Though it is not a big part of Vanguard’s revenues, the International markets do provide many opportunities. As mentioned in the case, Vanguard Australia managed more than $10 billion in 2002. This is not pocket change! There is money there and further International concentration would generate further revenues for Vanguard. Although it is not a key focus for Vanguard now, they should continue to attract customers in the International market.
Another issue facing Vanguard is simply marketing strategy. Their current strategy involves product-specific printed advertising. They have to increase awareness of their products. I myself have heard of Vanguard, but had no idea what their product offerings were and what they were all about prior to reading this case. I cannot recall ever seeing a commercial on television advertising Vanguard. They should reach out to young investors like myself because that is what their core business strategy is all about. They are seeking long-term investors, which lies with people in their early-mid 20’s who are in the first few years of their careers and just starting their 401k’s and other future planning investments. As mentioned in the case, Vanguard is thinking of a target marketing strategy, and I believe they should start with young investors in the first few years of their careers.
With Vanguard being the lowest spender of advertising in their competitive set, it is truly hard to entice new customers to their business. Vanguard must do extensive research on market trends in the investments segment. They should put together a specialized team to perform specific external analyses of these trends. Vanguard must analyze the market as a whole externally, which in turn provides extensive data on their customers and competitors. If they can determine which direction the industry is headed, this will allow them to target certain segments with a new advertising strategy. A word of warning though, determining market trends is both difficult and dangerous for a company. Determining the wrong trends could lead to disastrous losses for companies.
Vanguard has strong core values of being the low-cost provider of investment tools and providing customer-specific investment advice. They have achieved such a position through strong upper management leadership and have achieved great stature in the industry. Their reputation is a direct result of their core values. Changing their business strategy could be a result in success or be disastrous for Vanguard. They have to decide which path to choose, but they should start by expanding their current business. They have become a very successful company through their low-cost investment offerings, great managerial leadership, solid business structure, and good performance. They should continue target customers who already invest with them; the cost-conscious long-term investors. They should broaden their marketing group and increase advertising costs to attract more business. Vanguard also needs to continue to grow Internationally in emerging markets.
Vanguard must put together a team to study market trends. The external analysis results will allow Vanguard to determine exactly which path to take in the future. If the analysis results show that the market is trending away from long-term investments (possibly because of depleting retirement and pensions), then Vanguard can broaden their offerings to more short-term investments. Their current brand equity and customer loyalty should not be jeopardized if Vanguard adds to their investment offerings. It only allows more choices to current and future customers and will further increase Vanguards revenues in the future.