Chapter 1 - Introduction

1.0 INTRODUCTION

This chapter provides an overview of the product being marketed and information on the
institution and its environment.

1.1 MAURITIUS COMMERCIAL BANK

The current turbulence in the global financial world may be a godsend for fundamental
and innovative rethinking and reshaping of the bank business sector. In order to sustain
the business growth and meet statutory guidelines, new products or services need to be
introduced on the local market. One among the new service the Mauritius Commercial
Bank (MCB) is introducing is Wealth management solution known as investment
management.

The MCB through its 170 years existence has become one of the leading financial
services group in the sub-Saharan Africa region employing around 2500 persons in its 5
lines of business:

(1) Corporate banking – Leader in this segment with 40% market share

(2) Retail banking – Wide ranging channel with 42 branches, 144 ATM’s

(3) Cards – Over 4000 point of sale

(4) International operations – Present in over 8 overseas countries

(5) Non-bank financial services – Leasing, equity financing & investment

management

1.2 WEALTH MANAGEMENT SOLUTIONS

Wealth Management solutions consists of advising investors on financial planning and a

number of other services. Wealth management solutions can either be provided by
banking institutions, financial firms, brokerages or trusted financial analyst. The target

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 Chapter 1 - Introduction

group can be high net worth individuals, small business owners, institutions and families
with large bankable amounts.

Wealth managers coordinate retail banking, estate planning, legal resources and
investment management. Their work is highly dependent on the risk the client is willing
to take on investing; core objective being to enhance the income.

2.0 INTRODUCTION

This chapter defines the product with respect to what has been done worldwide and in the
Mauritian Context.

2.1 WEALTH MANAGEMENT

Vincent F. Yua and Hsiu-I Tingb define Wealth Management as an advanced type of
financial planning that provides high net worth individuals (HNWI) and families with
private financial services, such as asset management, banking, estate planning,
investment management, and legal resources. The goal of Wealth Management services
is sustaining and growing long-term wealth of clients; hence and it is based on a long-
term (Three or more years; in the context of accounting more than one year) consultative
relationship with the client.

2.2 WEALTH MANAGEMENT FRAMEWORK

For most banks/CPAs, providing this range of services means a significant shift from
simply offering traditional accounting services. But for those who are successful in
transforming their accounting practices into wealth management practices, there are
significant benefits:

• Wealth management complements the existing expertise of CPAs and leverages

the knowledge about your clients' lives that you already have.

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• Its holistic approach enables the wealth manager to formulate better solutions to
clients' financial challenges.

• The comprehensive nature of wealth management offers you the ability to readily
differentiate yourself from your traditional competition--other CPAs offering only
accounting services.

• Because of its consultative nature, wealth management results in deeper client

relationships, which lead in turn to increased profitability and more client referrals.

Figure 1

WEALTH MANAGEMENT SOLUTIONS ON A GLOBAL PERSPECTIVE

Wealth management solutions have been undergoing enormous growth worldwide since
several years. The number of families with Asset Under Management (AUM) of over $1
million has been doubling every few years.

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Wealth managers and private banks are anticipating unprecedented growth over the next
three years, according to the latest findings from PricewaterhouseCoopers 2007 Global
Private Banking/Wealth Management Survey, with chief executives predicting that, on
average, their assets under management will increase at a staggering rate of 30% per
annum. Famous organizations and banking institutions providing wealth management
solutions are Morgan Stanley, Merrill Lynch, Goldman Sachs, Swiss Bank, Saxo Bank
and Deutsche Bank amongst others.

2.4 THE MAURITIAN CONTEXT

In Mauritius, when advisors were asked what prompted them to pursue becoming a
wealth manager, the most common response was that they recognize that their clients
needed, and expected, more comprehensive advice and management. Basic financial
planning or investment management alone would not be sufficient.

After talking to different wealth mangers from different bank we have noted that any
Mauritian who has sufficient amount of money can be 1 million to any amount can invest
their money. But the main target markets are the big income household and big
institution. Individual Client portfolios are made which will contain the customer needs
and the risk associated. The wealth is invested on both national and international market
shares, Treasury bond, real estate and insurance scheme. All the investments are done
relatively with the individual customer needs.

The Relationship-Profitability cycle

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 Chapter 1 - Introduction

3.0 INTRODUCTION

This chapter describes the framework of the study and how the data was collected and
gives an overview of the methodology to be adopted.

