Sunday, December 28, 2008

Edward Jones Growth Plan on Track - December 2008

Edward Jones continues an aggressive expansion plan here and nationwide.

"We base our expansion on total liquid investable assets," said Jim Koinis, the area's regional leader and a financial adviser in Punta Gorda. "The industry knows how many dollars are available and what percentage of that business we have, and we know how well we can expand in an area.

"In the beginning, I knocked on doors all day long," "It sounds so old-fashioned, but you realize why you are doing it. You really want to get to know people before you can give them any kind of advice." (financial adviser with Edward Jones, C.J. Bannister). Cold calling remains the primary way she and other Edward Jones advisers build their offices.

St. Louis-based Edward Jones operates 9,200 offices in the United States, plus nearly 600 in Canada and 230 in the United Kingdom. Its 11,000 advisers work with more than 7 million clients. Today ranks first in number of offices, third in brokers and 30th in capital.

New financial advisers go through a detailed training process. Continuing education is important -- "We never stop going to school," according to Koinis.

"Our investment philosophy is buy quality, hold for the long term, and diversify," Koinis said.

Favored are a mix of municipal, government and corporate bonds, mutual funds, common stocks and tax-advantaged securities.

Its model stock portfolio includes financial services, health care, technology, consumer staples, consumer cyclicals, capital goods and energy.

SmartMoney magazine this year named Edward Jones the No. 2 full-service brokerage firm, behind Raymond James.

Adviser Profiles at Edward

Some advisers join Edward Jones right out of college, but many had previous careers.


Koinis was a teacher, school administrator and restaurant owner before moving to Punta Gorda and opening his office in 2000.

John Tucker

For John Tucker, Edward Jones is a family affair.

He has been a financial adviser with the firm in Bradenton for 20 years. His wife, Diane, has her own Edward Jones office, also in Bradenton. His sister and her husband, and one of their children, operate offices in Kentucky and Tennessee.

Tucker,presently 62, owned a drug store with his wife in Blackfoot, Idaho, before deciding to make a change. He had a master's of business administration degree, and after checking out a recently opened Edward Jones office in his town, he felt it would work for him and relocated to Bradenton.

"When you first start out, you go door to door, introducing yourself to people and telling them you plan to open an office," Tucker said. "From there you visit with those people you met, and over time some of them become clients, and some don't become clients. You get referrals, and that's how you grow the business."

After 20 years, Tucker does not have to cold call any more, but he still networks at Chamber of Commerce meetings, social functions and the like.

His day is a mixture of talking to clients on the telephone, visiting with them here in the office, or going to see clients if they can't come to see him.


Edward Jones - Still Recruiting and Expanding December 2008

Posted Dec 23, 2008 on

Financial Advisor, EDWARD JONESPosted Dec 23, 2008
Full Time
London, ON, CANADA; Sudbury, ON, CANADA; Vaughan, ON, CANADA; Windsor, ON, CANADA

Relevant Work Experience: All
Job Category:Financial Advisor
Industry:Banking; Insurance; Project Management
Company Url:

Financial Advisor *

Individuals from a variety of occupational backgrounds including sales people, I.T. professionals, and corporate managers have found new success at Edward Jones. By becoming an Edward Jones Financial Advisor, you can run your business, determine your compensation, and redefine your future.

We take a personal approach to business that starts with a face-to-face meeting between a Financial Advisor and an individual investor. As we continue to grow in Canada, the United States, and the United Kingdom, we are looking for individuals who are self-managers, sales-oriented and highly driven.

What leads to success as a Financial Advisor?

Edward Jones believes in doing business the old fashioned way, face to face. When starting out, our Financial Advisors spend most of their time in the communities they serve, making face-to-face contacts in neighbourhoods and with businesses, introducing themselves and Edward Jones. They spend time getting to know their clients, their investment needs and their objectives. Then they recommend the appropriate investments and services on an individual and personal basis. A strong sales and/or management background compliments the Edward Jones business model. We frequently find that individuals with a solid sales or management history thrive as Financial Advisors because they understand the commitment and relationship building skills that are crucial to establishing long-term clients.

As an Edward Jones Financial Advisor you will:

- Work autonomously from your own neighbourhood office while being supported by an international financial services leader

- Build your business by identifying and cultivating prospective clients

- Help clients to determine financial and investment needs, and utilize sales skills to effectively recommend suitable financial products

- Become knowledgeable in an array of financial products to suit a variety of objectives and risk levels

- Enjoy early financial support. We know that building a business takes time. For this reason, you'll have a compensation package during your first eighteen months including training pay that takes into account your experience and geographic location. You'll also have opportunities to earn new account bonuses and milestone bonuses based on your production while you build your client base.

Secure your future:

- Earn commissions, bonuses, and incentive travel based on your production

- Receive world-class financial and business development training

- Apply a proven business model

- Earn a full-time branch office assistant who manages client service and marketing activities

- Participate in profit sharing

- Have the opportunity to become a partner in the firm

- Work for one of the best companies to work for in Canada***

This is a unique and exciting opportunity for the right type of person. The financial gains can be great - but it takes a dedicated individual to capitalize on the potential. Visit the Edward Jones career site now to apply online and read success stories of current Financial Advisors Edward Jones - Achieve Well-earned Success

*In Quebec, our advisors are known as Investment Advisors.

**Edward Jones received the highest numerical score among full service brokerage firms in the proprietary J.D. Power and Associates 2006-2008 Canadian Full Service Investor Satisfaction StudiesSM. 2008 study based on 6,240 total responses measuring 16 brokerage firms and measures opinions of investors who used full-service investment institutions. Proprietary study results are based on experiences and perceptions of consumers surveyed May 2008. Your experiences may vary. Visit

***For the sixth consecutive year, the financial-services firm Edward Jones was named one of the best companies to work for in Canada by the Globe and Mail's Report On Business magazine and in La Presse in the annual listing of the "50 Best Employers in Canada." This year the firm ranked No. 5.

Edward Jones is an equal opportunity, committed to developing an inclusive culture. We believe that diverse ideas, opinions and perspectives are good for building business.

Total Job Losses in USA 2008

The government reported that nearly 2 million jobs have been lost in 2008 till November end. In total, it reported job cuts of 1.9 million for 2008, through November.Those losses exceed the 1.5 million job cuts that occurred in a 12-month span from 1990 to 1991, according to information from David Wyss, chief economist for Standard & Poor's.

On Friday, the Labor Department said that employers hemorrhaged 533,000 jobs in November, the largest monthly loss since December 1974.

The annual unemployment rate also increased to 6.7% in November, from 6.5% the prior month. In 1982, the rate was nearly 11%. Hence it is certainly the worst recession since 1982.

The total layoffs announced in the first week of December: 33,914.


11th December 2008

Bank of America said that it planned to cut 30,000 to 35,000 positions — among the largest layoffs ever — over the next three years as it digests its acquisition of Merrill Lynch. That could amount to more than 11 percent of the combined firms’ global work force of 308,000.

As of last week, banks have cut 186,439 jobs since the onset of the financial crisis in July 2007, according to data from Bloomberg News.

James Dimon, CEO of Bank of Americal said that housing prices could fall another 20 percent.

The New York City comptroller, William C. Thompson Jr., raised his estimates of Wall Street job losses over the next two years to 170,000.


