              9
                           Different Roles within the DMU
                                                     Lodge
                            Buyer User Influencer (Gate) Keeper Decider

ID need                             x       x
Establish specs               x     x       x
Schedule when needed          x     x       x
ID alternative suppliers      x     x       x           x
Evaluate alernatives          x     x       x
Select a suppier              x                                    x
Negotiate price & service     x                                    x
Make final choice             x                                    x
Evaluate after purchase             x
                                                                  10
Relevant Questions about
   Consumer Behavior (Cont’d)

      How does all this vary by different
       customer segments?




                                             11
      Market Segmentation
   Core concept of marketing and consumer
    behavior

   Segment is a group who want something and
       what they want is different from other
       consumers

   Goal is to find segment(s) that we can satisfy
       better than any other competitor
                                                     12
Strategy Options
   in Segmentation
   Mass marketing
      (not segmented)




                        13
Strategy Options
    in Segmentation                             (Cont’d)

   Differentiated marketing
       different marketing approach for
        different segments
            E.g., Johnson & Johnson Baby Shampoo




                                                           14
   Ad that Offers
 Different Products
   with Different
Benefits to Different
     Segments




                   15
        Strategy Options
            in Segmentation                            (Cont’d


   Concentrated (niche) marketing
       e.g., River Wild Winery has teamed up with Mossy Oak
        (manufacturer of outdoor gear) to produce $13 wines
        called Wild Game Wine
            $13 blends aimed at those who traditionally have drank beer,
             not wine

       Wine in India
            (top 1% of income in urban areas)

       Michelob Ultra
            (low carb beer for upscale yuppies)
                                                                        16
                Segmentation Hierarchy — From Mass
                Market Strategies to Mass
                Customization
                                                         Niche A1   Custom A1
                              Segment A      Segment A              Custom A2
Market Demand




                                                                    Custom A3

                                                                    Custom B1
                              Segment B      Segment B
                                                                    Custom B2


                              Segment C      Segment C              Custom C1

                   Mass            Multi-      Single    Segment     Mass
                  Market          segment     Segment     Niche     Customi-
                 Approach         Strategy    Strategy   Strategy    zation
                = Target Market
                                                                               17
 Measures to Isolate and
 Describe Market Segments
1. Usage behavior

2. Geographic location

3. Demographic characteristics

4. Psychographics (life style)

5. Product benefits sought
                                 18
    Segmenting Markets Based on
    Actual Marketing Behavior
   Usage segmentation
       the 80-20 rule
       (e.g., the “heavy half”)
       Users of the product
       Users of the brand

   Examples:
       Heavy users of credit cards (VISA)

       Frequent users of Burger King (BK --- or MacDonald’s)

       Non-drinkers of scotch whiskey (DeWars)
                                                                19
           %      Cum.%      %      Cum. % Annual
Decile   Trans.    Trans.   Sales    Sales Spending
 10        30%     30%       42      42%    $2,873
  9        20       50       20      62     $1,367
  8        14       64       13      75      $895
  7        11       75        9      84      $686
  6        8        83        6       90     $428
  5        6        89        4       94     $297
  4        4        93        3       97     $175
  3        3        96        1       98      $87
  2       2.5      98.5       1       99      $71
  1       1.5      100        1      100      $45
Total    100%     100%      100%    100%     $68020
      Example of Usage Segmentation
         --- Taco Bell

Three Usage Segments
   visit at least once a week
      labeled “frequent users”




   visit as little as once a month

   never visit (do not like Mexican food)

                                             21
    Taco Bell            (cont’d)

Among “frequent users”:

two sub-segments accounted for 70% of sales

  1. “Penny pinchers”
        18-24 year olds
        visit frequently but use narrowly
        use primarily for lunch
        buy 3-4 items but only low-priced items

                                                   22
 Taco Bell                (cont’d)

2. “Speed Freaks”
     Two income couples, often parents with kids
     Generally harried
     Want quick service and easy use
     Concerned with taste and food quality
     Willing to purchase higher priced items




                                                    23
        Taco Bell       (cont’d)

   For Penny Pinchers:
       Reduced prices 25%
       Emphasized core offerings priced at $.59,
          $.79, and $.99




