Wells fargo case study

Wells Fargo Group
9 May 2007

Wells Fargo:
Marketing Plan

Kevin De Place
Bill Ho
Ryan Neal
Diana Suranyi
Kevin Yetter
Executive Summary
Our team constructed a marketing plan of the company Wells Fargo. The first half of the report covers the company background by finding information about it, its competition, and the environment to see how the company stands. The second half of the report deals with a new product, tax preparation, and how it will be implemented into Wells Fargo.

When analyzing the company, we found that it is viewed as the largest bank in the United States by physical size. The company have “2000” child companies and their advertising style is very recognizable with the stagecoach theme. The biggest competition to Wells Fargo is Bank of America.

There are many trends that are looked at that could affect the banking industry. Some trends include the environment, government policies, technology, and much more. These trends show how the industry should view what is going on in the market that could affect how consumer’s perceptions are changing in the market.

After the trends were analyzed, our team analyzed the customers and put them into segments. These segments are relevant because of the different ways that consumers look at the bank industry. The segments were then used to
make the target market of the age range of 26 to 60 years old and lower to middle class consumers.

Then we made a SWOT table; that shows our strengths, weaknesses, opportunities, and threats. All this information was then used to make our marketing plan.

Through examination of the information in the situation analysis, our team came up with a new product service, tax preparation. This service will coincide with our home loans by making it a free service to customers who have a home loan with us. If a customer does not have a home loan with us; the service can still be used in-house with a specialized and licensed tax preparer or with software for a fee.

Our target market is people in the age range of 26 to 60 years old and lower to middle class. Our team will initially setup a test market in the San Franando Valley in June 2007 and end in May 2008. After implementation, the findings will be reviewed so the service can be setup to all customers.

Finally, our team feels confident in our recommendations of this new service. The service is expected to bring in 58 new home loans per year, which will insure brand loyalty and enforce Wells Fargo’s customer loyalty. Table of Contents

Situation Analysis
Company …..…..……………………………………………………………………..1
History of Company……………………………………………………..1
Current Situation……………………………………………………..1
Human Resources……………………………………………………..1
Financial Resources……………………………………………………..2
Product Portfolio……………………………………………………..2
Current Target Market……………………………………………………..3
Current Pricing Strategies……………………………………………………..3
Current Distribution Strategies……………………………………………………3
Current Promotion Strategies……………………………………………………..3
Company Strengths……………………………………………………..4
Company Weaknesses……………………………………………………..4

Industry……………………………………………………………………………..5 Competition……………………………………………………..5
Bank of America……………………………………………..6
J.P. Morgan Chase Bank……………………………………………..8
Citi Bank……………………………………………..9
U.S. Bank……………………………………………10
Omni Bank…………………………………………….11

Environmental Trends……………………………………………………12
Where Industry Does Business…………………………………………..12 Economic Environment……………………………………………12
Political Trends……………………………………………13
Regulatory Trends……………………………………………14
Social Trends……………………………………………15
Technological Trends……………………………………………15 Demographical Trends…….………………………………………16 Other Trends……………………………………………17 International Trends……………………………………17
MarketTrends……………………………………17
Impact of Trends……………………………………………18

Customer Analysis……………………………………………………………………18
Industry Level……………………………………………………18 Relevant Variables……………………………………………………19 Young Adults…………………………………………………….20
New Families…………………………………………………….20
Low Income Families…………………………………………………….20
Middle Income Families…………………………………………………….21
Wealthy Families…………………………………………………….21
Foreign Families…………………………………………………….21
Seniors…………………………………………………….21
Farmers…………………………………………………….22
Small Businesses…………………………………………………….22
Middle Businesses…………………………………………………….22
Big Business / Corporations…………………………………………………….22
Needs and Wants……………………………………………………23
High or Low Involvement……………………………………………………24
Decision Process……………………………………………………24
Roles Consumers Play……………………………………………………24
Demand Forecast……………………………………………………24

SWOT analysis……………………………………………………………………25

Marketing Plan
General Marketing Strategy………………………………………………………………27
Marketing Objectives…………..………………………………………..27
Campaign Strategy……………………………………………………27
Performance Measurement……………………………………………………28
Segmentation Analysis……………………………………………………28
Target Market……………………………………………………29
Positioning Statement……………………………………………………29

Marketing Mix……………………………………………………………………30
Product……………………………………………………30
Description……………………………………………30
Benefits to Consumers……………………………………………31
Branding Issues……………………………………………33
Potential Impact to Wells Fargo Name…………………………………..33
Potential Impact to Pre-Existing…………………………………………33
Marketing Object and Target Market Needs.…………………………….34
Price……………………………………………………34
Pricing Strategy……………………………………………34
Pricing the Products……………………………………………35
Price vs. Cost……………………………………………36
Consumer Perception……………………………………………37
Competition……………………………………………38
Price Effects on Brand Equity……………………………………………38
Pricing Objectives……………………………………………38
Placement……………………………………………………39
Distribution Strategy……………………………………………39Distribution Channels……………………………………………39
Product Transportation……………………………………………40
Promotion Mix……………………………………………………41
Communication Objectives……………………………………………41

Implementation……………………………………………………………………42
Schedule……………………………………………………42
Budget……………………………………………………43
Evaluation……………………………………………………45
Risks & Threats……………………………………………………45

Conclusion……………………………………………………………………48

Appendix……………………………………………………………………49

Survey Plus……………………………………………………………………55

References……………………………………………………………………61 Company
History of Company
Wells Fargo is a publicly traded company that was founded by Henry Wells, William G. Fargo, and associates on March 18, 1852. During the era in which it was founded, stagecoach robberies were infamous. At that time, they focused on safely transporting their money from Nebraska to California. Now, Wells Fargo uses this stagecoach image as their company’s background and main marketing techniques. Current Situation

Out of all companies worldwide, Wells Fargo is the 26th leading company based on sales, assets, profits, and market value (The Forbes 2000). Their debt ratings are ranked positive and stable as well as having the highest possible credit ranking from Moody’s Investing Services, Aaa (Appendix A). When ranked by American Banker based on assets, they ranked 5th against all other American banks. (American Banker) Human Resources

They employ over 155,000 individuals and that number grows more every year.
Within these individuals Wells Fargo understands the importance of diversity, and works to employ people of all races and personalities. Diversity helps them to deliver quality services by further understanding their diverse customers’ needs. The chairman and CEO of Wells Fargo, Dick Kovacevich, sees that as a team, Wells Fargo Company shares common values on responsibilities, and how they live and work. Their company also instills those values and hard work ethics into the over 2000 separate “child” companies they own, such as; Crocker National Bank, First Interstate Bancorp, and Northwest Corporation. Wells Fargo knows the quality of customer service is very critical to customers. The Branch Customer Service Manager is responsible for managing quick, smooth, and quality customer experience. Meaning the manager must make sure the customer gets all questions answered, speedy service, and to wait no longer than 5 minutes for service. This position focuses on proper production management skills. Managers pinpoint problems by going to the source to solve them instead of using band-aid solutions. Managers motivate bank workers to treat customers nicely, and more importantly make them feel comfortable. Enough workers are always employed to satisfy the banks busiest times. When customers call the bank to report a problem or ask for information they get taken care of with fast friendly service. Managers analyze existing procedures and devise new ones to increase efficiency. For example the time it takes a teller to help a customer can be reduced by rearranging the physical layout of the bank. All the tools teller’s need is positioned close by for easy access. The qualitatively improved services make the bank more competitive and more attractive to customers. Financial Resources

With a stock market value of over $110 billion, Wells Fargo Company has become the largest financial institution on the west coast of the United States. Wells Fargo also has a high cash volume of over $480 billion in assets (Appendix C). Product Portfolio

Wells Fargo Company focuses its skills on many aspects of banking; investing, insurance, brokerage services, trust and estate services, financial consulting, international banking, foreign exchange, as well as online and ATM banking. Their products include diversified financial services, banking, consumer finance, home loans, commercial real estate, and specialized lending. Their company is always conducting economic research to better their financial market strategies. They believe that understanding what is going on around them increases their understanding of investing. They use agricultural reports, country reports, regional reports, housing situation analysis, economic forecasts, growth charts, and local banker observations to find all types of economic information. Current Target Market Defined

Our current target market is anyone that has or can make money worldwide. In the United States, a person can have a savings and checking account if an address, social security number, and signature is given. For other types of services a credit score and other information must be used to determine eligibility. Current Pricing Strategies