Investment Banking Job Losses - 2008

Main financial services job losses since beginning of September

Sep 1: Commerzbank 9,000

Sep 13: GMAC 5,000

Sep 26: HSBC 1,100

Oct 3: UBS 2,000

Oct 10: Barclays 3,000

Oct 21: National City Corp 4,000

Oct 23: Goldman Sachs 3,300

Oct 28: Credit Suisse 500

Oct 30: American Express 7,000

Nov 7: DBS Group 900

Nov 14: Fidelity 1,700

Nov 14: Royal Bank of Scotland 3,000

Nov 17: Citigroup 52,000

Nov 20: Bank of New York Mellon Corp 1,800

Dec 1: J P Morgan Chase 9,200; HSBC 500; Bayern LB 5,600

Dec 4: Credit Suisse 5,300; Nomura 1,000

Wednesday, December 10, 2008

Edward Jones pays up in mutual fund case - September 2008

September 10, 2008

Edward Jones & Co. will pay the state $7.5 million to settle a 4-year-old case involving the firm’s "revenue sharing" agreements with mutual fund companies.

Then-attorney-general Bill Lockyer sued Jones in 2004, alleging that it had failed to tell its customers about fee-splitting arrangements it had with various fund companies. Investors didn’t know about the incentive Jones brokers had to pitch some funds and not others.

For more details

Goldman Sachs Laid Off Thousands in 1st week of November 2008

Goldman Sachs notified roughly 3,200 employees this week that they have been laid off. It was part of previously announced and reported plans to slash 10 percent of the firm’s global work force.

Goldman has quietly and slowly cut jobs all year. The bank laid off hundreds of M&A support staff and junior bankers in June due to slowing markets, following a round of leveraged lending and mortgage securities cuts in April.

Early this year, Goldman cut 1,500 people, or 5 percent of its staff, following 2007 performance reviews.

A typical commnet by a GS employee

As someone who was let go from GS on Wednesday, I can tell you that the process was not very pleasant. They came in the morning, took us out, processed our paperwork and that was it. No goodbyes, no thanks for your contribution, no ability to go back to get our belongings. To make matters worse, no bonus will be given (assuming one is given to those still working there) even though we accrued the bonus for 11 of the 12 months. Makes me think that they wanted to keep the bonus pool high for existing employees, so they get rid of those who would be getting a bonus in 3 weeks - that is what truly sucks.

— Posted by Jessop

For more comments by GS employees


Friday, October 31, 2008

Lehman - Managing Bankruptcy

On October 24, 2008, Lehman stated that its workforce was comprised of about 140 employees and a team of about 125 from restructuring firm Alvarez & Marsal. One of the firm's (Alvarez & Marsal) founders, Bryan Marsal, is serving as chief restructuring officer of Lehman.

Barclays PLC, which bought the company's core US assets last month, has continued the employment of more than 9,000 Lehman workers. Barclays and Lehman have a transition services agreement whereby former employees of the investment bank will help it wind down its business.

But Lehman said in court documents on Thursday that those employees are unable to devote the time and resources necessary to help Lehman wind-down its businesses. Lehman wants permission from the court to hire additional workers quickly to avoid the risk of losing information that would help it unwind thousands of complex derivative transactions. Lehman said it was seeking to hire former Lehman workers because the tasks to unwind the business require specialized knowledge.

Lehman's lead bankruptcy attorney Harvey Miller informed the court that it may request higher payment schemes for these employees than bankruptcy courts are used to. The "transactions involved necessitate the employment of individuals with very specific skill sets, and preferably, former Lehman employees who possess the expertise and experience necessary to efficiently administer and wind-down the Debtors' businesses and the subject transactions,"

The estimate for the total base salary for 620 employees, including an additional 480,is $96 million. The employees would be eligible to earn a bonus. Lehman said the total amount of bonuses to be issued would not exceed $110 million.

Lehman also asked for approval to set aside severance benefits of $22.5 million for employees that are involuntarily let go. It said employment contracts would have initial commitment periods ranging from three to 24 months.


Monday, September 29, 2008

Subprime crisis related litigation

According to Navigant Consulting’s most recent report on this topic, of the 607 subprime-related cases filed in federal courts over the 18 monthe ended June 30, 2008, 310 were filed in just the first six months of 2008 — more than the 297 filed during all of2007.

Jeff Nielsen leads Navigant Consulting’s Financial Services Disputes & Investigations group and is actively advising clients in a number of subprime-related matters. He comments “We are now more than a year into the credit crisis, and the litigation continues to pile up.”

Financial system rescue plan in America (USA)

Every man, woman and child have to commit $2,300 to rescue the financial system.
$700 billion is a lot of money.

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Sunday, September 28, 2008

The History of the Global Financial Meltdown

The history of the financial meltdown

Simon Evans charts the long chain of events that led to last week's turmoil

Sunday, 21 September 2008

A Day at Goldman Sachs as an Analyst - Bijel Kirti Doshi

Jammin' Like Crazy at Goldman
This Indiana grad works really long days and nights in investment banking, but enjoys "the team-oriented culture" and "focus on mentorship"

10.00 a.m. to 1.30 a.m.

Read the details'_at_goldman_sachs.htm

Saturday, September 27, 2008

Hedge Fund Failures

March 6, 2008

Carlyle Capital, a publicly-traded mortgage bond fund, said it received a notice of default after failing to meet margin calls from banks, stoking fears of a wave of hedge fund liquidations and fire sales of assets.

On Tuesday Focus Capital, a $1bn fund in New York, said it was forced to liquidate its portfolio after missing margin calls. Friday saw the implosion of Peloton Partners, a $2bn London-based fund.

August 1, 2008

Expect to see more hedge fails fail this year than are originated, says Philip Duff of Duff Capital Advisors in a CNBC interview. Duff predicts that 2008 will be the first year that will see more hedge funds go out of business than start up.

Duff is the former COO of Tiger Management and former CFO of Morgan Stanley

September 21, 2008

The commercial real estate market in New York is feeling the pain of Wall Street's demise.

With the breakdown of Bear Stearns last spring and the shuttering of scores of hedge funds throughout the year, vacancy rates have edged up to 7.3 percent as of Aug. 31 from a record low of 5.8 percent the year before.

Top Four Causes of Hedge Fund Collapses

1. Improbable Market Events
2. Leverage
3. Investor Redemptions
4. Forced Liquidation or Portfolio Sale

March 9, 2006

Kirk S. Wright and his firm, International Management Associates, appear to have lost the hedge fund's all of the $115 million that they invested.

The failure of Wright's fund adds to a long and growing list of hedge fund meltdowns, large and small. Usually only the larger failures make the news, such as Bailey Coates Cromwell Fund ($1.3 billion), Marin Capital ($1.7 billion), Aman Capital (est. $1 billion), Tiger Funds ($6 billion), and Long-Term Capital Management ($1 billion).

A March study by Capco, a financial-services consultancy and technology provider, f investigated 100 hedge fund failures over the last 20 years and found that half of them failed because of operational issues rather than lousy investment decisions. These include misrepresentations and inaccurate valuations, fraud, unauthorized trading, technology failures, bad data and so on.

"Systemic risk is commonly used to describe the possibility of a series of correlated defaults among financial institutions---typically banks---that occur over a short period of time, often caused by a single major event.

March 28, 2008

Forty-nine hedge funds shutdown in 2007, representing $18.8 billion at their higher valuation, compared with 83 hedge funds that shuttered themselves--worth $35 billion--the year before, as calculated by Absolute Return.


Aug 22, 2008

Earlier this month, former CNBC anchor Ron Insana folded Insana Capital Partners, the hedge fund he launched in 2006, while superstar investor Dan Benton announced that he's shuttering his $2 billion hedge fund Andor Capital Management in October.'s-Hedge-Fund-Closure-a-Cautionary-Tale?tickers=%5EGSPC
Bloomberg story, September 2008

"Ospraie Management LLC, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year because of bad bets on commodity stocks.