   For Speed Freaks:
            Instituted major speed up program
            Increased peak capacity by 54%

            Decreased wait time by 71%
                                                    24
      Example:    Inferring Segments
                from Sales
                      Price   $/gram Doses mg/dose
Tylenol drops         $4.84   $3.23   19     80
Tylenol chewable      $3.18   $1.33   30     80
Tylenol E.S. tabs     $3.79   $0.25   30    500
Store Brand E.S. tabs $2.39   $0.16   30    500
Tylenol E.S. gelcaps $6.22    $0.17   72    500


  To what segments do these products likely
    appeal?
  How will profits differ by product?
                                               25
        Describing Usage Behavior
    with Brand Dominance Index (BDI)
    Quick summary index of whether sales in a segment are
 proportional to the size of the segment in the overall population

                  (% Brand Sales in a Segment)                   * 100
BDI =
                 % of Total Population in that Segment


CDI = Category Dominance Index*
  (* substitute product category sales for brand sales in above equation)

                                                                            26
     Using BDI for
     Market Segmentation: Apple PCs
                  % of        % of
 Segment        Population Apple Sales    BDI
College           15%         25%        166
Students
Business          30%         10%
Professionals
                                          33
PC Users           6%         12%        200
60 or Older
Workers in         2%         12%        600
Publishing
                                                27
       Brand and Category Development

                        BDI
             High BDI         Low BDI

      High
       CDI

CDI
      Low
      CDI


                                        28
  Brand and Category Development
                              BDI
                 High BDI              Low BDI
                 Saturation?
      High     Maintain or build
                                     High Potential —
       CDI                          Grow brand share
             brand share in these
                                    in these segments
                  segments
CDI
          Build Category Usage
      Low  (Primary Demand             Avoid these
      CDI Stimulation) in these        segments?
                segments

                                                        29
     Segmenting with Variables that
    Correlate with Marketing Behavior
   Geographic
       Urban vs. rural (Wal-Mart)
       Business organizations within 500 miles of our plant
       Chicago suburbs (burglar alarms)


   Demographic
       Wealthy vs. lower income Chinese male bank customers
       Teenagers (Alloy.com)
       Wine retails find that women are more curious than
        men about wine and/or more willing to ask questions
                                                               30
    Demographics: key to
understanding basic differences




                             31
                          Correlates of
                        Marketing Behavior

   Psychographics (life styles)
       Attitudes, Interests, and Opinions
       “Consumer personality”


    Examples:
       Outdoorsmen who believe in right to have guns in every home (NRA)
       Women who want their home “spotless” (Spic and Span)
       Business people who travel frequently and want a familiar, easy-to-
        read newspaper (USA Today)
                                                                        32
      Combine Usage, Demographics, &
       Psychographics When Possible
Example:
2004 Presidential Campaign
                                        Unregistered households in
   Office park dads                     Democratic households in
   Senior citizens                      Ohio and Pennsylvania
   Women                                   (Committee to Re-Defeat
   Person of color                                   Bush)

   Gun owner                           Donors to Dean via the
                                         Internet
   Live in “industrial heartland”
                                        Young people
   Speak Spanish at home
                                        Evangelical Christians
   Irish
                                        Organized Labor
   NASCAR dads
                                        Cuban-Americans
   Unmarried women
                                        Arab-Americans                33
34
35
36
Segmenting on the Basis of Benefits
   Sought - Benefit Segmentation

   Finds segments that view different product benefits
    as relatively more or less important

   Correlates highest with Buying Behavior
       Also correlates with other segment descriptors (usage,
        demographics, psychographics)
       But hard to correlate with media usage

   Best single way to segment markets

                                                            37
 Benefit Segments in the Toothpaste Market
Differentiating    The Sensory     The                               The
Characteristics     Segment      Sociables     The Worriers     Independents

      Principal      Flavor;
                                  Bright         Decay
     Benefit(s)     Product                                         Price
                                  Teeth        Prevention
         Sought    Appearance

                                   Teens
Demographics         Children    20-35 year    Large Families        Men
                                    olds
                     Users of
   Behavioral       Spearmint
                                  Smokers
                                               Brush several    Brush several
 Characteristics     Flavored                  times per day    times per day
                    Toothpaste


