Fidelity Incorporated: Pricing the Fidelity Blue Chip Growth Fund

Abstract

This case presents an application of conjoint analysis in a financial services setting. It is best used in a course on marketing research. The decision in the case centers on a fund manager's need to generate additional profit from a mutual fund. To do this, he needs to determine a new pricing structure for the fund. The case presents students with the results from a real-world conjoint analysis and requires them to work through the pricing and profit implications of that analysis.

Excerpt

UVA-M-0674

FIDELITY INCORPORATED:

PRICING THE FIDELITY BLUE CHIP GROWTH FUND

John McDowell walked off of the 18th green at Andover Country Club and handed his putter to his caddie in obvious disgust. He had double-bogeyed the 18th and, in doing so, shot an 84, his worst round of golf in the last several months.

McDowell knew what the problem was. It was not his stance, his shoulder position, or even his often-beguiling driver. It was his lack of concentration brought on by the pricing decision facing him, a decision upon which he knew millions of dollars were at stake.

As the fund manager of Fidelity's Blue Chip Growth Fund (BCGF), McDowell not only oversaw the investment decisions of the fund but had considerable input into its marketing plan as well. Senior management at Fidelity had asked McDowell to consider how to generate more profit from the fund. While the fund had grown significantly over the last few years, management believed that they were not charging customers enough for the services provided. Fidelity had recently spent a great deal of money updating and enhancing their on-line order handling and customer service capabilities and believed it was now appropriate to ask their customers to pay something for these increased services.

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Keywords: marketing research, pricing, marketing