The New York-based Ospraie Fund fell 26.7 percent in August after a ``substantial sell-off'' in energy, mining and resource equity investments, Anderson said in a letter to investors yesterday."
Hedge funds may be next
'We're going to see five fail for every bank'
September 18, 2008

"We're going to see five hedge funds fail for every bank, maybe more," says Christopher Whalen, senior vice-president and managing partner at Torrance, Calif.-based Institutional Risk Analytics.

The CDS market has ballooned to about US$62-trillion, with hedge funds making up much of the trading before the credit crisis began.

A moment of reckoning for many hedge funds may come at the end of this month, when their exposure to credit default swaps must be "marked to market" to reflect the increased obligations at the end of the third quarter.

It may be a very quiet exercise, however, as most hedge funds are private and report only to their investors. Operating largely outside public markets and regulatory scrutiny, the failures, too, may take place largely behind the scenes and may already have begun.

Friday, September 26, 2008

Registered Investment Advisors

An investment advisor is one who manages the investments of others for a fee, typically calculated as a percentage (e.g., 1%) of assets under management on an annual basis. Investment advisors must be registered under either federal or state law depending on the amount of money under management. Common examples of investment advisors include pension fund managers, mutual fund managers, trust fund managers and also individuals granted discretionary authority by private clients to manage their personal investments.

Stock brokers (known as "registered representatives" under federal law) are not necessarily (and often are not) registered investment advisors. The vast majority of stockbrokers simply take orders for sales and purchases of stocks, bonds and other financial instruments and provide financial advice (and recommend sales and purchases) only as an incidental service to their primary brokerage service -- they usually do not have discretion to manage client investments.

In general, under U.S. law, investment advisors owe their clients an ongoing fiduciary duty to exercise their discretion in selecting investments with their clients' best interests in mind. Stock brokers on the other hand, typically do not owe a fiduciary duty to clients beyond the proper execution of buy and sell orders.

80-b-2(11) Definition of Investment Adviser in INVESTMENT ADVISERS ACT OF 1940

(11) “Investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities; but does not include

(A) a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.] which is not an investment company, except that the term “investment adviser” includes any bank or bank holding company to the extent that such bank or bank holding company serves or acts as an investment adviser to a registered investment company, but if, in the case of a bank, such services or actions are performed through a separately identifiable department or division, the department or division, and not the bank itself, shall be deemed to be the investment adviser;

(B) any lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession;

(C) any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor;

(D) the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation;

(E) any person whose advice, analyses or reports relate to no securities other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of the Treasury, pursuant to section 3(a)(12) of the Securities Exchange Act of 1934 [15 U.S.C. 78c (a)(12)], as exempted securities for the purposes of that Act [15 U.S.C. 78a et seq.];

(F) any nationally recognized statistical rating organization, as that term is defined in section 3(a)(62) of the Securities Exchange Act of 1934 [15 U.S.C. 78c (a)(62)], unless such organization engages in issuing recommendations as to purchasing, selling, or holding securities or in managing assets, consisting in whole or in part of securities, on behalf of others; or

(G) such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order.

Registration process



FAQs regarding registration

Monday, September 22, 2008

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Friday, September 19, 2008

Financial Advertising - A Regulator's View Point

Excerpts from

Keynote speech by Nausicaa Delfas, Head of TCF Strategy, Financial Promotions and Unfair Terms
Infoline Conference "Financial Promotion of Investment Products after MiFID"
12 December 2006

To help achieve a fair deal for consumers, we find it helpful to think in terms of the four pillars essential to delivering a more effective and efficient market in retail financial services:

helping consumers to become more capable and confident in the decisions they are required to make;
ensuring that consumers receive, and use, clear, simple and understandable information;
ensuring that firms are soundly managed, well-capitalised and that they treat their customers fairly; and
delivering a regulatory regime that is proportionate and risk-based.
Our approach to financial advertising is relevant to the delivery of all these pillars. However, the key requirement is one of the eleven principles which underpin our whole regulatory approach: Principle 7 states: ‘a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading’.

So why do we place so much store on firms getting financial advertising right? Clearly, advertising plays a highly influential role in how consumers make decisions – and I am sure you can appreciate that the consequences of misleading advertising can be painful for all concerned. Poor promotions can lead consumers to buy the wrong product, ultimately with unhappy outcomes for them and for firms.

it is so important for adverts to be straightforward in communicating the nature of the product or service and the risks involved. If advertisements fail to give a clear and straightforward description of the nature of the product, how then can we expect consumers to make the right choices, and looking forward, to progress in taking greater personal responsibility for their financial decisions?

Over the last two years, we have investigated over 930 cases of potentially misleading advertising. Although we did not need to take action in all of these, in 60% of them adverts were swiftly amended or withdrawn altogether. Moreover, where consumers have been misled and suffered loss, firms often offer them compensation. This means that we can deliver very rapid consumer protection without needing to resort to formal enforcement action – the fact is that anything approaching a 'public censure' has to go through the formal disciplinary process which could significantly delay delivering protection. What matters here is acting fast.

In the vast majority of cases, formal enforcement action would be disproportionate. But in the more serious cases we do, of course, take such action. In the last two years, we have done so in respect of twelve firms, levying just over £1.5 million in fines.


are you clear that you have considered the needs of your target audience?
are you clear that you provide a fair and adequate description of the risks and drawbacks of the product?
are you clear that you have described the product properly? In this case, a whole of life insurance policy was described as a funeral plan in one promotion, when it was no such thing.

World's Best Investment Banks 2008 - Global Finance Ranking


Best Investment Bank -
Goldman Sachs

Best Equity Bank - Merrill Lynch

Best Debt Bank - Citi

Best M&A Bank - Goldman

Best Up-and-Comer - Falcom
Financial Services

Most Creative - Citi


Global - GS Capital Partners

North America - TPG

Western Europe - CVC Capital


Consumer - JPMorgan

Financial Institutions - Morgan

Health Care - Goldman Sachs

Industrial/Chemicals - Citi

Media & Entertainment - Morgan

Oil & Gas - Merrill Lynch

Power - Merrill Lynch

Real Estate - Credit Suisse

Technology - Goldman Sachs

Telecom - Merrill Lynch


Global - Sullivan & Cromwell

North America - Skadden, Arps,
Slate, Meagher & Flom

Western Europe - Freshfields
Bruckhaus Deringer

Asia - Morrison & Foerster
Central & Eastern Europe -
White & Case
Latin America - Simpson
Thacher & Bartlett
Middle East/Africa - Baker &
Best Investment Bank - Goldman
Best Equity Bank - Merrill Lynch
Best Debt Bank - Merrill Lynch
Best M&A Bank - Goldman
Country Awards:
Canada – BMO Capital Markets
US – Merrill Lynch
Best Investment Bank -
Deutsche Bank
Best Equity Bank - JPMorgan
Best Debt Bank - Deutsche
Best M&A Bank - Deutsche
Country Awards:
France - BNP Paribas
Germany - Deutsche Bank
Italy - Mediobanca
Netherlands - Rabobank
Nordic Countries -
Handelsbanken Capital

Portugal - Millennium bcp
Spain - Santander
Switzerland - UBS
United Kingdom - JPMorgan
Best Investment Bank - Citi
Best Equity Bank - UBS
Best Debt Bank - Citi
Best M&A Bank – UBS
Country Awards:
Australia - Macquarie Bank
China/Hong Kong - China
International Capital
India - ICICI Securities
Indonesia - Mandiri Sekuritas
Japan - Nomura
South Korea - Samsung
Taiwan - Chinatrust
Best Investment Bank - Citi
Best Equity Bank - Credit Suisse
Best Debt Bank - Citi
Best M&A Bank – Citi
Country Awards:
Argentina - Merrill Lynch
Brazil - Banco Ita├║
Mexico - Banamex
Best Investment Bank -
Best Equity Bank - Deutsche
Best Debt Bank - UniCredit
Best M&A Bank - Morgan
Country Awards:
Russia – Renaissance Capital
Turkey – Garanti Securities
Best Investment Bank - Samba
Financial Group
Best Equity Bank - Samba
Financial Group
Best Debt Bank - Deutsche
Best M&A Bank - Citi
Best Equity Deal – PetroChina
Lead Underwriters: China
International Capital, China
Citic Securities, UBS
Best Debt Deal - $9 billion
GlaxoSmithKline bonds
Joint Bookrunners: Citi,
JPMorgan, Lehman Brothers
Best M&A Deal - Sabic-GE
Advising acquirer: Citi
Advising target: Goldman
Sachs, Lehman Brothers