   Personality                    Sociable     Hypochondriac     Autonomous;
                    Hedonistic                                   Independent;
                                   Active       Conservative
    & Lifestyle                                                 Inner-Directed


       Brands        Colgate     Plus White                     Brands on Sale
                                                   Crest
                      Stripe     Ultra Brite                    Private Labels
     Preferred                                                           38
   Benefit Segments in the Banking Market
Differentiating      Value          Empty           One-Stop           Financial
Characteristics     Seekers         Nesters         Bankers             Losers
                                                                       Available
  Principal          Good                         Convenience &
                                                                        Loans;
  Benefit(s)       Savings &       Low Fees         Variety of
                                                                      Convenient
   Sought         Loans Rates                       Services
                                                                       Branches
                                     Older;
                                                   Young Families
Demographic       Lower Incomes    Own Their         With Kids
                                                                         Rent;
Characteristics                   Home; Higher
                                                  Average Incomes
                                                                      Lower Income
                                    Incomes
                                                                        Past Loan
   Banking          Rel. Large                      Low Savings;
                                   Have Other                           Requests
                     Savings                      heavy credit card
Characteristics                   Investments                         Refused; Cash
                    Accounts                           usage
                                                                       Paychecks

                  Conservative;                                        Pessimistic;
 Personality
                   Disciplined;   Complacent;      Child-oriented     Downtrodden;
 & Lifestyle       Optimistic;    Travel Abroad      Activities       Blue-collar Job
Characteristics      Striving

                   Best Value                                           Financial
   Brands                                         Largest Bank w/
                    Banks &          None                              Companies;
  Preferred                                       Most Branches
                    Products                                                   39
                                                                      Loaner Banks
                 Benefit Segmentation
                 of Snack Food Buyers
              Nutritional    Weight         Guilty        Party          Hedonistic   Economical
              Snackers       Watchers       Snackers      Snackers       Snackers     Snackers
Percentage    22%            14%            9%            15%            15%          18%
of Snackers
Lifestyle     Self-Assured   Outdoorsy,     High -        Sociable       Hedonistic   Self-Assured
Traits        Controlled     Influential,   Anxiety,                                  Price-
                             Adventure      Isolate                                   Oriented
Snack         Light          Light          Heavy         Average        Heavy        Average
Usage
Benefits      Nutritious,    Low Calorie    Low Calorie   Ok for         Good Taste   Low Price
Sought        Natural        Quick          Good Taste    Guests and     Filling      Best Value
                             Energy                       With Drinks
Types of      Fruits,        Yogurt,        Yogurt,       Nuts, Chips,   Popcorn, Ice Nothing
Snacks        Veggies,       Veggies        Cookies,      Crackers,      Cream,       Specific
Eaten         Cheese                        Candy         Pretzels       Candy, Chips
Demography    Educated       Younger        Young, Old,   Middle-Aged    Teens        Big Families
              With Kids      Single         Females,      Non-Urban                   Educated
                                            Lower SES                                       40
                                       Active Thirst Customers ---
                                          Benefit Segmentation
                                                   at Gatorade


                                           Hard         Committed         Team                       Guilty      Contented

                   Competitors           Workers        Exercisers       Socials      Wannabees Inactives Inactives

   Attitudes          "Win the         "Work hard to "No good day       "Sports are "Wish I could "Exercise is "Don't do it;

toward Activity        game"           make a living" w/o exercise"        fun"        do more"     a chore"     don't care"

 Level & Type       Most active -      Highly active - Most active -     Moderate        Light      Very low     Non-active

  of Activity        team sports       physical labor     personal       team &

                  fitness & recreatn                      fitness      commaraderie

% of Populatn           20%                17%             24%             12%           9%           12%              4%

% of Category           26%                17%             26%             10%           9%            9%              4%
                                                                                                                   41
 Demographic           Young               Older          Older        Young male      Boomers                Ol der
          Segmentation Bases for Consumer
           and Industrial Markets: Overview
TYPE OF VARIABLE   CONSUMER MARKETS INDUSTRIAL MARKETS