3.1 METHODOLOGY

The following methodology shall be adopted for the project completion:

1) Conducting a Marketing Research

For the marketing research both primary and secondary methods have been used
to obtain qualitative and quantitative data.

Primary data:

i. A face to face interview with, Mr. Vishal Joyram, leader of wealth

management team of the State Bank of Mauritius.

ii. Phone interview with Mr. Didier Peten, head of the wealth management
team of AfrAsia Bank.
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 Chapter 1 - Introduction

iii. Email and phone interview with Mr Hashim Jomaye, fund manager at
Mauritius Commercial Bank Investment ltd.

Secondary data:

Internal

i. MCB Bank brochures to have an idea on their current marketing

campaign.

ii. MCB Bank annual reports to have an idea of their Mission, Vision &
Objectives.

External

i. Central Statistic Office to have an idea of the percentage that the target
market represent.

ii. Annual Budget journal of the Minister of Finance for year 2009 to see
the extent at which management is involved in the economy.

2) Determining the strategic intent behind the product

3) Defining the target market

4) Establishing how the product will add value to the market

5) Devising a proper promotional plan

The methodology to be adopted for the completion of the project is illustrated in the
flowchart below:

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 Chapter 1 - Introduction

Wealth Management
Solution

Primary
Research 4.0

Primary
Research No
Sufficient?
Secondary
Yes Research

Research Define Company's

Data Intent

Is it meant
for No
everybody?
Define Specific
Target Market
Yes

Establish how the product will

add value to the target market

Devise a proper promotional

plan

End

INTRODUCTION

This chapter deals with the strategic analysis. It describes the strategic intent behind the
product, the target market segment definition, how the product will add value to the target
market, and the awareness campaign and promotional plan for the product.

4.1 STRATEGIC INTENT BEHIND THE PRODUCT

Today, The Mauritius Commercial Bank Ltd is considered to be the leader among
commercial banks in the Indian Ocean. In order to sustain its leadership, to survive in
this competitive business arena and provide high level of service to its customers, it has

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become imperative for MCB to invest in new products and services. One of the core
values of MCB is innovation. Another reason for introducing wealth management
solutions is differentiation. This will be a means to gain a greater share of clients’ wallets
or to attract new clients.

Nowadays, wealth management solution is one of the fastest growing segments of the
financial services industry. In response to the demand from and competition for the
wealthy individual client, many commercial banks and private organizations are offering
wealth management services. While the rapid growth of the personal wealth of the
Mauritian citizens has raised more and higher demands for financial services both in
depth and breadth, the MCB also has an inherent impulse for financial innovation in
order to realize strategic transformation. Wealth management can combine the two
effectively to meet the demands of both sides.

4.2 TARGET MARKET SEGMENT

Kerin (2003) defines market segmentation as a process of dividing the total market for a
good or service into smaller, internally homogenous groups.

Our main target will be the High Net worth Individuals (HNWIs) holding more than Rs1
million. HNWIs are usually affluent individuals who have already accumulated huge
amount of wealth and entrepreneurs who have built successful million-worth businesses,
yet are seeking more opportunities to grow their business, assets as well as their personal
wealth.

Wealth management and investments holds no guarantee on return. It is meant for

customers who can afford a high level of risk with large capital. Wealth management
firms have traditionally targeted only the wealthiest customer segments because only
these customers can afford the high end service and risk. High net worth (HNW) clients
expect their advisors to have specific and extensive expertise.

Another way of targeting mass affluent will be through demographic segmentation

4.2.1 Demographic Segmentation

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Demographic segmentation consists of dividing the market into groups based on

variables such as age, gender, family size, income, occupation, education, religion, race
and nationality. For the purpose of our study it has been decided to segment the market
in terms of age group, income and occupation as follows:

Age group above 25 years of age This will be explained through the
Customer Life Cycle.
Income above Rs 1,000,000 annually As the income level goes up, life
expectancy increases life style
requirements increase.
Occupation Company CEOs, Directors, Occupation tells a lot about the
Managers, Businessmen, Senior behaviour of the individual. Top
Officers in the Public and Para- Managers of companies are well
statal Bodies educated, confident, and very busy
person, who is likely to appreciate
professional advices on their assets as
well as business.
Table 4.1: Demographic segmentation

4.2.2 Geographic segmentation

Geographic segmentation tries to divide markets into different geographical units like
regions, countries among others.