The way that Wells Fargo decides on pricing for different products goes by the Fed’s interest rate, also called the prime rate. Then Wells Fargo looks at competition and the industry to decide on what to charge consumers to get consumers interested in receiving that particular product or service from Wells Fargo. Current Distribution Strategies

Wells Fargo has many banking stores in the United States. When a consumer needs a certain product or service, all that a consumer needs to do is go into the branch and apply for that particular product or service. Current Promotion Strategies

Wells Fargo has many promotions to show consumers the products and services available to them. Wells Fargo advertises on their own website, http://www.wellsfargo.com, the company advertises on television, radio, billboards, internet, the Yellow Pages, and in-store. Company Strengths

Wells Fargo is a very strong financial lending company. Their strengths include high cash volume of over $480 billion in assets as well as a powerful distribution of advantages in the Banking Industry (Appendix C). They also have strong ties to several different industries including financial services, energy, gaming, media, communications, municipalities, real estate, retail, solid waste management, and technology. Since 1852, they have grown roots into the mind of individuals as being strong and trustworthy. Their name is well known and they’re marketing strategy, the stagecoach specifically; can be identified easily with individuals. They have strong, hard working, and smart employees from all types of diverse lifestyles. They are considered “America’s [Most Admired] large bank, and [ranked] 12th most admired company in the world” (Barron’s). They are the # 1 bank in total stores, the 3rd in banking stores, 1st in mortgage stores, 1st in personal credit market share, 3rd branded bank ATM owner, the 2nd debit card issuer, and the 1st prime home-equity lender in states they do business in Wells Fargo. Company Weaknesses

Wells Fargo’s weaknesses include confusion due to large-scale activity. Being an enormous company it is hard to personally know all individuals within the banking community. They are often the targets of fraud, and counterfeiting due to how large they are. Other weaknesses might include ability to obtain brand loyalty. In today’s society, with so many other large scale competing banks, getting brand loyalty from individuals can be complicated. Many people have accounts in more than one bank, and several individuals’ change from bank to bank depending on offers they are given at different times. Industry

1. Competition
According to the report from Americabanker.com in December 2006, our team could find out the market leader, market challengers, market followers, and market niche in the bank market and the results of all bases on bank’s total assets. Assets were used to determine size mainly because the services that these banks offer do not necessarily have fixed prices, and many products do not have any prices at all. As the result, our team found that Bank of the America is the market leader in the commercial bank industry in the United States with a market share of 21% based of assets. But according to Gardner, “After [Wells Fargo’s] foray onto the tundra, the bank’s 2,900-branch network spans almost 3,500 miles across 23 states and five time zones, from Van Wert, Ohio, to Bethel, Alaska, and that’s more miles and more time zones than BofA” (Gardner). From this the claim can be scene to be that Wells
Fargo could be considered the biggest bank by physical size.

In the result, we can see that J.P. Morgan Chase Bank, Citibank, and Wachovia Bank are the market challengers. Their total assets are less than Bank of America’s at around 2 percent to up to 50 percent. In the report, we can find out that Wells Fargo and U.S Bank are the market followers. For our team’s research, we found out a lot of market niches in the commercial bank industry, specifically we will look at Wauchula State Bank.

In the banking industry, there is a lot of competition. The competition is not only with direct competitors, but also with indirect competitors such as ING Direct, which is a financial company. These companies offer several services in insurance, asset management, investment, internet banking, and other such products to various customers.

There seem to be no “gaps” in the market which could be filled. The closest things that could be seen are the foreign market shares, which seem to be taken care of by small individual banks. If a large bank stepped into the field offering a different type of promotion for, let’s say, Chinese Cantonese speakers. Then perhaps they could corner that small part of the market as well. These types of customers are the only ones that really seem to fall between the “gaps” of the big companies and fall into the smaller companies businesses. The position that most banks take on such matters is to open up branches in neighborhoods of these types of individuals and hire employees that can speak the language of the consumer, but generally the stores still look the same and act the same otherwise. This can still scare away these customers.

Bank of America:
BofA held $1,082,242,862,000 total assets ever since its merger with MBNA, listing them as #1 on total assets by American Banker (Appendix B). BofA has a market share of 21% based on assets. Also, Bank of America has 161,318 full-time employees and 5,808 branches around the United States. All the branches are distributed within 50 states. Their main products include those listed in Appendix E as well as risk management and financial management
(Overview: Corporate Profile 1). Appendix F shows the amount of revenue generated in each of their main fields of business.

Their products do not generally have a set price, since the diversity of the banking world has several different interest rates applying to different credit scores as well as sizes of corporations.

BofA aims their products for the big businesses more than individual consumers. They have over 20 million active users that are currently banking with them, and from those 20 million they serve “98% of the U.S. Fortune 500 companies… [as well as] …80% of the Global Fortune 500 [companies]” (Overview: Corporate Profile 1). Mostly they serve consumers and small businesses; secondly they serve individual banking customers.

Most of their banks can be found near businesses in high growth communities, such as business and retail districts in Los Angeles. They have fewer banks near residential districts, and do not aim for the “in supermarket” banks like Wells Fargo. This can be seen as a weakness. Their strength is their capabilities with big businesses, but their weakness is that of not being connected with individual customers.

To promote their products they generally have word of mouth and big business advertising. They advertise in big money magazines and business reviews, such as Forbes, Fortune, U.S. News, The Wall Street Journal, and American Banker, while rarely advertising over television or to the average American consumer. J. P. Morgan Chase Bank:

For the J.P. Morgan Chase Bank, it has $1,013,985,000,000 total assets, ranking it #2 by American Banker.(Appendix B) Their market share is 20% based on assets. Also, it has 131,868 full-time employees and 2,667 branches in the U.S. They focus most of their services towards commercial and corporate companies, and very little on private banking.

Their products include all of the regular banking services (Appendix E) as well as treasury services and asset management. They focus on asset
management inside of large commercial and corporate companies to increase revenue, and then their secondary product is commercial banking.

Physically they have several banks in which they do business, including their Chase banks which they do business with individual customers. They are generally located in cities and suburban areas, and less in rural. They focus on fast, busy business people and market their products towards them (Chase – About). Although their bank company Chase is aimed more at individual customers than businesses, JP Morgan is still losing a great deal of customers to smaller banks. Their biggest weakness is that they do not concentrate on small customers, but their biggest strength is that they have a large amount of the big money customers, making it so that their profits are high even with lower market segment.

Chase is a brand inside of J.P. Morgan. It is focused on individual customers and small businesses more than big businesses, but they still focus towards the same types of individuals. Business going white collar workers and privately owned businesses can get J.P. Morgan’s advanced security systems in their normal checking and savings accounts. They also offer federal rate loans for college students. To market to these students they use a marketing technique geared towards the academic calendar, saying the origination fee will be paid by Chase themselves for the first academic year.

To promote their products, J.P. Morgan advertises in major political, news, and business magazines such as Forbes, Fortune, U.S. News, The Wall Street Journal, and American Banker, then focus their TV advertising on Chase Bank.

CitiBank:
Citibank has $706,497,000,000 total assets, 184,489 full-time employees and 286 branches with a market share of 14% based on assets. For the Wachovia Bank, it has $472,143,000,000 total assets, a market share of 9% based on assets, 78,571 full-time employees, and 3,193 branches. Their rank by assets is 3 according to American Banker (Appendix B). They offer all the main banking products (Appendix E), as well as Identity Theft Solutions and the ThankYou Network.

They focus these products towards individual consumers and private customers. Their main products are online banking, which they have been made famous by. Through online banking, they have been able to reach out to customers in various ways that they wouldn’t have been able to before, and contact more customers by doing so. Specifically they target the market of online investing more than other comparable banking industries, helping customers to earn money investing, as well as saving money in their accounts (Online Investing). Their online strategy is their biggest strength and weakness at the same time. While it is very innovative and attracts younger consumers, it can easily scare away those who still think the internet is insecure and those who are confused or scared by new technology.

Besides their online locations, they also have physical banking locations. Though significantly fewer locations than market leaders and challengers, they are still found in almost every strong community in the southern California area.

They promote their product using magazine ads, TV ads, and web advertising techniques such as banner ads and pop ups. Their specific marketing technique uses their name as their logo. The Citi name is well recognizable, and easily remembered. When promoting products they talk about internet security and investing relations, while not promoting their loans or financing directly.