Still there is still plenty of worry in the Global Financial Market

Wharton Professors Franklin Allen thinks there is still plenty of worry -- to go around. The real risk now is overseas, particularly in Europe," according to him. He foresees potentially enormous problems with "big banks in small countries," such as Belgium and the Netherlands. "Fortis [Bank] will come under scrutiny in the next few weeks," he noted, referring to a Belgian-Dutch bank which saw profits for the first half of 2008 fall by 41% compared to the same period of 2007, according to a recent report from the BBC. The performance was blamed on the crashing global credit markets and the bank's own bad loans.

That might turn out to be a blip if things turn sour for Switzerland's two big banks, UBS and Credit Suisse, he suggested, adding that the value of the assets held by those banks is six times the gross domestic product of their home country. "If they have a big problem, the Swiss government cannot bail them out." And If Swiss banks -- traditionally conservative safe havens for international finance -- hemorrhage, a cascade effect across the global markets could have implications that are impossible to assess. Said Allen: "Hopefully it won't happen. But that's the worrying thing."

View expressed by Prof Allen in a panel discussion

Thursday, September 18, 2008

Investment Banking in China - Presence of Global Companies

In China, foreign institutions covet licences that allow them to form investment banking joint ventures to underwrite domestic stock and bond offerings.

Beijing has been slow to grant such licences, with only a handful of banks managing to win approval for mainland securities joint ventures, including Morgan Stanley, Goldman Sachs, UBS and Credit Suisse.

Global bank HSBC Holdings hopes to strike an investment banking partnership in China as part of its expansion in the region, the bank's Asia chairman, Vincent Cheng, said on 5.8.2008.

Goldman Sachs Gao Hua: In 2004, Goldman Sachs was granted approval by the China Securities Regulatory Commission to create a new investment bank, called Goldman Sachs Gao Hua (GSGH). In creating GSGH, Goldman Sachs partnered with Fang Fenglei, a well-known and politically connected Chinese investment banker, and Lenovo Group, China’s largest computer maker. As part of the deal, GSGH acquired the operating license of the failed Hainan Securities, which Goldman Sachs paid $67 million to bailout. This gave Goldman Sachs the ability to deal in mainland stocks and bonds, as well as access to China’s equity and debt markets, a privilege previously given only to Chinese securities firms. This licensure gives Goldman Sachs (through GSGH) a first-mover advantage in accessing China’s burgeoning trading and securities markets as a

Strong ties to the government will aid Goldman Sachs in positioning itself to be on the “short list” for lucrative business and assignments. Goldman Sachs has already achieved a milestone in the form of GSGH, which permits them to act as a licensed broker/dealer in China. This was realized against strong opposition from a powerful domestic broker/dealer lobby.

On the personal level, Goldman has forged partnerships with influential Chinese businessmen.
These relationships serve two functions: they generate business for Goldman Sachs
and they enhance Goldman Sachs’ relationship with the government.
Powerful businessmen facilitate economic transactions in the Chinese marketplace. The
government responds favorably to businessmen of political clout. This is called “Guanxi” (friendship) and is essential to the current conduct of business in China. GSGH, an extremely valuable asset to Goldman Sachs operations in China, was facilitated by the inclusion of Fang Fenglei as a partner. Fang is a well-known investment banker of considerable political clout who possesses many valuable ties to senior political leaders.

Another strategic partnership was formed by Goldman Sachs’ dealings with China Netcom (CN). A leading CN advisor is Jiang Mianheng, the son of China’s president. Jiang is a driving force of China’s technological advancement. Goldman Sachs’ investment in CN gives it a formidable political ally and also a possible source of revenue from technological ventures in the future.

Morgan Stanley Outfit: China International Capital Corporation (CICC), the investment bank joint venture between Morgan Stanley and China Construction Bank, had been in service for nearly a decade and was believed by Chinese businessmen to have the best reputation. Upon entering the market with Goldman Sachs Gao Hua, Goldman Sachs mined much of CICC’s talent, including head of operations Fang Fenglei.This resulted in the transfer of 15 of 45 GSGH staff from CICC.


The Chinese market is one of unparalleled economic growth. Every week,
more than $1 billion in foreign direct investment (FDI) comes into the country. China has averaged a 9% increase in its gross domestic product (GDP) over the past 25 years. The growth rate of foreign trade has averaged 15% since 1978. In 2005, China accounted for 30% of Asian business transactions (excluding Japan).

Chinese firms have begun investing heavily abroad. In 2003, Chinese firms invested
$3.32 billion overseas. Lenovo, a Chinese computer giant, recently acquired the personal computer division of IBM in a $1.75 billion deal. CNOOC, a Chinese oil company, was recently engaged in a bidding war for U.S.-based Unocal that topped $18.5 billion. These examples demonstrate the market for investment banking services that arises in China as Chinese companies have capital and are willing to deploy it strategically to enhance their business.

The Union Bank of Switzerland (UBS) recently announced that it would invest $500 million into Bank of China, and take a 20% stake in Beijing Securities.

Last year, the Hong Kong and Shanghai Banking Corporation (HSBC) took a 19.9% stake in the Bank of Communications.

Citigroup recently announced that it is leading a consortium to purchase a majority stake in the Guangdong Development Bank.


Wednesday, September 17, 2008

Investment Banking - Financing Problem

The problem with the investment banks is that they've generally financed themselves for the good times, not the bad times. This means an excessive dependence on short-term funding and high leverage. This generated high ROEs in good times, supporting large payouts for employees and shareholders alike. But when times turned bad, compounded by poor risk management and mind-bogglingly stupid investment decisions, such a capital structure has come back to haunt many a firm.

Nouriel says solve the problem by joining investment banks and commercial banks, and using core deposits as a vehicle for extending the duration of the investment bank's liability structure.

Roger Ehrenberg says no.

According to him, Goldman Sachs and Morgan Stanley should materially alter their financing strategy, lengthening duration by issuing different tranches of preferred stock, subordinated debt and term debt, de-levering in order to weather the storm and accept lower ROEs in the process.

This means that these firms, their culture and their employees won't be destroyed. To maintain continuity and survival in bad times, firms must forego some of the liquidity-driven option value, and put in a more conservative, less leveraged, more flexible capital structure in place.

Investment Banking 2.0 - Pattern to emerge after the Present Crisis

Investment Banking 2.0 will be the re-emergence of the boutique, the focused, nimble, high-touch firm that was the bedrock of capital formation in the early years of the stock market boom.

The mega-firms, universal banks being created at the urging of the Treasury are not sustainable. They'll live just long enough for investment banking losses to be absorbed by the commercial bank's larger capital base, after which the best talent will flee for greener pastures.

Goldman Sachs Quantitative Group - 2008

Goldman Sachs's flagship Global Alpha fund recorded the biggest loss of almost any hedge fund in 2007. It started the year with $10 billion, made an estimated loss of 39%. The fund lost money after recording a 7.7% drop in the last full week of July 2007. It made a 6% loss in 2006 and a 40% gain in 2005.