    Descriptor     • Geography         • Location
    Variables      • Demographics      • Size
                   • Socio-Economics   • Industry SIC
                                       • Operating, Technical &
                                       Financial Characteristics




                                                            42
           Segmentation Bases for
       Consumer & Industrial Markets                      (cont’d)



TYPE OF VARIABLE   CONSUMER MARKETS INDUSTRIAL MARKETS

 Psychological     • Attitudes       • Corporate Orientation
   Variables       • Interests       • DMU Organization
                                            Structure
                   • Opinions
                                     • DMU Power Structure
                   • Lifestyle
                                     • Policies and Procedures
                   • Personality
                                     • DMU Member
                                            Motivations
                                     • Risk Tolerance


                                                          43
             Segmentation Bases for
         Consumer & Industrial Markets                                  (cont’d)




TYPE OF VARIABLE  CONSUMER MARKETS INDUSTRIAL MARKETS
                                      • Buy-class
Product/Patronage • Purchase Occasion
 Characteristics                          •New buy, re-buy,
                                          modified re-buy
                     • Awareness/User Status • Awareness/User Status
                     • Usage Rate              • Usage Rate
                     • Brand Loyalty           • Vendor Loyalty
                                               • Specific Application


 Related Variables • Benefits Sought           • Purchase Criteria
                     • Mix Element Sensitivity • Mix Element Sensitivity
                                                                        44
        Good Segment Descriptors
         Lead to Segments that:
   Are easy to identify
   Are seeking benefits that your company offer better
    value than competitors (defensible)
   Respond differently to marketing tactics
          Different tactics or different levels of marketing tactics

   Can be reached efficiently
   Are large enough to warrant special attention
   Will not change drastically over time (stable)                      45
       Costs/Benefits of Segmentation
        Product Differentiation Increases:
Costs:                        Benefits:
   Market research              Spotting & comparing
   Product development /         market opportunities
      modification               Finer adjustments of
   Production                    marketing mix elements
   Administration               Clearer market response
   Inventory costs               understanding
   Advertising & promotion      Focused use of resources

                                                            46
       The Ultimate Segmentation:
                Micro Marketing
   Segments of one
       or very few

   Focuses on
       major customers

   Focus on retention,
       not merely acquisition
                                  47
    Micro-Marketing
   Goals:
       Know as much as possible about each
        customer

       Satisfy them as best you can

   Example on next slide:
       some facts about supermarket customers

                                                 48
    Implementing
       Micro-Marketing
   Direct mail

   Internet
       Cookies

   Loyalty card programs
       Example to follow in Adv. And Promotion notes


   Data-base management (CRM)
                                                        49
50
      Potential Advantages of
       Adaptive Micro-Marketing
   Customized products and messages

   Higher retention (loyalty) of customers

   Purchase stimulation

   Greater opportunity for cross-selling

   Less cannibalization from new product intro's
                                                    51
     Potential Advantages of
      Adaptive Micro-Marketing
     (cont’d)


   Higher switching costs for current customers

   Lower switching costs for competitors’ customers

   More able to resist competitive attack

   Lower marketing costs due to knowledge about
       the customer

   Defection analysis
                                                   52
Generalizations from
   Segmentation Research
   Products and advertisements should be
    designed to fit as exactly as possible the
    needs of target segment(s).

   No brand can appeal to all segments.
       Compromises may result in being first choice of no
        segment




                                                      53
Generalizations (cont’d)
   Easier to take advantage of existing
    benefit market segments than to try to
    create new ones.

   Careful positioning strategy can help
    avoid cannibalization.

   Avoid the majority segment fallacy.

                                            54
Generalizations (cont’d)
   Segmentation may not be profitable for
    every organization
       Costs may exceed the benefits
       Firm may not have the resources to outdo
        competition --- esp. in the long term
       Differences among segments may not be
        sufficiently large to warrant different marketing
        approaches