U.S. Bank:
US bank is located in 24 states nationwide. The head quarter is located in Minneapolis. They have over 2,472 branches in convenient locations. They rank as the 6th largest bank according to American Banker, based on their assets of over $200,000,000. (Appendix B) They have a market share of 4% based on assets. US Bank’s main services include checking accounts, investing, loans money transfer, insurance, debt consolidation, saving accounts, student credit cards, and home mortgages. During the tax season, they offer a program called TurboTax over the internet for their customers to calculate their income taxes. Using TurboTax to help customers do their
taxes is an example of one of their strengths. They concentrate on helping the customer, and making the customer happy. This makes customers brand loyalty grow more than most other banks in the industry. US Bank offers check cards with rewards for their customers, such as cash bonus to redeem for gifts. They have an expert to help their customers to do their finance and investments. Also they have online services for management customer’s bank account and investments. Their biggest weakness seems to be their innovativeness when it comes to technology. The website is hard to get around on, and it is not really up to par with the other big banks in the industry that it is competing against.

Omni Bank:
Another market nicher is Omni Bank. The bank will locate in some specific spaces to help their customers. Omni bank is located in Southern California. The head quarters is in the city of Alhambra. They have only five stores. All the stores are located near the Chinese districts of Los Angeles County. It provides some mortgage and loan services for their customers. For example, one of their branches is located in Monterey Park, California. This branch mainly helps people who live in the area with mortgages and loans.

The company’s biggest strength is also its biggest weakness. While focusing its products for the Chinese communities might get them a great deal of those individual consumers, it has the problem of not attracting outside customers. Therefore they may have a great percentage of the Chinese customers in the area while only having a very low percentage of the non-Chinese customers. If they made their banks less specific to Chinese immigrants they might lose a portion of their market share of Chinese customers, but they would gain more business through the non-Chinese customers in the area.

Omni bank principally offers some loan and mortgage services for their customers. Also they have other special services to satisfy their customer’s needs, such as safe deposit boxes, ATMs, night depository services, lockbox depository services, and traveler’s checks. Omni bank attempts to offer the lowest interest rate payments and easily qualifies
programs to help a customer to get a loan. They also help people who do not have credit history by qualifying them for first time loans.

2. Environmental Trends
Where does the Industry do business?
The industry does business worldwide with individuals and businesses that deal with money. Economic Environment
An economic trend that could affect the banking industry could be stock market trends starting to slow or move in the negative direction. This usually shows the state of the economy. If the economy of the United States starts to fall, less people will be saving and investing into the economy. When analyzing the Great Depression, it can be seen that people pulled their money out of banks, so there was little national savings. Today, America’s government has developed the FDIC to help prevent something like that from happening. But there is still the prospect of a negative shift in the economy. This will slow down the funds that banks will receive. If they have fewer funds, there could be layoffs due to shortage of supply. Also, if no one can pay back funds to the bank, there will be a lot more bankruptcies, making it so the company loses money that way. To stimulate the economy, Wells Fargo and their competitors can offer lower interest rates on loans and higher interest rates on savings. The economy can be defined as, “[A] collective measure of the production, distribution, and commerce in a given area, from a small village to a state to a nation” (Canton 50). An affect to the change of this economy is, “[T]he fact that twenty-first-century economies will survive and prosper only if they embrace innovation” (Canton 50). Political Trends

The main political trend in the United States is that political policies are always changing. The main one right now is war. Whenever there is war, it can stimulate the population with more federal jobs that are geared toward supporting the war. Also, businesses can profit from this by selling goods to the government that are used for war. More money coming in due to the war can create more jobs to the public causing the population to have growth.

On the other hand, if the government makes policies that can affect the public, like shutting down free medical clinics, people lose jobs that they had at the free clinics, and people that once had free care will have to pay for it or not get care at all. This can make the population growth rate go down or you will see less money being spent on miscellaneous goods.

Different sectors can be affected in different ways, “Certain industries are particularly affected by the actions of government authorities. While all businesses are influenced by regulation to some degree, regulation, licensing, and certification can dictate in large part how certain industries conduct business” (Abrams 80). Regulatory Trends

As discussed before with government policy, regulatory trends can change all the time. Those that regulate banks are; “Federal Reserve Board, the Office of the Controller of the Currency, the Office of Thrift Supervision, or any one of 50 state regulatory bodies” (Bank Regulation).

There are many different policies in affect to help people in poverty, help small business, and in essence, make sure that the individual gets representation so that their money is protected. Some poverty regulations are those of welfare and grants to those that need it, “Income support policy occurs mostly through social insurance, but also through universal grants (‘demogrants’) and means-tested social assistance (‘welfare’), with different policy mixtures in different countries” (Sherraden 3). Without government regulations, individuals with less money would not get representation.

Social Trends
As discussed earlier, if a society as a whole has a trend one year of buying an Apple IPOD® there will be a huge societal trend to buy that item. If society is in a buying trend, you will see fewer savings and more people borrowing money from banks.

The social trends are always changing in all aspects of life, “…[H]uman activities create new systems with emergent behaviors that are both
unpredicted, and, perhaps, unpredictable, as the ever-increasing integration of human and natural systems leads to a concomitant increase in importance of the particular forms of complexity that characterize human evolution” (Allenby 159). A social trend that society is geared toward in the banking industry is online banking. Wells Fargo and their competitors have online banking available to everyone that has the internet 24 hours/7 days a week. Social trends have changed to the point of following technological trends. If there isn’t technology in items, there is usually no social trend that will follow that particular item. Technological Trends

This can be tied to social trends as well as other trends. If technology is growing, you will see a trend for people to want to buy more products that are more technological than ever before and always want the most technological item available. At the same time, more jobs will be available for those people that know how to make and market those items. If the market is flooded with a lot of people that can make more technical items, the price range for receiving a job in that market will go down. At the same time the price of items get more expensive at first, but then get cheaper so that more people can afford them. As stated in Deconstructing the Computer, “…[T]he price index for PCs has been falling more rapidly in recent years the index for mainframes…” (Jorgenson 12). If these items are always changing to a newer item, more items will be sold but the market price for items might change at a higher rate. This relates to us because if the economy is stimulated to work, more money will be spent. If more people are buying, there is more of a market to borrow and spend, which the banking market will have more growth.

A technological trend recently is being able to access the internet in a wireless environment, “Internet access over mobile devices is becoming increasingly pervasive, particularly in consumer spaces” (Tan 9). With the need to be mobile is an ever more serious need for security. Banks need to look at ways to become mobile as well as secure. Demographical Trends

This trend goes with the trends of generations of people. The biggest one out there right now is the “baby boomers.” Marketing goes with what are the
needs of this big generation. So if there are a lot of baby boomers that are going into retirement or close to it, you will see a trend of more people needing health care or retirement funding, or things that they can do while on retirement. So, there will be a trend associated with money being spent on these plans or needing to have accounts to hold those funds. A current trend in the banking industry today is the need for society to have the latest and greatest technology at fast speeds and before anyone else. The banking industry has satisfied this need by giving society the opportunity to use online banking 24 hours a day and 7 days a weeks. Whenever a transaction is made, it is instantly posted to the account making it obsolete to need to balance the checkbook. Other Trends

International Trends
Changes in international banking can also affect the way that Wells Fargo does banking. As noted in Banking International Regulation’s website, “It is an appropriate subject to discuss, since all of the forces that are operating the international level are affecting national economies too. Mexico, with its growing integration into the world economy and global capital markets, is as expose as any to these trends” (Banking Supervision and Regulation), Changes that can occur in other countries can affect the money supply in the United States. Any international events that occur need to be looked at as to how it will affect the economy of the United States. Marketing Trends

Marketing trends in today’s culture have to do with selling the product in a different way than before. One of the new changes in selling is the idea of developing existing products in new fields instead of creating new products. In Foghound’s 2006 Marketing Predictions: 10 trends that are heating up, Swaysland describe an example as “Buying music online is a big new market concept, which is why iPod and iMusic are so successful.” (Swaysland par. 2) Bankers have also taken on this trend by offering online banking as opposed to normal “in bank” banking activities. The idea of developing products further instead of coming up with new products in a way that can increase productivity and get new customers is a growing trend in the marketplace today.