Goldman Sachs Asset Management cut 20 members of its quantitative team as a result of a restructuring in March 2008.

Monday, September 15, 2008

Market Segmentation and Selection of Target Segments

Buyers for a generic product constitute a market. Market can be segmented in a number of ways.

Market Segmentation

Two broad group s of variables are sued to segment consumer markets. One group of variables is consumer characteristics. The other group of variables is behavioral characteristics. Behavior is consumer response to benefits sought or brand and use occasions.

Consumer characteristics used for market segmentation include geographic, demographic and psychographic characteristics.

Geographic segmentation

Geographic segmentation divides the market into different geographic units such as nations, states, regions, cities and neighbor hood etc.

Demographic segmentation

In this segmentation approach, the market is divided into groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, or social class.

Psychographic segmentation

In this approach to segmentation, buyers are divided into different groups on the basis of lifestyle and/or personality.


Active lifestyle, country lifestyle, latenighters etc. are some of the segments under this classification


Markets are being segmented on the basis of personality. Personality is a group of traits exhibited persistently by a person. For example, Ford buyers were identified as independent, impulsive, masculine, alert to change, and self confident, while Chevrolet owners were conservative, thrifty, prestige conscious, less masculine, and seeking to avoid extremes.

Behavioral segmentation

In this approach buyers are classified into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Some behavioral variables can be usage rate, readiness for buying the product, attitude toward the product, loyalty to the product, and occasions on which the product is used etc.

Multi-attribute segmentation (Geoclustering)

Some marketers are using multiple variables to define target groups. For example using socioeconomic status and lifestyle variables may be combined and market segmentation is done.

Market Targeting

After the doing the market segmentation, the firm has to evaluate the segments for their market potential. Then the company has to decide which and how many segments to serve and how to serve them. The decision alternatives available to the firm are:

Single segment concentration

In the simplest case, the company selects a single segment.

Selective specialization

The firm selects a number of segments, each objectively attractive and appropriate, for the firms objectives and resources. There may be little or no synergy among the segments, but each segment is a money maker on its own.

Full market cover

The firm may attempt to serve all customer groups


Philip Kotler, Marketing Management

Marketing Management Article Series

If you take the risk, you get expected return only

If you take the risk, you get expected return

Every security market investor, trader and intermediary should know this statement.

Don't jump in your seats if somebody says I have taken the risk and I made the money.

There were many who took the same risk and were in dumps. This is the man who became successful and exhorts everybody else to take the risk.

Unless you can manage the possible loss (loss will never be expected in a risky venture only profit is expected) don't take the risk.

The mighty investment banks like Merrill Lynch and Bear Stearns have lost their independent status.

Lehman filed for bankruptcy. Many hedge funds are folding up. Let people understand risk taking properly.

Friday, September 12, 2008

Best Practices of Efficient Investment Advisors

Download the full report of Advisor Impact of 2007

Time Management and Personal Productivity, 33 page report

Thursday, September 11, 2008

Organization buying

Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and Wind)

Some of the characteristics of organizational buyers are:

1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products.

2. The purchases are in large quantities.

3. Close relationships and service are required.

4. Demand is derived from the production and sales of buyers.

5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products.

6. The organizational buyers are trained professionals in purchasing.

7. Several persons in organization influence purchase.

8. Lot of buying occurs in direct dealing with manufacturers.

Organizational Buying Situations

Straight rebuy

Modified rebuy

New task buy

Systems buy

Participants in the Business Buying Process


Major Influencers on Business Buyers

Environmental factors

Organizational factors

Interpersonal factors

Individual factors

Organizational Buying/Purchasing/Procurement Process

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order routine specification

Supplier performance review

For Further Reading

Philip Kotler, Marketing Management

The issues in organizational buyer behavior are applicable when securities market intermediary are trying to sell their services to institutional clients.

Monday, September 8, 2008

Analyzing Competitors - A Marketing Activity

Marketing Management Article

Companies need to know five things about competition.

Who are our competitors?
What are their strategies?
What are their objectives?
What their strengths and weaknesses?
What are their reaction patterns?

Who are our competitors?

Kotler outlined four levels of competition, based on the degree of product substitutability.

1. Brand competition.
2. Industry competition
3. Form competition
4. Generic competition

Identifying Competitor Strategies

Resourceful competitors revise their strategy through time. A group of firms following the same strategy in a given target market is called a strategic group. A company needs to identify the strategic grouping which it competes. It has to monitor efforts so potential new entrants into this strategic group.

Determining Competitors’ Objectives

The company has to make efforts understand what drives each competitor’s behavior. Normal microeconomic assumption is that every firm attempts to maximize their profits. However, in actual practice, companies differ in the weights they put on short-term versus long-term. Hence, each firm pursues a mix of objectives, current profitability, market share growth, cash flow, technological leadership, service leadership etc. with different weights attached to them.

Assessing Competitors’ Strengths and Weaknesses

Marketing department has to determine the strengths and weaknesses of competitors. When market share is to be increased, the marketing department has to know the weaknesses of competitors, which can be attacked in the market place for grabbing market share.

Reaction Patterns of Competitors

The laid back competitor
The selective competitor
The tiger competitor
The stochastic competitor

Designing the Competitive Intelligence System

A well designed system provides company managers with timely information about competitors and responds better to requirements of more information when needed in response to significant new about the actions of a competitor.

For Further Reading

Philip Kotler, Marketing Management

I started a new orkut community to develop interaction among practitioners, consultants and researchers.

I request my readers to join the community and support it by participation.

Management Theory and Practice

Merrill Lynch - The FCS Financial Marketer of the Year

March 20, 2008

The FCS Financial Marketer of the Year Award recognizes a
financial services firm that has done outstanding work in the area of
financial services communications. It is open to any firm in the
financial services industry including, but not limited to: banks,
brokerages, investment management firms, mutual funds, credit cards
and insurance companies.

The Financial Communications Society (FCS) presented its
second annual FCS Financial Marketer of the Year award to Merrill
Lynch Global Wealth Management.

Steve Cone, Chief Marketing Officer of Epsilon, who also served as head of advertising and brand management at Citigroup Private Banking and authored the best-seller "Steal These Ideas: Marketing Secrets That Will Make You A Star" delivered the keynote address on the occasion.

FCS Financial Marketer of the Year Award 2007-08 judges are:

Jim Sansevero, CMO, Lord Abbett & Co.,
Barbara Glasser, CMO, Citi Wealth Management, Citibank;
Michael Prieve, Creative Director, Doremus;
Danielle Abdelnour, Head of Branding and Corporate Design, Americas,UBS;
Tod Seisser, Creative Consultant, former Chief Creative Officer of Saatchi & Saatchi New York;
Linda Finnerty, Professor, F.I.T., State University of New York and former Director of Corporate Communications for Alliance Capital and DLJdirect.

Rich Aneser, Managing Director of Brand Management & Communications for Merrill Lynch Global Wealth Management accepted the award on behalf of Merrill Lynch

For more information visit

Sunday, September 7, 2008

Consumer Behavior

Buyer’s needs, characteristics and decision making process interact with the stimuli created by the environment and marketers and buying decisions are made by the buyers.

Hence marketers have to understand what happens in the buyer’s consciousness between the arrival of outside stimuli and the buyer’s purchase decision. They must answer two questions:

• How do the buyer’s characteristics – socio-cultural (sociological), personal, and psychological influence buying behavior?
• How does the buyer make purchasing decisions?

