Marketing at The Vanguard Group Case Solution

1. What does the Vanguard brand stand for?

The brand Vanguard stands for ‘mutual mutual funds,' which means that it is an investment management company that operates in the industry of mutual funds. Vanguard has a very customer-centric approach as they place its focus on its owners and clients, which provides the company with more discipline, commitment, and efficiency compared to the other competitors in the marketplace. Vanguard has been successful in establishing itself as the world's largest mutual fund brand that accounts for sixty percent of the retail consumers, followed by shareholders accounts. The company has positioned itself as a fund provider with the lowest costs. Moreover, being a cost-effective brand Vanguard came to a point where 40 percent of the customer transactions were made using the internet. A good reputation has been associated with Vanguard as it operates in a very cluttered market without spending heavy investments on its advertising. If we talk about the human resource of Vanguard, the brand typically adopts job rotation and training methods to enhance the skills of its workers. It allowed its employees to identify problems that have a negative impact on their productivity. With that being said, Vanguard’s focus is on future results that can be seen from the fact the customer insights are kept in check. In addition to this, Brennan, the CEO of Vanguard, had made the company a brand where decisions were not solely made depending on numbers. Instead, the company has a strong belief in intuition. This has allowed Vanguard to develop a balanced scorecard that enabled the organization to set goals and devise strategies in accordance with its employees and shareholders, who are the valuable assets of the company. Therefore, it is safe to say that being the largest fund company to effectively manage its employees with attractive compensation plans to deliver high-quality projects, Vanguards, as a brand, is focus-driven with high attention to disciple. 

2. Who has been Vanguard’s target customer? Whom have they not targeted?

Vanguard, as a mutual fund organization, targets customers who are interested in mutual funds that are low-cost and long-term. The company has 60 percent of retail customers, and the remaining percentage belongs to institutions that are interested in pension plans for their employees. Since the largest target audience of Vanguard is its retail customers, the accounts of these customers reached 11.2 million in 2003. These customers are further classified into three categories that Vanguard targets: Core clients, who ask for the company services through phone calls. Voyager customers are served with discounted rates, and a team of five people reviews their statements along with conducting their need-based assessments. The third customer is the Flagship client. This customer receives free financial planning services with 20 percent discount rates. Moreover, each account of the customer is given under the charge of a single representative. Thus, it can analyze that the target customer of Vanguard is those who seek to invest in long-term funds with lower costs. Vanguard has not targeted short-term investors. This can be seen when the company devises its marketing policies for its long-term investors, discouraging short-term investors that can prove to be a profitable segment for Vanguard. The company also rejected an investment of $40 million with a fear that the investment would be withdrawn rapidly by the investor. Apart from this, it is evident from the case study that Vanguard does not target short-term investors as it offers the lowest redemption rates. The redemption rate of the mutual fund industry between 1993 and 1998 had grown by 25 percent, while Vanguard decreased it by 25 percent. The company strongly believes that by using lower redemption rates, it can retain its customers and can encourage them to invest more in Vanguard.