Another change is that of creating a meaning-making objective in advertising as opposed to normal promoting. “Customers are tuning out advertising, promotions and spin,”(Swaysland par. 6) while they are starting to want to buy services from companies that they can trust by making their own choices based on what they believe the companies mean to them. In the banking industry where many of the companies are offering identical services at nearly identical prices, simply promoting a brand name and product line will not do anymore. Banking firms will need to sell the ideas and concepts around their products and services more than selling their products and services directly. Impact of Trends

The impact that these trends have on Wells Fargo, its competitors, and the industry are that there is always a need to watch consumer behavior to see how people will spend their money and why they choose a certain bank or lender to help them make the decisions to spend or save their money. Banks always have to see what motivates consumers to pick the banks they pick. Technology can play a major role in that decision, so banks always need to find ways to be up to date on technology as well as given that to the public securely. These trends pose opportunities to the banking industry because the more a bank like Wells Fargo can keep up with the trends of society, the more business they will receive. Customer Analysis

Customer Description at Industry Level
Wells Fargo provides, “[B]anking, insurance, investments, mortgage, and consumer finance to more than 23 million customers from more than 6,100 stores and the internet” (Nine par. 8). Wells Fargo does not discriminate on race. The main thing they look at is financial history. In fact, Wells Fargo recognizes that certain areas can have a large population of different nationalities. For example, Wells Fargo understands that the Hispanic community is increasing, representing $1.8 billion in buying power for 2005 (Estrella par. 2). In response, Wells Fargo looks at the demographics of an area and tries to get as much bilingual staff as possible. Altogether, “Wells Fargo provides financial services and products to more than one million businesses with annual sales up to $20 million in all 50 states,
Puerto Rico, and Canada” (Quantcast 2).

Relevant Variables to Describe Segment
The variables that are relevant to describe the segment are age, level of schooling, how many people they support or that are in the household, and amount of income coming into the household. Age is relevant because if someone is new to receiving money, they are not thinking about buying a house or getting a car; whereas if someone has been working for a while, they will be a little older and thinking about buying a car or a house. The level of schooling is relevant due to the fact that people that go to school longer will have more knowledge of their money resources. Also, when they are going to school, they are using their money for school and not thinking about renting or buying anything unless it is school related. The amount of people in a household can determine the amount of money spent on food and clothing and also how people decide on where they will live by renting or buying a household depending on the amount of people that need to live in one location. The last relevant issue discussed is the amount of money that is coming into a household that can determine if the household is renting or how much they will spend on the house they are looking to buy. All these are relevant to the segment because it will determine how customers will use the services of the banks and where they will spend their money or save their money.

From this information our team has separated the banking industry’s customers into several different categories, and then we described those categories and their needs as follows: Young Adults:
Young adults are between the ages of 18 and 25. Even though they may have had a savings account, these people are at a place in their lives where they need to start a bank account for the first time. They look for free checking and savings accounts and have much less money to put into a bank account than other customers. As college students, these individuals may be taking out their first loan. The most common way they look for banks is by looking for those that are easily accessible, nearby their homes and workplaces. Their attention is more geared toward TV advertising rather than advertising in magazines. Young adults are looking for quality and unique goods instead
of trendy ones (Lorranye). These consumers have great potential for being future clients when they grow older. Therefore, building brand loyalty now helps banks to keep these clients when they get to ages where they start to need larger loans and banking. New Families:

These individuals have just started a family. They may be looking for homes to raise their new family. This may require them to take out their first home loans. They have high involvement when looking for the best rates for the loan. Low Income Families:

These families have already developed themselves as a unit. “40% of bank customers were low to middle income (Korets).”They may be struggling from paycheck to pay check. This means savings is not much of an option. Rather, credit card loans might be of interest to them. Tax accounting cannot save them much money except if the tax accountant is cheap. Middle Income Families:

The middle-income family looks for improvement on their status. These families are most certainly have or are looking for homes to establish themselves. Therefore, financing or refinancing is always options for them. Tax accounting can save them money that they desperately need to pay off loans. Wealthy Families:

These customers are looking for a bank that will help them to make more money from their money. They do not need many loans unless they are starting a business. They are also investing in CDs, mutual funds, real estates, and anywhere they can make profit. Also, a good tax accountant can help them save a lot of money Foreign Families:

These families are looking for banks that can fulfill their language barrier needs. They look for people they can trust and help them understand the product. Preferable, they would like to speak to someone who has their native tongue. Advertising does not affect them as much, due to the fact that they don’t understand it as much Seniors:

Senior may be trying to secure their retirement. They are also looking for security and might be considering investing. They want people to manage their estate and assets. Generally, this is the most brand-loyal demographic, because they look for familiarity and brand they know they can trust from past experiences. Farmers:

Farmers are looking for a bank that knows what they want. Their bankers should be friendly and get along with them. Farmers can have big or small bank accounts depending on their profits, but they always look for the same things: reliability, trust, and goodwill. Small Businesses:

Small Businesses are looking for a bank that can help them managing their assets and their financial needs. Often times they will need quick short-term loans in order to purchase materials or equipment. They may also need larger long-term loans to start up the business Middle Businesses:

These businesses are normally the market followers in an industry. They look for the same things as a small business, while also needing more diverse financial support. Big business / Corporations:

Big Businesses look for something completely different from the rest of the consumers. They need large short-term loans to acquire smaller companies. These Businesses are looking for everyway possible to make their profits bigger. This includes investing, marketing, and accounting.

Customers use Wells Fargo products for many reasons. Age, credit scores, and income are relevant. One reason is to buy now what they cannot afford with financing. Since small businesses usually do not have enough capital to start, Wells Fargo targets

If the customer owns a small business, they seem to get more loans out of Wells Fargo than any other bank. According to CRA (2005), Wells Fargo is the number one lender in terms of total volume of dollars to small businesses in the United States (Nine par. 2). Finances from commercial real estate seem to be on the rise, “Avg. commercial and commercial real estate loans grew
$11b or 10% from 3Q05 and $2.2b or 8% annualized on a linked-qtr. Basis” (Event Brief par. 1). Needs and Wants

The internet seems to be a growing tool for Wells Fargo customers. According to PR Newsweek, Wells Fargo currently has 8.3 million active users (Event Brief par. 1). They also say that “One-time visitors make up 30% of Wells Fargo online audience” (Quantcast par. 2). This means 70% of the online audience might be habitual users. There are many innovations on the internet, which keeps the customer coming back online and away from long lines in the offices. Customers being able to see and edit their accounts online statements save them a lot of time in a world where there is never enough time. Evidence of this is stated by the CFO of Wells Fargo, Howard Aktins, “Continued to achieve significant growth in usage of desktop deposit service … Seeing greater usage of the commercial electronic office (CEO), used by two-thirds of the Co.’s middle market and large corporate customers…..” (Event Brief par. 2). Consumers are using banking to secure funds. Insurance is used to protect assets. Mortgages are used to finance homes. Financing is used to raise money for businesses. Through the use of internet, Wells Fargo can now cater to anyone around the world.

High or Low Involvement
Involvement usually depends on the amount of money the decision deals with. The trend is that the higher the money involved, the higher the involvement. When it comes to large financing like home loans, decisions are usually having high involvement. Naturally, if it were a larger corporation buying an eight-story building, the involvement would be even higher. Some basic checking accounts to students would be an example of low involvement. Especially since these checking accounts are free. Decision Process

Interest rates are the major factor involved in decision making. Given that there are so many banks out there giving various rates; Wells Fargo prides itself on customer loyalty. Another major factor is the Complexity of the product Wells Fargo sells. Since Wells Fargo advertises itself as a friendly service, many customers choose Wells Fargo when the product is complex. Roles Consumers Play in the Decision

A joint decision in a family would consider two spouses. Both are users of finance. Usually, the financing goes under both names in title, so both spouses are also buyers. Either spouse can be the decider or gatekeeper Demand Forecast

Industry Profits as a whole have steadily increased since 2001. Recently, business lending has increased, but commercial lending has decreased in most regions (Bavio). Short term loans have decreased due to competitors (Bavio). Commercial business also seems to have more money on hand to pay for their costs. Taking risky loans have become a trend in the market due to increased competition. As a result, a lot of banks are losing money on those risky loans. SWOT Table and Analysis

(a) Strengths
Size
Star/Still Expanding/Growing Market
FDIC Insured
Solid Reputation
Highly recognizable advertising campaign / Marketing Recognition Business Environment (open counters)

(b) Weaknesses
Not International
Internet Security
Government Policies/ Fed. Regulation
Recession
Economy
Highly Competitive Market
Low Brand Loyalty

(c) Opportunities
International
Ease of Use for Internet Usage
Tax Services/Free/Internet
Branches
ATM Service
24 Hour Services
(d) Threats
Highly Competitive Market (Major)
Low Brand Loyalty in Industry (Major)
Government Policies (Potential)
Depression (Potential)
Economy (Potential)
Civil Unrest/War (Potential)
Interest Rates (Minor)
Inflation (Minor)
New Competitor Sales Promotions and Strategies (Minor)

When analyzing the strengths of Wells Fargo Company we noticed that Wells Fargo’s overall size is their biggest strength. As noted under the company section, they are physically the largest bank in America. We identify the banking industry as a still expanding and growing market; therefore we see Wells Fargo’s banking services to be a star instead of a cash cow when using the BCG matrix. When our team analyzed the advertising and marketing measures that Wells Fargo uses, we noticed that they are a highly recognizable brand, and therefore their marketing recognition is a strength..