Socio-cultural (sociological), Personal, and Psychological Characteristics

Various sociological factors of importance



Social class

Reference groups


Statuses and roles

Personal factors of importance

Age and stage in the life cycle


Economic circumstances

Life style

Psychological factors of importance

Personality and self concept




Beliefs and attitudes

The Buying Process

Roles people play in buying process






Buying behavior

Habitual buying behavior

Complex buying behavior

Variety seeking buying behavior

The stages of buying decision process

Problem recognition

Information search

Evaluation of alternatives

Purchase decision

Post purchase behavior

Post purchase satisfaction

Post purchase actions

Post purchase use and disposal

For Further Reading

Philip Kotler, Marketing Management

I had recently read Kotler and prepared revision articles. Subsequetly I looked at a book on marketing financial services. The contents of the book follow chapters of Kotler's book and concentrate on financial services domain. I plan to take up that book and write concepts, theories and ideas relevant marketing securities in future posts. But first I shall post the general marketing related posts. Then I can link these posts of marketing articles related to securities market domain and that should make understanding of issues easy and better.

I look forward to comments, suggestions and anecdotes of personal experience in marketing securities from my readers.

Orkut Community

I opened an orkut community yesterday to discuss the issues related to management theory and practice in various subjects of management. Such a forum could help us to find out the concerns of practioners that require some ideas from theorists and fellow professionals.

I request readers to consider joining the community and participate in discussions at their convenience.

Management Theory and Practice

Saturday, September 6, 2008

Marketing and Marketing Concept

I am writing articles on Google Knol platform with an intention to develop a management knowledge revision encyclopedia on the platform. I am calling it a revision encyclopedia as I want it to be useful to people who have studied the related texts and for the purpose of revising and refreshing their knowledge they read these articles. Knowledge workers have to make efforts to make sure that they bring all the appropriate principles into play when they are solving a problem or deciding an issue. Unless they make efforts to frequently revise the principles in various subjects related to management, managers cannot assure themselves or assure others that they are using all the relevant knowledge and taking right decisions.

Performing artists spend hours every day practicing their art and perform for three or four hours on a day. Many knowledge worker in contrast work a minimum of 8 hours per day. So they cannot study their knowledge material for an appreciable amount of time. But expecting them to spend at least half hour to sharpen their knowledge base in the brain is reasonable. Cost of ignorance is quite a large figure in the world. Knowledge workers also incur it and incur it for the organizations they are serving despite having certificates that attest that they have studied knowledge bases in a satisfactory manner. Knowledge base needs to be revised to make it useful when needed. I am writing these article to facilitate the management knowledge base revision. I initiated number of articles in marketing, psychology, sociology, organizational behavior and principles of management. In the area of marketing, I have covered number of chapters. I am giving here the article based on the first chapter of Philip Kotler.

The Marketing Concept – Kotler

Marketing - Definition

Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.

A human need is a state of deprivation of some basic satisfaction. People require food, clothing, shelter, safety, belonging, and esteem. These needs are not created by society or by marketers. They exist in the very texture of human biology and the human condition.

Wants are desires for specific satisfiers of needs. Although people’s needs are few, their wants are many. They are continually shaped and reshaped by social forces and institutions, including churches, schools, families and business corporations.

Demands are wants for specific products that are backed by an ability and willingness to buy them. Companies must measure not only how many people want their product but, more importantly, how many would actually be willing and able to buy it.


A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.


When one party is more actively seeking an exchange than the other party, we call the first party a marketer and the second party a prospect. A marketer is some one seeking one or more prospects who might engage in an exchange of values. A prospect is someone whom the marketer identifies as potentially wiling and able to engage in an exchange of values.

Marketers do not create needs. Marketers, along with other societal influences, influence wants. Marketers influence demand by making the product appropriate, attractive, affordable, and easily available to target consumers.

A product is anything that can be offered to satisfy a need or want. Offering and solution are synonyms to the product in marketing context.

A product of offering can consist of as many as three components: physical good(s), service(s), and idea(s).

Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needs.

Value is “the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership, and use.

Marketing management

Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.

Definition of American Marketing Association

Marketing (Management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

Marketing management has the task of influencing the level, timing, and composition of demand in a way that help the organization achieve its objectives. Marketing management is essentially demand management.

Marketing managers manage demand by carrying out marketing research, planning, implementation and control.

Within marketing planning, marketers must make decisions on target markets, market positioning, product development, pricing, distribution channels, physical distribution, communication, and promotion.

Marketing work in the customer market is formally carried out by sales managers, salespeople, advertising and promotion manages, marketing researchers, customer service managers, product and brand managers, market and industry managers, and the marketing vice-president.

Concepts of marketing that business units hold

Business units even now hold one of the following concepts of marketing and manage their marketing activities accordingly.

The production concept

The production concept holds that consumers will favor those products that are widely available and low in cost. Managers of production-oriented organizations concentrate on achieving high production efficiency and wide distribution

The product concept

The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers in product oriented organizations focus their energy on making superior products and improving them over time.

The selling/sales concept

The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the organization’s products. The organization must therefore undertake an aggressive selling and promotion effort.

The marketing concept

The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.

The societal marketing concept

The societal marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.

The Marketing Concept

The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.

The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability.

Target market

No company can operate in every market and satisfy every need. Nor can it always do a good job within one broad market.

Customer needs

Marketing is about meeting needs of target markets profitably.
The key to professional marketing is to understand their customers’ real needs and meet them better than any competitor can.

Some marketers draw a distinction between responsive marketing and creative marketing. A responsive marketer finds a stated need and fills it. A creative marketer discovers and produces solutions that customer did not ask for but to which they enthusiastically respond

Integrated Marketing

When all the company’s departments work together to serve the customer’s interests, the result is integrated marketing.

Integrated marketing takes on two levels. First, the various marketing functions-sales force, advertising, product management, marketing research, and so on – must work together.

Second must be well coordinated with other company departments.

The company is doing proper marketing only when all employees appreciate their impact on customer satisfaction. To foster teamwork among all departments, the company carries out internal marketing as well as external marketing. External marketing is marketing directed at people outside the company. Internal marketing is the task of successfully hiring, training, and motivating employees who want to serve the customers well. In fact internal marketing must precede external marketing. It makes no sense to promise excellent service before the company’s staff is ready to provide excellent service.


The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of private firms, the major goal is profit. (Marketing managers have to evaluate the profitability of all alternative marketing strategies and decisions and choose most profitable decisions for long-term survival and growth of the firm.)


Kotler, Philip (1997), Marketing Management, 9th Ed., Prentice Hall, New Jersey.

The full directory of marketing articles

Marketing Management Article Series

As Knol is a wiki platform, readers can edit and revise the article to make it more useful.

Sunday, August 31, 2008

Tips/Suggestions/Ideas to Financial Advisors

Does It Pay to Advertise in Print?
9 Ways to Improve Results
By Vanessa Richardson
June 12, 2008

You don't need to run big ads
Tout your achievements
Your pay-off may take a while

For the full article

Turn to AdvisorMax for all of your practice management needs. Sign up for a free membership to access thousands of tips and strategies from financial planning experts that save advisors time and make their businesses more efficient and profitable.

Saturday, August 30, 2008

Relationship Manager Compared to Salesman

Salesmen are oriented to transaction selling. Transaction selling refers to focus on a single transaction. Salesman identifies a prospect, approaches him and motivates him to complete the buying process. The emphasis is in on the need or want for the product and the fulfillment of the want through the salesman and the product that he is offering.

Relationship selling or relationship marketing or relationship management focuses on the customer for establishing a long-term relationship. In acquiring the customer, the company would like to demonstrate to the account that it has the capabilities observe the account’s needs in a superior way, if the two parties can for a committed relationship. Kotler (1997) identified SPIN selling as technique to be used in relationship development.