                                                            55
        Appendix:
More Segmentation Examples




                        56
                        Dog Food Market

                Functionalist             Family Mutt                 Baby Substitute               Nutritionalist             Don’t Care
SIZE
% of Owners             40 %                       25 %                          10 %                       13 %                        12%
% of Feedings           55 %                       20 %                           5%                        10 %                        10%
GEOGRAPHICS        strong in central &      strong in east               strong in west             very strong in south      Strong in east &
                    south                    very weak in west            weak in east                & east                     central west
                   very weak in west                                                                   very weak in west
DEMOGRAPHICS       Multiple dogs           own one dog                   Own one very               dogs                      nothing distinctive
                   children                avg. size                      small, older dog           fewer than avg.
                   lower income            children                      No children                 children
                   C/D counties            lower income                  Higher income              higher income
                                            C/D counties                  Urban                      urban
ATTITUDES          outdoor/hearty          little interest in dog        dog is fragile,            very attached to          nothing distinctive
                    dogs                    dog playful                    indoor type                 dog
                 eat anything              no bother                     above avg.                 dog belongs to
                 no bother                 below avg. menu                attachment to dog           housewife
                 little attachment to       acceptance                    heavily involved in        most interested in
                    dog                    interested in                   choice of food              nutrition
                 interested in              ownership benefits            dog is finicky eater       least interested in
                    ownership benefits     least interest in              great desire to serve       cost
                 avg. interest in           nutrition                      what dog likes             active dog
                    nutrition              kids, not
                 housewife not            housewives are
                    involved                 involved
TYPES USED       Basically meal feeders    Heavy meal and low-              Mainly canned;          Mostly meal; also high             Mixed
                                              priced canned               relatively little meal    priced canned & biscuit
Soft-Moist              2.0 %                      6.4 %                        25.4 %                      7.8 %                     41.0 %
Meal                   88.2 %                     63.7 %                        22.7 %                     59.0 %                     43.0 %
Canned                  8.9 %                     28.4 %                        44.9 %                     27.1 %                     37.0 %
   High                 1.2 %                      3.2 %                        14.9 %                     10.2 %                      6.0 %
   Parity               1.8 %                      8.2 %                        16.9 %                      7.4 %                     12.0 %
   Economy              5.9 %                     17.0 %                        13.1 %                      9.5 %                     18.0 %
                                                                                                                                             57
  Dell’s View of Benefit Segments
                                                            Home
Segment Techno- Techno- Techno-                             Plug &
        Teamers Criticals Wizards                           Players
           Low price;      Advanced       Latest            Simple;
           Networking      features;      features;         Affordable
Benefits   capabilities;   productivity   Good value for    Ready to
Sought:    Name                           the money;        use out of
           brands;                        Little need for   the box;
           Reliability                    advice            Compatible
                                                            w/media
Buyers:    Corporate       High-end       Sophisticated,    Home-users
           buyers          corp. buyers   At-home           who want
                                          buyers; Order     to use for
                                          from PC mag’s             etc.
                                                            email, 58
Segmenting
   more precisely
   Segmenting by Benefits sought
              X Usage situation




                                    59
            Young        Children Teens            Teens        Situation-
Situation    Fair         Dark     Fair            Dark          Benefit
             Skin          Skin    Skin             Skin        Features
                                                              -windburn
Beach/                                                        protection
Boat Sun-                                                     -formula &
             Insect       Insect       All-day      All-day   container can
bathing
            Repellent    Repellent    protection   protection withstand heat
             Added        Added                               - container
                                                              floats
                                                              - distinctive
                                                              container won’t
                                                              get lost
  Home,                                                       - large pump
 Poolside                                                     dispenser
   Sun-                                                       - won’t stain
                                                              furnishings
 Bathing
Person-      Special      Special      - Special        -
            protection   Protection   Protection   Protection
 Benefit
              - sun;       - sun;        - Nice      - Nice
Features    mosquitoes   mosquitoes       odor        odor
                                                                        60
               Adult Women               Adult Men               Situation-
              Fair    Dark              Fair    Dark              Benefit
Situation                                                        Features
              Skin     Skin             Skin    Skin
                                                              -windburn
Beach/                                                        protection
                                                              -formula &
Boat Sun-
            Summer       Summer       Light scent Light scent container can
bathing     perfume      perfume                              withstand heat
                                                              - container
                                                              floats
                                                              - distinctive
                                                              container so not
                                                              get lost
  Home,     Moistur-     Moistur-                             - large pump
 Poolside     iser         iser                               dispenser
             added        added                               - won’t stain
   Sun-                                                       furnishings
 Bathing
Person-      - Special    - Special
            protection   protection     - Light     - Light
 Benefit
                                         scent       scent
Features    - Female     - Female
             perfume      perfume                                         61
            Young        Children     Teens        Teens        Situation
Situation    Fair         Dark         Fair        Dark         -Benefit
             Skin          Skin        Skin         Skin        Features