Weaknesses include the fact that they are not international when many of their competitors are, as well as general banking weaknesses such as security, policies, regulation, and problems with our current economy that banks face.

Opportunities that our group points out are easily brought down from our weaknesses, but also from our research. When doing research we found that US Bank helps with customer’s tax returns, perhaps Wells Fargo could follow the same type of idea. Maybe a merger with a company like H&R Block could gain customers.

Finally, threats that we noted are mostly self-explanatory. One thing our
team would like to talk about though is the problem with brand loyalty. In the banking business the biggest threat is that of brand loyalty. How does a company keep its customers loyal, and what if a new competitor’s promotions exceed the company’s? A big threat is that of losing customer loyalty through such measures. General Marketing Strategy

Marketing Objectives
The objective of this marketing campaign is to create a new service for Well’s Fargo’s customer base to create more brand loyalty, reinforce brand image, and extend customer base in home loans. The campaign will start in a specific area, which was chosen by general population of the target market in the area. This area is the San Fernando Valley, which includes Northridge, Canoga Park, Tarzana, Woodland Hills, and many other smaller communities. This community contains a great diversity of classes, from upper lower class to upper middle class, all of which are targets in the marketing strategy.

Campaign Strategy
The campaign is going to focus on implementing a new tax service to existing customers and new customers, particularly those who have or are trying to get home loans. An appropriate time given for this project is from June, 2007 to May, 2008. These dates were chosen because the campaign needs to have the attention of the consumers and the consumers need to understand that Wells Fargo will be offering this service before the consumers begin looking for this service. That way they have Wells Fargo in their mind when they think of their taxes next season. June was chosen because it is an appropriate time frame for Wells Fargo to prepare to implement this service. They will need time to gather information, hire any new employees, make mergers, or any other actions required to carry out such services. May was decided because it would be the appropriate time to decide whether or not Well’s Fargo gained an appropriate customer base to the amount of costs which it incurred, mainly because this is the month after tax season. Therefore, it would be the best time to review the performance of this project.

Performance Measurement
In May, 2008, Wells Fargo will measure the effectiveness of the marketing plan on their home loans and general profits. To measure, first they will calculate new costs given to them by this marketing campaign, such as new job salaries and any increased marketing or advertising costs from last year. There is an expected increase in home loans by this project. Home loans are where Well’s Fargo makes the majority of its profits, especially their margins. So to measure how effective this campaign is, they will use the following steps: 1. They will calculate the % increase in home loans, profit, and profit margins over the past 5 years to figure out an effective average increase. 2. They will calculate the % increase in home loans, profit, and profit margins from last year and this current year; where the new service was implemented. 3. They will compare the % increases in step 1 to step 2 to see if there was a significant difference between average increase and increase from the year of implementation.

Segmentation Analysis
The customer base was divided into different segmentations based on age and income for individuals, and then size and income for businesses. The reason that the customer base was divided into these various sections was because these are how a bank would identify and treat them different. Age and income reveal large differences’ in the amount of money a customer can qualify for a loan as well as the length of the loan. A young person would likely have a short term car or school loan, while an older person or business owner would be likely to qualify for a larger, longer term loan. Also, individuals and businesses would take completely different types of loans.

Target Market
The target market for this campaign is lower to upper middle class individuals between the ages of 26 to 60. The younger market share and lower middle class would be more likely to be taking out home loans, which is where Well’s Fargo makes a great deal of money, and the older upper middle class customers would be likely to refinance their existing loans into one large loan, which would constitute as a new loan at Well’s Fargo,
as discussed in the customer section in the situation analysis.

Positioning Statement
Wells Fargo is currently the market leader in southern California for home loans with lower to upper middle class customers. These consumers choose Wells Fargo because of the brand image and because they are well known to be helpful and friendly. Wells Fargo’s main competition includes Bank of America and Chase Mortgage. Because these banks generally deal with larger corporations and not individuals, they are often viewed by those who are trying to take out home loans to be too business-oriented to care about small families. They also intimidate small families with their complexity and cold nature, where Wells Fargo tries to be as friendly and warm to the consumer while explaining things in detail to make them less complex and easier to understand.

Marketing Mix
The Marketing Mix consists of 4 factors; Product, Price, Place, and Promotion Mix. These factors are taken into account to describe the benefits of the new product, if it will be profitable, and if it will add to the company’s overall product line in a positive way. The marketing mix is also used to decide how the product would best be suited for placement and promotion, and how to implement such strategies.

Product
Description
The new service proposed to Wells Fargo is an extension of its current financial services provided to its customers. Currently, Wells Fargo has several branches for financial consulting and mortgage consulting. The goal of this campaign is to make the company more accessible and add an accounting division to bring more customers into offices. This would include in-house consulting or free tax software called FastTAX (much like TurboTax), to help costumers with their taxes.

Benefits to Consumer
The target market, middle class Californians, often uses services such as H&R
Block to process their taxes. Many also use TurboTax or other products. By bundling these services into home loans and bank accounts, Wells Fargo can increase brand and product equity at very little cost. The company wants to help customers in all financial situations, that way they know they can depend on us.

When surveyed, 57% of those who were surveyed said that they would be interested in a bank doing taxes, and 57% said they would be interested if the bank offered free tax services (appendix k). While this may seem like a small percentage at first look, it is actually quite large, if 57% of those with home loans switched to our bank because of our service that would be a ridiculously large growth. Realistically, probably only a small fraction of these customers would change, but hopefully 57% of people would think it’s a great deal.

There will be two different ways this product will be given to the consumers. The first is in-house consulting. These services would be given at already available financial branches of Wells Fargo. These services will be confidential, and in no way affect any accounts or transactions the customer has with Wells Fargo. This service can be made by either procuring a joint venture with H&R Block, or by creating our own firms inside of our existing financial services departments. We analyzed costs and found that the most cost effective plan would be to hire our own professional tax consultants, and to train current employees to assist them during tax season.

The second way is a take home accounting product such as TurboTax. This is valuable to the consumer because it is versatile and can be used easily by the customers themselves. Also, Wells Fargo would have a weekly two hour lecture on how to use this product, where customers can come in and find out how. Personal help could also be provided. The product might use either a pre-existing product, such as TurboTax or H&R Block’s TaxCut program, or the IT department could create its own at a costly price. Therefore it has been decided that the strategy that should be used is to use a pre-existing tax program, either through procuring a company or a joint venture. The most cost effective at this time would be to try a joint venture with a company
such as TurboTax. Either way the packaging would look the same, just with a different product name. In this example, this product line would be called FastTAX, and would be packaged as below.

Branding Issues
When considering making a new product or service such as this, the company must take into account any impact that associating its current brand name with this new product might have. These issues include how the product will impact the current brand name and how this product will impact pre-existing product lines. The company must analyze if these impacts will be negative, and to what degree, in order to realize if this will be a profitable decision.

Potential Impact of New Product Using Wells Fargo’s Name
Issues that Wells Fargo might have to consider when creating this product is that if there is a fault in the product, the company would not want its brand name associated with it. It could also make customers think that the company is going too broad with its services and no longer specializing in specific fields, making them less likely to count on us when it comes to those specific needs.

Potential Impact of New Product on Pre-Existing Product Lines This product would not steal business from any other sections of our company already in development, due to the fact that accounting services are not already in place. However, the company could consider that there is a potential for loss in our financial division if customers end up finding that they do not need financial advice after speaking with our accountants. Also some customers might find a conflict of interest between our accounting confidentiality and the fact we have home loans with them. If someone is unable to pay their taxes because of loss of income, a customer might get frightened and move their loan to a different bank when afraid that we might foreclose on their loan.