As companies offer multiple products and services, the emphasis is moving from transaction marketing or selling to relationship marketing. Customers prefer suppliers who can sell and deliver a coordinated set of products and services to many locations if required. Relationship managers are given the responsibility to manage the sales of variety of products to customers on a long-term relationship basis. Relationship managers have to understand the needs of the customers on a long-term basis, make useful suggestions to them in respect of the product that their company is selling, and then monitor these accounts to make sure that their needs are being met with the products/services supplied to them and be ready to provide the after-sale-service as required. Losing a customer is very costly to the company. Relationship manager is entrusted with the responsibility of maintaining the long-term relationship.

Relationship manager is no doubt a salesman but with a different outlook and attitude. He needs a different training. He is responsible for the client, is the focal point of all the information about the client, is the provider of all the company information to the client, and he is the mobilizer of all the company services for satisfying the client.

In a properly implemented relationship management system, the organization will focus as much on managing its customers as on managing its products to fulfill the revenue targets.


Kotler, Philip (1997), Marketing Management, 9th Ed., Prentice Hall, New Jersey.

Marketing Strategies for Challenger Firms


Firms that are not market leaders in their industry or product category are trailing firms. One or two of them could be close competitors to the market leader and they can be termed as runner-up firms. These firms can take the role of challengers when they make aggressive efforts to further their market share or they can be termed followers when they keep quiet and maintain their market share.

There are successful trailing firms which challenged and became industry No. 1 firms. Canon is one such example in copiers. Toyota is now the world No. 1 company in automobiles; it displaced General Motors.

The challenger companies have to attack the leader, other comparable firms, and smaller firms in their bid to gain market share.

Attack has a greater probability of success when there customer dissatisfaction with the current leader. There is a gap in the market which the leader is not serving. Comparable firms can be successfully attacked when they are underfinanced and are charging excessive prices and customers are showing dissatisfaction. Similarly, underfinanced smaller firms can be attacked to gain market share.

With each attack, the challenger may hope to gain a reasonable increase in its market share.

The following attack strategies are possible.

Frontal Attack

An attack is called a frontal attack when the opponent’s strength is challenged head on. In marketing, the fight is done all fronts in market segments and areas where the opponent is currently strong. The general idea is that to win in a frontal attack, the challenger requires three times the fire power of the opposite side. What is fire power in marketing? Price of the product, quality of the product, sales effort, advertising effort, and service effort etc. are the various types of fire power in marketing. The challenger must be able to deploy superior fire power in the markets he is challenging.

Modified Frontal Attack

A modified frontal attack uses price as the challenging dimension. The challenger matches the opponent in other dimensions but will charge a lower price over an extended period.

Flank Attack

Attacking a weak position in the opponent’s force is flank attack. Challenger identifies the weak areas in the offering as well as marketing territories of the opponent and attacks those areas. A front attack may also be launched simultaneously, but the frontal attack is only to engage the opponent. But the real victory is won in the flanks. Market share gain in weak territories is the objective, but the opponent is forced to defend his share even in his strong territories and products.

Encirclement Attack

In this attack both strong areas and weak areas attacked simultaneously. This type of attack is more often done by a leader when challenged. When the leader makes an aggressive attack to gain market share from the trailing firms, he can use this strategy. Even other firms, can use this strategy when they are attacking a much smaller firm’s market share.

Guerilla Attack

Guerilla attacks consist of waging small, intermittent attacks on different marketing territories of the opposing firm. The aim is to harass and demoralize the opponent initially before launching the main attack.

Bypass Attack

In a bypass attack to gain market share, a firm identifies segments not served by the existing firms and makes efforts to gain market share.

The Marketing Firepower

Price discounts: The challenger can sell a comparable product at a lower price.

Cheaper goods: The challenger can come out with economy goods with lesser number of features. The strategy will succeed when there is significant number of buyers in need of lower priced product.

Prestige goods: A challenger can launch a higher quality product with more features.

Product proliferation: The challenger can offer a greater product variety.

Product innovation: the challenger can come out with an improve product.

Service innovation: Improvement in service offered to the buyers.

Distribution innovation: a new distribution outlet that offers additional convenience to buyers.

Process innovations: The challenger may have done a process innovation that gives better quality or lower cost and it is passed on to buyers.

Advertising innovation: The challenger may have innovative communications strategy that reaches and motivates larger number of potential customers resulting in higher sales.

Challenger needs to have a product-service offer or marketing mix advantage that is of value in the market place. Then he can use that advantage to gain market share by employing a suitable attack strategy.


Kotler, Philip (1997), Marketing Management, 9th Ed., Prentice Hall, New Jersey.

Friday, August 29, 2008

Brand Score Card

Article in the latest issue of marketing management, American Marketng Association

Ethical Norms and Values for Marketers

Kotler discussed ethics and social responsibility marketing in the last chapter of his book 'Marketing Management.'He gave the code or the statement of American marketing association. The recent code and reference to the proposed code are given here.

2004 statement

The American Marketing Association commits itself to promoting the highest standard of professional ethical norms and values for its members. Norms are established standards of conduct that are expected and maintained by society and/or professional organizations. Values represent the collective conception of what people find desirable, important and morally proper. Values serve as the criteria for evaluating the actions of others. Marketing practitioners must recognize that they not only serve their enterprises but also act as stewards of society in creating, facilitating and executing the efficient and effective transactions that are part of the greater economy. In this role, marketers should embrace the highest ethical norms of practicing professionals and the ethical values implied by their responsibility toward stakeholders (e.g., customers, employees, investors, channel members, regulators and the host community).


Marketers must do no harm. This means doing work for which they are appropriately trained or experienced so that they can actively add value to their organizations and customers. It also means adhering to all applicable laws and regulations and embodying high ethical standards in the choices they make.

Marketers must foster trust in the marketing system. This means that products are appropriate for their intended and promoted uses. It requires that marketing communications about goods and services are not intentionally deceptive or misleading. It suggests building relationships that provide for the equitable adjustment and/or redress of customer grievances. It implies striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process.

Marketers must embrace, communicate and practice the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system. These basic values are intentionally aspirational and include honesty, responsibility, fairness, respect, openness and citizenship.


Honesty— to be truthful and forthright in our dealings with customers and stakeholders.

· We will tell the truth in all situations and at all times.

· We will offer products of value that do what we claim in our communications.

· We will stand behind our products if they fail to deliver their claimed benefits.

· We will honor our explicit and implicit commitments and promises.

Responsibility—to accept the consequences of our marketing decisions and strategies.

· We will make strenuous efforts to serve the needs of our customers.

· We will avoid using coercion with all stakeholders.

· We will acknowledge the social obligations to stakeholders that come with increased marketing and economic power.

· We will recognize our special commitments to economically vulnerable segments of the market such as children, the elderly and others who may be substantially disadvantaged.

Fairness—to try to balance justly the needs of the buyer with the interests of the seller.

· We will represent our products in a clear way in selling, advertising and other forms of communication; this includes the avoidance of false, misleading and deceptive promotion.

· We will reject manipulations and sales tactics that harm customer trust.

· We will not engage in price fixing, predatory pricing, price gouging or “bait-and-switch” tactics.

· We will not knowingly participate in material conflicts of interest.

Respect—to acknowledge the basic human dignity of all stakeholders.

· We will value individual differences even as we avoid stereotyping customers or depicting demographic groups (e.g., gender, race, sexual orientation) in a negative or dehumanizing way in our promotions.

· We will listen to the needs of our customers and make all reasonable efforts to monitor and improve their satisfaction on an ongoing basis.

· We will make a special effort to understand suppliers, intermediaries and distributors from other cultures.

· We will appropriately acknowledge the contributions of others, such as consultants, employees and coworkers, to our marketing endeavors.

Openness—to create transparency in our marketing operations.

· We will strive to communicate clearly with all our constituencies.

· We will accept constructive criticism from our customers and other stakeholders.