                                                                  - Designed
                                                                Specifically for
                                        Both        Both         type of lamp
               NA           NA        Moisturizer Moisturizer
Sun-lamp                                  &           &            - Artificial
 Bathing                               Message     Message          tanning
                                          oil         oil         ingredient

 Snow        - All-day    - All-day    - All-day    - All-day    - Protection
 Skiing     protection   protection   protection   protection    from special
                                                                 winter rays;
                                                                   windburn
                                       - Winter    - Winter
                                         scent       scent       - Anti-freeze
                                                                    formula

Person-      Special     Protection    - Special
 Benefit    protection     - sun      Protection   Protection
Features      - sun                    - Female      - Male
                                       perfume        scent                62
               Adult Women               Adult Men              Situation
              Fair     Dark             Fair    Dark            -Benefit
Situation                               Skin    Skin
              Skin     Skin                                     Features

                                                                  - Designed
                                                                Specifically for
               NA           NA          Both        Both         type of lamp
                                      Moisturizer Moisturizer
Sun-lamp                                  &           &            - Artificial
 Bathing                               Message     Message          tanning
                                          oil         oil         ingredient

 Snow        - All-day    - All-day    - All-day    - All-day    - Protection
 Skiing     protection   protection   protection   protection    from special
             - Winter     - Winter     - Winter     - Winter     winter rays;
               scent        scent        scent        scent        windburn
                                                                 - Anti-freeze
                                                                    formula
Person-       Special    Protection    - Special
 Benefit    protection                Protection   Protection
Features     - Female    -Female       - Female
             perfume     perfume       perfume                             63
        Segmentation Example:
        Fidelity Investments
   Individual Investor Customers
       Self-directed
            Make all their own investment decisions

       Delegators
            Won’t do anything without professional advice

       Validators
            Want to be in charge, but often want second
             opinion*
                    * medical patient with on-line info. and doctor analogy
                                                                        64
  Example:       Fidelity Investments                   (Cont’d)




Fidelity’s marketing to Individual Investors
     $3 million accounts
          Get own personal account representative

     Less rich investors
          Meet with one of 174 reps in brand offices

     Ordinary investors
          Refer to independent financial planner

                                                          65
     Example:        Fidelity Investments                             (Cont’d)




   Fidelity’s marketing to Individual Investors
       Day-traders
           Provide superior technology
                Future: Voice recognition software allows quick traders to
                 ask questions and trade by cell phone
                Interactive Cable TV
                    Watch CNBC;

                    hear about good stock;

                    press button to contact Fidelity.com on TV;

                    Make trade

                    Already 500 trades a day




                                                                        66
Example:        Fidelity Investments                 (Cont’d)




Corporate 401(k) business
     Large companies (10,000 plus employees):
          Staff of 145 conduct 15,000 educational
           meetings a year with employees


     Mid-to-small tech-oriented firms
          Serviced completely via the Internet
               “e401(k)”
               half price

                                                       67
  Example:       Fidelity Investments                  (Cont’d)




Corporate 401(k) business
     Smaller, less technical-oriented firms
          Many hire an independent commissioned broker for
           their 401(k)s
          These brokers offer many Fidelity products
          Independent broker accounts account for

401(k) business = 56% of corporate assets
     Has lead to change in investment philosophy
     “no surprises”, rather than max the growth
                                                         68
 Example:       Fidelity Investments                  (Cont’d)



Fidelity also offers total benefit package benefits
  to smaller companies on out-sourced basis
      Fidelity NetBenefits.com
          Can change income tax withholding
          Find a doctor approved by HMO
          Borrow from 401(k)
          Check on pension amount in 12 years
          Pay bills
          Monitor brokerage account
          Etc.
    Hoping for future roll-overs (plus prevent switching)
        42% retention currently
                                                        69

								
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