Marketing Objectives and Target Market Needs
The company’s marketing objectives are to increase home loan rate, brand
loyalty, and overall profit of the company. The product is expected to do all of these things. Our current target market, lower to upper middle class individuals, have to file taxes every year. This can be a burden on individuals that do not understand how to manage their finances. According to our survey, 65% of individuals in our target market pay for some program or service to file their taxes (appendix k). That is a very large percentage, if we can help these individuals in our target market with their taxes while getting new loans, it would be a win-win situation. Wells Fargo already helps many of their current customers with financing, if they were able to bundle in a product that would lure a larger customer base than they would be at a great advantage. The individuals targeted specifically want to have more money to spend, and they want their bank to help them. If Wells Fargo offers them refinancing along with a package that would include free taxes, than they would have even more of a reason to switch to Wells Fargo for all of their banking and mortgage needs.

Price
Pricing Strategy
The basic pricing strategy for this product will be a competitive customer-perceived value approach. The product will be free to those who refinance with Wells Fargo; this is a customer-perceived approach. Those who actually refinance under the agreements that allow them to have the free tax service have a minimum refinance or loan amount required for them to get the service. This amount is decided upon by the financial analyst in charge of their case. The analyst will also take into consideration the interest rate allowed to by the customer, then from there tells the customer which of our tax services he or she qualifies for. Those who have lower loans with lower percentages will give Wells Fargo a low rate of return on those loans, meaning that these customers would only be eligible for the less costly software, FastTAX. This product is also available to other customers of ours for only $30 if they do not have loans (a competitive price based on TurboTax pricing).

Those with higher loans, such as home loans, and those with high interest which we are expecting a large rate of return; can qualify for full tax
service in-house. While these services may sound like they are free, in all actuality our financial analysts will be negotiating the terms of the loan with this in mind, and explain to the customers how this is a bonus. This will draw customers to higher interest rates and larger loans, actually bringing in more profit than to the customers that pay for the services.

Pricing the Products
As previously mentioned, our take home software will be a program that is used on a computer that allows individuals to do their taxes at the convenience of their home. This software will be $30, the same price as competing products (TurboTax Pricing). The products will actually be our business affiliates product, and because of this the majority of the profits on this software will go straight to them, leaving us just the amount of money it costs us to distribute and sell the products.

The in-house tax services will be offered for free from our financial analysts, but those who do not have loans with us but still want to use our product, will have to pay prices according to service rendered. Many of our pre-existing customers who have bank accounts with us are expected to want to try our service. During this first year of operation we will be conducting a trial price that is competitive to H&R Block’s pricing. Our tax services are only offered to individual customers and not to businesses, so the pricing will be between $25 to $300, depending on the time needed to file the taxes (H&R Block Pricing). Our tax preparers and consultants will be trained to be able to quote on the spot when a customer displays his tax information. Ranging from $25 for those whose taxes can be filed quickly; such as college students that use 1040EZ forms, to $300 for those whose taxes take a long time to file, such as people that have their own business.

Price vs. Cost
While determining price, one must always compare costs. The advertisements that our company will be spending money on will cost quite a bit, but we will only be advertising our in-house consulting. The TaxFAST software will be advertised only in-store and online in small sections to show that we provide the service as an added bonus to customers everywhere in our
company. This software will actually be a joint project with another company, where they will be incurring most of the costs of the project while making most of the profit; we will merely take a small amount of profit by providing them with the ability to put the product in our stores and on our website.

The cost of our in-house consulting will be great, an over $1 million start up cost for our 15 branches in the San Fernando Valley. While the initial cost is high, we expect to generate much more revenue from the expected increase in loans and refinancing from this project. Even if the company had a first year loss, it is expected that the customer base will grow, giving the company a larger amount of income over the next several years due to the long terms associated with loans.

Consumer Perception
Currently none of the competition in the area has been using this type of idea. If Wells Fargo initiates this project, consumer perception of the idea of a bank doing your taxes will be a brand new subject. Current consumer perception of Wells Fargo is that they are a farmer and family oriented bank that is considered helpful and friendly. These perceptions are rarely used in the tax preparation industry; usually companies like H&R Block focus more on being a business and giving off an aura of professionalism. Wells Fargo can bring together a consumer perception that is all of the above. Customers already know how helpful and friendly our financial teams can be, and it is natural that those in the banking industry are considered professionals. Therefore, if we can show customers we are capable of handling their taxes just as good as other companies, Wells Fargo will have a competitive edge with consumer perception in the years after they prove their abilities.

Competition
Currently, competitors price their products at rates that are scaled. Lower prices for individuals that are doing personal income taxes for state and federal; with higher prices for those who do business and major tax write-offs. To compete with these firms Wells Fargo will develop a similar strategy, while focusing on the lower priced customers. It seems that most
competition focus on higher priced customers, if Wells Fargo were to concentrate on these as their target market, as they are, they might be able to gain easy entry into this market.

Price Effects on Brand Equity
Wells Fargo has always comparatively priced its products based on how it would like to be viewed by the consumers. If we overprice this product it could reflect negatively upon us. Normally we would price economically that way our prices give a welcome image to our consumers, giving off a view that is friendly and honest. If this product were to be more expensive than other companies, perhaps our brand would be viewed as trying to take advantage of people and then it could build negative brand equity. Therefore, we have decided to price our product comparatively to other companies.

Pricing Objectives
The objective of this project is to increase our market share of home loans. Pricing this product at normal levels instead of under the price of other companies gives the product an image of worth, that way when we offer the products for free with substantial loans; it gives our loans a competitive edge. Hopefully this strategy will meet with these objectives and increase market share accordingly.

Placement
Distribution Strategy
The main new product proposed to Wells Fargo is not actually a physical product, but a new product service. Because this is a direct service there will be no distribution channels between the manufacturers and the consumers. Therefore the distribution strategy proposed will be simply a direct to consumer approach, where the service is offered in our pre-existing branches of Wells Fargo banks.

For our FastTAX program mentioned, the distribution strategy will be a slightly different strategy. Because we will purchase this software from another company, we will actually be the intermediary. After we purchase the goods we will ship them directly to our various Wells Fargo locations for
customers to purchase there.

Distribution Channels
As previously mentioned, our service will be a direct from manufacturer to consumer system, meaning that no channels will be needed. We will however post tax guides, and electronic tax programs on our website that customers will login to. The main point of this tax service will revolve around having a ready to work tax specialist at all valley locations in time of need.

As for the FastTAX program, there will only be one channel of distribution, which is actually Wells Fargo itself. Since we are not the direct manufacturer, we will be purchasing this product then shipping it to our stores and selling it to consumers.

Product Transportation
The individual consumers will be coming to our already existing Wells Fargo branch locations. The branches chosen are those that are placed accordingly, such as those in areas that are mainly visited by lower to upper middle class customers. This placement will make it consistent with our target market for this new product. The objective of this is to make our product easily accessible and within the reach of our consumers by being in branches that they already visit. These branches will have a large booth in the middle of the larger branches for tax sign ups, and in the smaller branches sign up sheets near the doors. If the customers decide to purchase tax software that they can take home, they can purchase it at our store locations, or they can download it from our store website.

For our FastTAX program, we will be making two transportation methods of the product available. The main will be transportation from our manufacturer straight to our Wells Fargo branch locations, and the second will be transportation via UPS to any customer’s houses that order it online. These customers would be paying the charges on UPS delivery personally; therefore we will not include these rates into our costs analysis.

Promotion Mix
Communication Objectives
Wells Fargo offers financial services of many kinds. But since we don’t sell products our services, it can only be measured based on the customer satisfaction of the transaction experience. Wells Fargo currently strives to give the best customer financial experience. Now, we want to add tax services into that equation. Remember, our goal is to increase the number of home loans by offering free tax services to people who have home loans with us. How can tax services be any better than free to qualifying customers? That’s right. Free. We will advertise this simple and to the point message, “Customers with home loans have free tax services”. Our message will be posted with signs in all San Fernando Valley Wells Fargo locations. The new message will also be posted on the website of Wells Fargo after a customer signs into their account.

If the customer’s area code used for the account is within Los Angeles County, they will see a banner ad in the form of “Free Tax Services to San Fernando Valley Residents”. Putting the message on our website will educate all of our current customers in the area that use the Wells Fargo account homepages to view and edit their bank accounts. We figure many wells Fargo customers have home loans with someone other than us. Hopefully informing customers of free taxes with a home loan will make people transfer their loan to us. As with any promotion we want customer feedback. The feedback we receive from advertising on our website and in-store will be analyzed and used to tailor the next message we send out to the general public of the valley. A month later, we will extend the message to be received anyone who sees our billboards around the valley. We will not purchase any new billboards because we are planning on keeping advertising cost at a minimum. We however, will redesign all current Valley billboards to mention our new tax service.

