...08 Fall 08 Fall DLJdirect DLJdirect Purpose: During the 1990s, the online brokerage industry expanded rapidly. This rapid growth was due in large part to technological advancements, popularity of equity investments, and customer behavior changes. This growth has created a highly competitive landscape in which companies are spending more and more money on marketing in an attempt to capture additional market share. One company within the online brokerage industry, DLJdirect, faces difficult questions that it must answer to help form the company’s strategic plan in the near future and set a solid foundation for future growth and stability. The online brokerage industry can be broken down into four primary customer segments that are determined by certain characteristics such as net worth, risk tolerance, frequency of trading, and user interface expectations. Research has also indicated four leading competitors that control a large portion of the market share. Each of them target a specific segment, or segments, within the industry. Our primary purpose is to assist DLJdirect with analyzing their current business approach and analyzing the four customer segments in order to clearly determine which customers they should target based on DLJdirect’s strengths and business philosophy. We will also identify the main competition and DLJdirect’s points of differentiation and points of parity as they relate to each competitor in order to maximize this value for future...
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...Introduction/Key Issues With the deregulation of commissions in 1975, Charles Schwab created the discount broker. With new rules set in place commissions would now be set by market competition. While competitors like Merrill Lynch and Fidelity raised their fees, Charles Schwab chose the opposite route. For so many years the cost of trading stock was so high it limited the investment opportunities available for Americans. Schwab envisioned that individual investors would jump on the opportunity to be in control of their trading at a discounted rate. By focusing on the principle of providing the best customer experience across all channels CS revolutionized the brokerage industry. With the introduction of online trading in the late 90’s, CS became one of the top financial services firms in the nation while doubling profits. However, a dynamic marketplace posed new challenges. The stock market crash of 2001 and competition from new Internet discount brokers cut into CS’s transaction fees, which was their main source of revenue. With high trading volumes likely coming to an end CS has to focus on other sources of revenue. Recommendations CS’s decision to become the first discount brokerage firm was a great strategy to cement them as a force in the brokerage industry. However, this image was hurting them for future growth. While CS offered many of the same services affluent investors ($1MM + investable assets) sought from full-commissioned brokerage (FCB) firms, they weren’t...
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...NTT DoCoMo: Marketing i-mode To ease the congestion problem, in 1997, DoCoMo gave Enoki—a lifetime employee who had worked his way up through NTT’s engineering ranks—a mandate to convince DoCoMo subscribers to begin using their cell phones in a fundamentally different way. More specifically, the mandate was to build a wireless Internet service that would create demand for sending/receiving text-based data via cell phones. Enoki decided to use DoCoMo’s existing packet switched network for the new service, which minimized the overall investment associated with the project.3 One advantage of such a network was that instead of having to keep a wireless circuit open for the duration of a phone call, it was possible for DoCoMo to interweave text-based data packets into a voice stream—allowing multiple subscribers to “share” a single circuit. In building a team to help him create the mobile Internet service, Enoki began by recruiting two outsiders who he believed would help him break free of the rigid, technical mindset that permeated NTT’s engineering-driven culture. The first was Mari Matsunaga, a marketing guru who had achieved a reputation as an editor-in-chief extraordinaire at Recruit, a Japanese magazine publishing house. Given the fact that Matsunaga had zero technical expertise (she didn’t even own a cell phone at the time), Enoki’s decision to bring her on board took many in the company by surprise. Enoki explained: In traditional Japanese companies, you’re...
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...CRM JOE PEPPARD, Cranfield University School of Management, UK Today, many financial services organisations are rushing to become more customer focused. A key component of many initiatives is the implementation of Customer Relationship Management (CRM) software. Our research has highlighted that most institutions take a rather narrow view of CRM and as such, benefits have been limited. While second generation CRM has emerged to embrace the total organisation (hence Enterprise CRM), success in general has still not been widespread. In the paper, a framework is presented which is based on incorporating ebusiness activities, channel management, relationship management and backoffice/front-office integration within a customer centric strategy. © 2000 Elsevier Science Ltd. All rights reserved Once upon a time retailers, banks, insurance companies and car dealers had a close relationship with their customers. They often knew them individually, understood what they wanted, and satisfied their needs through personal customised service. As a result, they earned loyalty and a large share of their customers’ business. This, however, was a costly and inefficient system and customers effectively subsidised this relationship by paying higher prices. Over the years, through mass marketing and increased consumerism customers traded relationships for anonymity, reduced variety and lower prices. Today, through the effective use of information and communications technology, such a tradeoff is now not...
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...1 CHAPTER 21 VALUING FINANCIAL SERVICE FIRMS Banks, insurance companies and other financial service firms pose particular challenges for an analyst attempting to value them for two reasons. The first is the nature of their businesses makes it difficult to define both debt and reinvestment, making the estimation of cash flows much more difficult. The other is that they tend to be heavily regulated and the effects of regulatory requirements on value have to be considered. In this chapter, we begin by considering what makes financial service firms unique and ways of dealing with the differences. We then look at how best we can adapt discounted cash flow models to value financial service firms and look at three alternatives – a traditional dividend discount model, a cash flow to equity discount model and an excess return model. With each, we look at a variety of examples from the financial services arena. We move on to look at how relative valuation works with financial service firms and what multiples may work best with these firms. In the last part of the chapter, we examine a series of issues that, if not specific to, are accentuated in financial service firms ranging from the effect of changes in regulatory requirements on risk and value to how best to consider the quality of loan portfolios at banks. Categories of financial service firms Any firm that provides financial products and services to individuals or other firms can be categorized as a financial service firm. We...
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