Charles Schwab & Co., Inc. Harvard Case Solution & Analysis

Charles Schwab & Co., Inc. Case Study  Solution


Charles Schwab was initiated in 1975 as the brokerage firm. The Schwab Company came with a different and unique business model. The company charged up to 75% less than other companies for stocks. Moreover, it allowed the investors to manage their assets by their own and there was no need for third party brokers. According to the unique business model, company grew up rapidly. Later, it was sold to the Bank of America. However, as the company’s profitability was increasing, it went for public market. However, as the company was achieving unstoppable growth, the marketing strategies of the company went uncontrollable which cost company so much and become a biggest hurdle in its growth

Situation analysis

In 2003-04 company noticed that there were few breaks and rifts between Schwab’s Company and its customers, due to which company’s profitability was decreasing from previous years. Moreover, the prices of services and products were increased so much that it was not a low cost industry provider company and was not facilitating customers with good value. As the decrease in profitability increase, company dig out the situation. The investigation of the company showed that as the company uses different customer segments for different marketing, the client base of the high-touch segment was decreasing and had been underweighted. On the other hand, the self-assured segment had been overweighed. In addition, it was also discovered that 9% of Schwab’s clients were demanding lower commission and fees, due to which they were shifting towards competitors. The company’s investigation shows that differentiation of Schwab has been declined. Despite of being discounted broker, company have been working like a full-service broker. Lastly, it had been identified that the satisfaction gap between clients and brokers have been created. As the customers needed mutual funds option, recommendations for stock that were based on professionals and experienced opinions.

The reasons that were stated or above described problems were identified as company’s branding and advertising had been haphazard. The main focus of marketing was sending direct mail to customers for specific products and services. Moreover, the company had been running six marketing campaigns simultaneously. Consequently, there was no one pace of company’s marketing. In addition, Schwab’s company was using different marketing agencies. The competition among these agencies have created tripping over other agency. Also, the company was gathering a tremendous amount of data, however, the usage of respective data was not done strategically. The brokerage services of company were charging much higher when comparing it with strong competition. Lastly, the company had made mistakes of limiting customers’access of researching and collecting information to the volume of respective customer’s transactions.


In order to solve company’s problem, it had been identified that company needs to increase its marketing in a respectful and organized manner. Moreover, the company should streamline its operations and work effectively to regain the reputation and its position.Following are the alternatives that can be persuaded by the company

Alternative 1: Social Media and internet advertising:

The company could use social media as the means of advertising. This activity would help the company to serve their message to millions of customers. Moreover, direct marketing such as direct email to existing customers or potential customers can also be made. However, the company should not use all mediums at one time as it will again be haphazard and would be difficult for the company to handle the situation. (J.Fauldsb, 2009)

Risks and benefits:

As the social media is used by millions of people at one time. Moreover, due to its advance technology, the most searched and watched things are shown in personal timeline. Therefore, as a person would be interested in respective products and services, the company’s advertising will be shown. In addition, as it is a low cost alternative, it would be highly beneficial for the company to increase its revenue with low cost sourcing. On the other hand, the risks associated with the social media advertising is the security of company and the respective posts of the company could be hacked by competitors and can be used against Schwab’s company......................

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