· We will explain significant product or service risks, component substitutions or other foreseeable eventualities that could affect customers or their perception of the purchase decision.

· We will fully disclose list prices and terms of financing as well as available price deals and adjustments.

Citizenship—to fulfill the economic, legal, philanthropic and societal responsibilities that serve stakeholders in a strategic manner.

· We will strive to protect the natural environment in the execution of marketing campaigns.

· We will give back to the community through volunteerism and charitable donations.

· We will work to contribute to the overall betterment of marketing and its reputation.

· We will encourage supply chain members to ensure that trade is fair for all participants, including producers in developing countries.


Finally, we recognize that every industry and marketing subdiscipline (e.g., marketing research, e-commerce, direct selling, direct marketing, advertising) has its own specific ethical issues that require policies and commentary. An array of such codes can be accessed through links on the AMA web site. We encourage all such groups to develop and/or refine their industry and discipline-specific codes of ethics to supplement general norms and values.

2008 proposed statement

Strategic Control of Marketing

Each company has to periodically assess its marketing strategy or strategic approach to the market. Market effectiveness review and then a more detailed marketing audit are the tools available to help in strategic control of marketing.

Marketing Effectiveness

A company’s or a division’s marketing effectiveness is evaluated based on the degree to which it exhibits the five major attributes of marketing orientation of the company or division. The attributes are:

1. Customer philosophy
2. Integrated marketing organization
3. Adequate marketing information
4. Strategic orientation
5. Operational efficiency

Philip Kotler gave a questionnaire to assess marketing effectiveness in his book Marketing Management.

The questions employed in the instrument are:

1. Does management recognize the importance of designing the company to serve the needs and wants of chose markets?
2. Does management develop different offerings and marketing plans for different segments of the market?
3. Does management take a whole marketing system view (suppliers, channels, competitors, customers, and environment) in planning its business?
4. Is there high-level marketing integration and control of the major marketing functions?
5. Does marketing management work well with management in research, manufacturing, purchasing, logistics, and finance?
6. How well organized is the new-product development process?
7. When were the latest marketing research studies of customers, buying influences, channels and competitors conducted?
8. How well does management know the sales potential and profitability of different market segments, customers, territories, products, channels and order sizes?
9. What effort is expended to measure and improve the cost effectiveness of different marketing expenditures?
10. What is the extent of formal market planning?
11. How impressive is the current marketing strategy?
12. What is the extent of contingency thinking and planning?
13. How well is the marketing strategy communicated and implemented?
14. Is management doing an effective job with its marketing resources?
15. Does management show a good capacity to react quickly and effectively to on-the-spot developments?

In his instrument, Kotler gave a 3 point scale from 0 to 2. This gives maximum of 30 points for a company or division. Score above 16 is rated as good.

Marketing audit

Marketing audit is a more detailed review which is undertaken periodically and is a supplement to the effectiveness review.

Marketing review is a comprehensive, systematic, independent and periodic examination of a company’s or division’s marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending plan of action to improve the company’s marketing performance.

Comprehensiveness indicates that all activities of marketing are audited and not trouble spots. Kotler defines auditing of specific activities as functional audit. Systematic audit indicates that well laid out audit plan is followed and the process is not done in an ad hoc manner. Independent auditor is carried out by persons from internal audit department with marketing expertise or external auditors with marketing expertise. Periodic auditing implies that it is done routinely and periodically and not in response to a problem. Management should not wail till the problem to set things in proper shape.

Marketing auditors have to meet customers, dealers and other outside groups also to find their assessment of the company and its marketing activities. The audit covers six major areas:

1. Marketing Environment
Task environment

2. Marketing Strategy Audit
Marketing objectives and goals

3. Marketing Organization Audit
Formal structure
Functional efficiency
Interface mechanism

4. Marketing Systems Audit
Marketing information system
Marketing planning system
Marketing control system
New product development system
Sales system

5. Marketing Productivity Audit
Profitability analysis
Cost effectiveness analysis

6. Marketing Function Audits
Advertising and Other communications
Sales promotion
Sales force

For further reading

Philip Kotler, "From Sales obsession to Marketing Effectiveness," Harvard Business Review, November-December 1977, pp.67-75.

Thursday, August 28, 2008

Performance Management Program


Performance planning is the first stage of the performance management process. During
performance planning, supervisors are expected to clarify performance expectations and clearly establish agreed upon goals/work priorities with each employee he/she supervises. This is also the time for job description review with the employee, especially if any changes have occurred since last reviewed.

Procedure for Performance Planning:

1. Supervisor meets with the employee.
2. Establish 3-8, collaboratively agreed upon goals/work priorities.
3. Establish criteria for successful performance of each goal/work priority.
4. Record goals/work priorities on Performance Planning Worksheet.

Policies Regarding Performance Planning:
If a supervisor does not initiate goal and/or work priority setting the employee
may develop his/her goals/work priorities and ask the supervisor to review them.
If the supervisor does not respond to either the employee’s proposed goals/work
priorities or the employee’s request for a meeting, after 90 days, the goals/work
priorities proposed by the employee become the goals/work priorities for the
current evaluation period.

If the supervisor and the employee cannot agree upon goals/work priorities, the
supervisor, after discussion with the employee, shall determine the goals/work


Regular communication about performance and coaching employees for improved performance are integral parts of performance management. These communications insure that the supervisor and the employee are working in agreed upon directions.

Coaching and feedback may take various forms; this includes observations, informal discussions, formal meetings and written documentation. Coaching and feedback are expected to occur on a regular basis throughout the performance management cycle. It is especially important for supervisors to provide feedback on performance issues in a timely manner and to discuss performance improvements and progress towards agreed upon goals/work priorities.

Policies Regarding Performance Documentation, and Feedback

It is expected that at least one communication (meeting, phone discussion, e-mail, written
review) will occur during the performance period, preferably during the middle six months. The Interim Review Form may be used to document discussion.


The Review and Development phase consists of evaluating the employee’s performance,
completing a written review, and conducting a two-way conversation focusing on results
achieved, areas of success and/or areas for improvement, future goals/work priorities and any developmental needs of the employee.

A McKinsey Study suggests that only 30 percent of employees say they receive feedback of real value in improving their performance. While the company handbooks or other descriptions often state the right goal for the performance process as improvement of performance, in practice in many companies performance appraisal is the order of the day.

There is a need to focus on performance improvement and the required coaching from the superior.

The performance goals have to be derived from the company goals. The superior and subordinate combination must have a deep understanding of how the company makes money, how the company’s customers make money, now the company can help its customers make money and what customers need to remain loyal.

Based on the agreed upon performance goals for the coming period, the superior has to determine the coaching requirements for his subordinate. Every superior has to remember that as a superior he has a coaching role. He has to set apart a certain amount of his time for coaching his team members. It will be a good idea if every supervisor is asked to prepare a coaching plan for his department as well as for each of his subordinates.

For further reading

Shekhar Purohit, The Performance Quest, The Economic Times, Corporate Dossier, 29 August, 2008, p. 2

Shekhar Purohit is Asia Pacific Leader for Executive Compensation and Corporate Governance, Hewitt Associates

Emerging Markets - Investment Banking - Growth Opportunities

The growing opportunity for investment banks in emerging markets

The growth opportunity ofr investment banks is in emerging markets.

Investment banks should look to emerging markets for the strongest growth opportunities in the next few years, recent McKinsey research shows.

Current trends include a relatively benign economic environment, a new breed of globally minded corporate players, and increased competition to develop strong local markets in the emerging world. Emerging Europe, Emerging Asia, Latin America (notably Brazil), and the Middle East are all areas expected to benefit.

Revenues from investment banking in emerging markets should grow in absolute terms even in a worst case. Under all scenarios, they should represent a bigger share of global revenues by 2010.