We may also incorporate this new message into current Wells Fargo commercials and radio ads. Our tax service will be available to only Wells Fargo customers. Customers in Wells Fargo that do not have home loans with us are still eligible for the tax service but will be charged a competitive rate.
The duration of this advertising will be until the end of the tax season of the following year. At the end of tax season of the following year, we will analyze how much extra money we made from additional home loans brought in by our tax promotion. If it’s successful we will promote worldwide.

Implementation
Schedule
Our goal is to use the Los Angeles area as a test market. The below applies to all branches in the Los Angeles area. Making Los Angeles conservatively aware of our new free tax services with the purchase of a home loan will begin immediately. Thoughtful signs will be placed in all branches of our banks in the greater Los Angeles area. Posters and signs on the inside will catch any customer’s eye that walks through the line, and will be consistently displayed year round. The deadline for developing and implementing the signs will be June 31st. We choose this form of advertising for its simplicity, and low cost. Wells Fargo will immediately look to hire a one tax service expert per branch. Currently all we need is one tax expert because the demand for tax services is extremely low right now. The tax service expert will be trained in other areas as well so that in the downtime of taxes, he/she can pitch in around the bank and help customers. Our goal is to be conservative and let Wells Fargo customers know what we are up to. We understand that people will not worry about taxes until the tax season so we will not make any intense advertising campaigns until tax season.

When the demand for tax services kicks in from the end of the year to mid April, we will hire more tax workers to satisfy the extra workload. We will then consistently advertise our tax service deal in 25% of current Wells Fargo Los Angeles area broadcast TV commercials. At that time our target market will be anyone 25 to 55 years of age within the Los Angeles area. That means 25% of Wells Fargo’s current TV commercials will be replaced with new ones. Throughout the year, we will be monitoring feedback from customers and we will make necessary changes to continue to improve advertising and customer awareness. Budget

Our budget will be minimal before tax season consisting of setup costs and one tax expert salary.From June 31st to December 31st our budget will consist of equipping 15 branches with tax services. The costs per branch are: One tax expert full-time salary of $68,000 per year (Business and Financial Operations Occupations) $300 initial setup

$339 tax books (QuickBooks premier accountant editions)
$100 store signs “Free Tax Service per Home Loan, or Competitive Rates”

In tax season we will pay $3 million in T.V. commercials. From Jan 1st to April 15th our budget will consist of, on top of prior balances already established: Two part-time tax specialists at each branch $25,000

Worker training $1,000
-Los Angeles Advertisements $1 million
– TV commercials $700,000
-15 second advertisements on cable networks
– Newspaper ads in L.A. Times $100,000
-Several mall ads and two large ones
– Billboard ads $200,000
-Across San Fernando Valley

This leads to the total budget at $2,421,085. A good portion of this budget though, will just be a substitute of funds we would have already spent. All advertising costs will come out of normal advertisement costs that Wells Fargo would have spent advertising their brand name originally. Since the advertisements for the tax services will be a substitute and those prices already accounted for, our additional budget compared to our normal budget will only be $1,421,085.

When calculating a break even analysis one must compare pricing to costs. If the average home loan in the southern California area is $400,000, with an average rate of 7% (calculated from our survey, appendix L), than the return on investment would be $28,000 a year. If the costs are considered to be $1,421,085, then divide the total costs by the income per average loan and
you would get an estimated 50 more home loans. Meaning that in order for this project to break even, Wells Fargo would need an additional 50 home loans on top of the expected loans for the year. If divided by the 15 locations, each of these locations would need to get an additional 5 to 6 loans on top of their estimated loans for the year.

Evaluation
We will use the past 5 year’s data to calculate our new marketing plan, such as loans, loan rates, and profit. We can use all the data to calculate the expected value and forecast. The expected value and forecast will reflect our company’s objective and goals. So we can use the result to check if that states our objective. For example, if our company has a total of 10,000 loans, which is 6 % of new loan. If the data shows a total of loans are increasing up to 11,000 loans and 10 % of new loans, then we can conclude that our new marketing plan is workable. In contrast, if we get negative results, all the loan and new loans are going down, and then it means our marketing plan is not workable.

Risks and Threats
This marketing plan has several risks and threats that could jeopardize our company. Whether our brand name could be hurt or we could lose customers to competition due to ineffective strategy, these risks and threats must be analyzed to understand whether this plan should be initiated or if it is too risky.

One such risk is that our plan could fail. One issue concerning this is that tax services are a specialty service that is not very popular. On the other hand, everyone needs to do their taxes. Also, customers might not think of Wells Fargo as an accounting service. Even though Wells Fargo does specialize in the financial industry, which is associated with accounting. Although it is prudent not to put too much emphasis on the tax services, because it might hurt Wells Fargo’s image. Also, the tax season is only a few months which limits the amount of time to make profit. That is why Wells Fargo should advertise only Seasonally.

Other risks also include product backfire. If something happens and Wells Fargo files individual’s taxes wrong it could create a very poor image for us, making our brand equity drop substantially.

A threat to our company is that competitors could realize the profitability of our product and saturate competition in the accounting market. Banks like Bank of America and Washington Mutual could put a devastating counter operation. The only way to contain this is by developing the new product quickly, so the other banks will struggle getting a part of the action. While Wells Fargo will already have a customer base, there is a very large risk that another company might attempt to copy our idea and then end up getting more buzz about the subject, causing customers will flock towards them instead of us.

Upon analyzing these risks, none are prominent enough for a rejection of the marketing plan. They are all theoretical, and none of them very likely to happen. If they’re risk increased than there might be a change of plan, but at this time these risks and threats should just be watched over. It would be a good plan to re-evaluate these risks 1 year from the beginning of the implementation to reassess how risky and threatening they are.

Conclusion:
Through examination of these findings, we have come to the conclusion that we would recommend this product for implementation. The expected costs would be under $1.5 million, which the company could make back just by procuring 84 new home loans or refinances. To implement this strategy we will have to start the project in June, 2007. The first part will end in May, 2008, then we will continue with the next part until tax season is finished in July 2008. The first part of the plan is to create product awareness, and the second is actually an attempt to sell this product to the customers. Once the period is ended we will analyze the performance by comparing the % increase in home mortgages compared to the past 5 years average % increase. Lower to upper middle class Californians between the ages of 26 and 60 are our target market. We will supply our product inside of our already pre-existing stores in which these customers already visit, creating easy
access to this new product.

There will be 2 products specifically, in house consulting, and a program called FastTAX. FastTAX will be an outsourced program that we buy from a separate company then resale for a minimal profit, while the in house consulting will be sold for much more. We aren’t planning on selling this products that much though, our main plan is to bundle this with our home loan system, attracting new customers to open up new home loans or refinance current home loans with us. Once they refinance or open up a new loan, they will get this service free of charge. Appendix A

Article II. Debt Rating Summary
We have one of the highest debt ratings of any financial services company. WELLS FARGO & CO.

Dominion Bond Rating Service
Fitch Ratings
Moody’s
Standard & Poor’s
Ratings Outlook
Stable
Positive
Stable
Stable
Long-term Issuer Rating
AA
AA
Aa1
AA+
Short-term Issuer Rating
R-1 (middle)
F1+
P-1
A-1+
Senior Unsecured
AA
AA
Aa1
AA+
Subordinated
AA (low)
AA-
Aa2
AA
Preferred Stock
–
AA-
Aa3
AA-

WELLS FARGO BANK, NA

Dominion Bond Rating Service
Fitch Ratings
Moody’s
Standard & Poor’s
Ratings Outlook
Stable
Positive
Stable
Stable
Long-term Issuer Rating
AA (high)
AA
Aaa
AAA
Short-term Issuer Rating
R-1 (high)
F1+
P-1
A-1+
Bank Deposits
–
AA+
Aaa
–
Senior Unsecured
AA (high)
AA
Aaa
AAA
Subordinated
AA
AA-
Aa1
AA+
Bank Financial Strength Rating
–
–
A
–

Source: https://www.wellsfargo.com/invest_relations/debt
Appendix B
Commercial Banks Ranked by Assets
On Dec. 31, 2005. Dollars in thousands
Published July 12, 2006
Rank

