DLJdirect: Putting Our Reputation Online
Purpose of the Report
This report attempts to address the key issues faced by DLJdirect Company by deciding how to respond to the aggressive marketing campaigns of the competitors. Along with this, the management of the company was also faced with the decision of which customer segments should the company target. Currently, the company has just been focusing upon the high net worth investors who were sensitive to risk taking and the company had never targeted the day traders. Most of the competitors of the company usually targeted the mainstream investors or the day traders. However, the question before the company was the whether the company was forfeiting the profits by not focusing on the day traders who were willing to take on more risk.
Along with this, the competitors of DLJdirect Company such as E*Trade and others had planned to incur marketing costs of about $ 1.5 billion combined whereas, DLJdirect Company had planned to spend a total marketing budget of $ 65 million. However, the purpose of this report is to evaluate and analyze that whether this level of marketing budget is enough to cover the marketing costs per each new account, which has recently doubled and also sustain the competitive position of DLJdirect Company. Estimations for the marketing budget for the year 2000 also have to be made.
Recommendations
Therefore, the first recommendation for the management of the company is to maintain the marketing budget for the year 1999 at the planned level of $ 65 million. These fixed marketing costs would be enough for the company to generate a positive long term return by covering the double marketing costs in this year.
Lastly, the most attractive customer segments for the company looking at the current capabilities of the company are the Get rich fast and the aggressively affluent customer segments. Therefore, the management of DLJdirect is recommended to target both of these customer segments. In particular, the company has a reliable and a fast service system, which would be more beneficial to the Get rich fast customer segment and the company could provide them all the services which they seek such as the site performance, transaction confidence and low fees.
However, one thing needs to be cleared that the company should target this customer segment as well but a huge amount should not be spent to acquire this customer segment. The reason for this is that exhibit 10 of the case shows that the size of the Get rich fast segment is reducing each year and when compared to the high net worth investors, it is recommended for the company to assign a higher discount rate for this segment because they are in such a position to easily swing the health and position of the stock market. Overall, the management of the company is recommended to come to a balance between the Get rich fast and the aggressively affluent customers.
Analysis
Each issue has been analyzed for all the recommendations that have been made in the previous section. First of all, we begin with the analysis of the planned marketing budget of the company of $ 65 million.........................
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