Assets
Deposits
Full-time employees
Branches

Dec. 31, 2005
Change*
Dec. 31, 2005
Change*

1
Bank of America Charlotte
$1,082,242,862
40.30%
$686,648,523
29.60%
161,318
5,808
2
JPMorgan Chase Bank Columbus, Ohio
1,013,985,000
4.8
552,610,000
6.7
131,868
2,667
3
Citibank New York
706,497,000
1.7
485,990,000
5.9
184,489
286
4
Wachovia Bank Charlotte
472,143,000
21.1
333,780,000
22.2
78,571
3,193
5
Wells Fargo Bank Sioux Falls, S.D.
403,258,000
10.1
319,396,000
13.4
121,271
3,194
6
U.S. Bank Cincinnati
208,867,410
7.4
135,603,591
5.7
47,384
2,526
7
SunTrust Bank Atlanta
177,231,290
35.5
123,624,623
39.3
30,652
1,728
8
HSBC Bank USA Wilmington, Del.
150,679,481
9.0
95,047,625
16.9
12,052
433
9
KeyBank Cleveland
88,960,716
3.4
60,855,800
2.5
18,018
959
10
State Street Bank and Trust Co. Boston
87,888,150
-2.6
60,337,941
7.1
21,102
1
11
Bank of New York New York
85,868,000
-6.8
65,318,000
-0.3
18,742
355
12
PNC Bank Pittsburgh
82,876,683
12.3
59,417,540
12.4
15,387
833
13
Regions Bank Birmingham, Ala.
81,074,402
64.8
61,483,342
63.3
21,526
1,415
14
Branch Banking & Trust Co. Winston-Salem, N.C.
80,226,832
7.7
54,318,471
12.3
20,945
943
15
Chase Bank USA Newark, Del.
75,051,579
-15.4
24,860,779
-15.6
18,527
4
16
Countrywide Bank Alexandria, Va.
73,116,292
78.5
39,609,479
97.9
1,889
2
17
LaSalle Bank Chicago
71,060,868
11.5
42,567,578
12.8
5,002
143
18
National City Bank Cleveland
69,482,177
31.2
38,322,018
37.3
12,930
413
19
Bank of America USA Phoenix
62,982,777
41.8
72,379
1070.4
7,272
1
20
Merrill Lynch Bank USA Salt Lake City
60,367,705
-9.5
52,789,997
-4.7
1,207
3
Source: American Banker Online
Appendix C

Source for Both Above: Appendix D
2006 2005 2004 2003 2002 2001
Earnings and per share data
Net Income$8,482 $7,671 $7,014 $6,202 $5,434 $3,411 Revenue 35,691 32,949 30,059 8,389 5,249 0,981
Diluted Earnings per Common Share 2.49 2.25 2.05 1.83 1.58 .98 Dividends Declared per Common Share 1.08 1.00 0.93 0.75 0.55 0.50

Key Performance Measures
Return on Assets 1.75% 1.72% 1.71% 1.64% 1.69% 1.20% Return on Equity 19.65% 19.59% 19.57% 19.34% 18.66% 12.69% Net Interest Margin 4.83% 4.86% 4.89% 5.08% 5.53% 5.29% Efficiency Ratio 58.1% 57.7% 58.5% 60.6% 58.3% 65.7%

Period-End Balances
Assets $481,996 $481,741 $427,849 $387,798 $349,197 $307,506 Loans 319,116 310,837 287,586 253,073 192,478 167,096 Core Deposits* 270,224 253,341 229,703 211,271 198,234 182,295 Stockholders’ Equity 45,876 40,660 37,866 34,469 30,319 27,175

Asset Quality Ratios
Non-Performing Loans/Total Loans 0.52% 0.43% 0.47% 0.58% 0.78% 0.98% Allowance/Total Loans1.24% 1.31% 1.37% 1.54% 1.98% 2.22% Allowance/Non-Performing Loans 238% 303% 291% 267% 256% 227% Net Charge-Offs/Average Total Loans 0.73% 0.77% 0.62% 0.81% 0.96% 1.10%

Net Income by Operating Segments
Community Banking $5,531 $5,473 $4,832 $4,299 $4,006 $2,437 Wholesale Banking 2,086 1,789 1,679 1,435 1,139 1,146 Wells Fargo Financial 865 409 617 531 289 447

Stock Price (NYSE :WFC)
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
2006 2006 2006 2006 2006 2005 2004
High $36.99 $36.89 $34.86 $32.76 $36.99 $32.35 $32.02 Low34.90 33.36 31.90 30.31 30.31 28.81 27.16
Close 35.56 36.18 33.54 31.94 35.56 31.42 31.08

*Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates and market rate and other savings. CAUTIONARY NOTE
ABOUT FORWARD LOOKING STATEMENTS
This document might have forward-looking statements about Wells Fargo, including descriptions of plans or objectives of management for future operations, products or services and forecasts of future revenues, earnings and other measures of economic performance. Forward-looking statements discuss matters that are not facts, and often include the word “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “target,” “will,” “can,” “would,” “should,” “could” or “may.” Do not unduly rely on forward-looking statements, as they give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we might not update them to reflect changes that occur after that date. A number of factors—many beyond our control—could cause results to differ significantly from expectations. Some of these factors are described in our Annual Report on Form 10-K for the year ended December 31, 2006. Source: Appendix E

List of Services offered by most banks:
Banking
Online banking
Checking
e-Savings
Savings
IRAs & Rollovers
Certificates of Deposit
Overdraft Protection
Small Business Banking
Private Banking
Expatriate Banking
Investments & Insurance
Online Investing
Credit Cards
Small Business Credit Cards
Lines & Loans
Home Equity Lines & Loans
Wire Transfers
Appendix F
Percentage of revenue earned from each major service offered by Wells Fargo company.

Source:

Appendix G
Survey Plus Information:
Survey #
Age Category
Do you own a house?
If so, do you have a home loan?
What is the APR on that loan?
What kind of other loans do you have?
How do you file your taxes?
Would you be interested in a bank offering tax help?
Would you be interested in our home loan = free tax service? 1
46-55
Yes
Yes
0.09
Car
have a friend do them
No
Yes
2
prefer not to disclose
Yes
No
0
Credit Card
do them myself
No
No
3
26-35
No
No
0.07
Car
do them myself
No
Yes
4
36-45
Yes
Yes
0.08
Car
pay for a service
Yes
Yes
5
36-45
Yes
Yes
0.06
Car
pay for a program
No
No
6
55+
Yes
No
0
none
pay for a program
No
No
7
prefer not to disclose
No
No
0.075
Car
pay for a service
No
No
8
46-55
Yes
Yes
0.05
Car
pay for a service
No
No
9
prefer not to disclose
Yes
No
0
none
do them myself
No
No
10
prefer not to disclose
Yes
No
0
none
pay for a program
No
No
11
36-45
Yes
Yes
0.07
Car
pay for a service
Yes
Yes
12
36-45
Yes
Yes
0.08
Car
do them myself
Yes
Yes
13
46-55
No
No
0
none
pay for a service
Yes
No
14
26-35
Yes
Yes
0.07
Car
pay for a program
No
Yes
15
46-55
Yes
No
0.08
Car
pay for a program
Yes
No
16
36-45
Yes
Yes
0.08
none
pay for a service
Yes
No
17
18-25
No
No
0.06
Car
pay for a program
Yes
Yes
18
18-25
No
No
0.09
Car and School
pay for a service
Yes
Yes
19
18-25
No
No
0.09
Car and School
do them myself
Yes
Yes
20
18-25
No
No
0.08
Car
have a friend do them
Yes
Yes
21
18-25
No
No
0
none
do them myself
Yes
Yes
22
46-55
Yes
Yes
0.07
none
pay for a service
Yes
Yes
23
36-45
No
No
0
none
pay for a program
Yes
No
24
36-45
Yes
Yes
0.06
none
do them myself
Yes
Yes
25
18-25
Yes
Yes
0.01
Other
do them myself
No
Yes
26
36-45
Yes
Yes
0.07
Car
pay for a program
Yes
Yes
27
55+
Yes
No
0
none
pay for a service
No
Yes
28
26-35
No
No
0
Car and School
do them myself
Yes
No
29
18-25
No
No
0
none
pay for a service
Yes
No
30
46-55
Yes
Yes
0.08
Credit Card
do them myself
No
Yes
Appendix H

Appendix I

Appendix J

Appendix K

Appendix L

>>>>>>>>>>>
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