The Map of Mauritius shown hereunder indicates the branches of the MCB. The main
regions shall be represented by specific branches. The main branches will have offices
for the Wealth Management Solution and other branches will need upgrade. MCB has
main branches in:

• Curepipe (attracting HNWI’s in Curepipe/Floréal)

• Rose Hill (attracting HNWI’s in Rose Hill, Ebene, Beau Bassin)

• Port Louis (attracting mainly the companies with high bankable asset)

• Flacq (HNWI’s in flacq and eastern coastal region and small businesses)

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• Grand Bay (HNWI’s, big companies in the northern coastal region)

The other satellite branches will after upgrade shall promote the Wealth Management
Solutions as well as providing the related services. The selected satellite branches shall
be:

• Rose Belle (attracting HNWI’s in the southern region)

• Vacoas (attracting HNWI’s in Vacoas region and also businesses)

• Quatre Bornes (attracting HNWI’s in that region and mainly Sodnac)

• Tamarin (Newly installed HNWI’s in that region)

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 Chapter 1 - Introduction

Figure 4.0: Map showing branches of MCB (MCB Annual Report, 2008)

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4.3 VALUE-ADDED FOR THE TARGET MARKET

High Net worth individuals are usually persons with high bankable asset and who are
willing to invest those assets or capital in order to maximise their growth. Wealth
Management Solutions at MCB at first shall target most the HNWI’s then at a later stage
to other investors.

This product in itself provides a new kind of financial framework for services such as:
private banking services, asset management, estate planning, investment management and
legal resources.

4.3.1 Time is money

HNWI’s are usually persons at the head of multinationals, organisations and/or retired
persons with their lump sum. Wealth Management Services, being a complete well
organised product, can help a lot to investors who are very busy in their work. There are
usually 2 ways for proper wealth management:

Personal Management – i.e., the investor takes in charge and carries out the
follow-up of his investment.

Experts – i.e., leaving everything in the hands of experts for them to invest on
handpicked selection of best available investment products in the local or global
market after an analysis of market conditions and economic trends.

However in both cases, customers are informed through seminars and/or video
conference organised to keep in touch with them and to show the variations in the market.

4.3.2 Proper risk profile for specific customers

This can be very important for specific customers. Whenever a client wants to invest, a
risk profiling is made to know the level of risk the investor want to take depending also
on short term and long term goals. Based on the risk profiling, a strategy is developed
that matches the profile of the investor agreed upon and an optimal portfolio of service
and the related product is selected. Hence with WMS investors shall no longer invest
blindly on products with undetermined risk level.

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4.3.3 Alternative to continually decreasing interest rate on savings

Following the recent decrease in the savings in Mauritius; 12.8% of GDP (CSO, 2009),
banks and other financial institutions have to provide other new financial products. One
of the features in Wealth Management Solutions is fixed term deposits. Big capital when
invested on the long term (> 3years), preferential interest can be obtained usually be the
order of 5 – 10% depending on the capital deposited. Most of the time, the rate proposed
to customers is 1% minimum above the average savings rate. Since the amount to be
invested is the result of enormous hard work and efforts, term deposits can constitute a
very good alternative to the usual saving for the cautious low risk taking investor.

4.3.4 Modern and daring customers

For modern, daring and risk taking investors who are internationally focussed, this
service can invest their capital on local and international stock exchange. This can be
valuable because dividend obtained from stock exchange investment is not taxable.
Wealth Management also invest in bonds this can be very interesting for investors willing
to take medium to high risk.

4.4 AWARENESS CAMPAIGN AND PROMOTIONAL PLAN

4.4.1 Introduction
Established in 1838, MCB is a prominent banking and financial services provider in the
Indian Ocean whilst being the undisputed leader in Mauritius. In order to stay in the
competitive world MCB is doing its promotional campaign to launch its new services
which is wealth management solution.

4.4.2 Promotional strategies

Based on Ansoff’s marketing strategies wealth management solution is one from product
development section. It’s a new product targeting mainly existing clients with objective
to increase sales of the wealth management services. It is a new product and it is in its
introductory stage of the PLC. Since it is in its introductory phase the product choice
effect is very high but the choice towards MCB is less effective so in our campaign we
are trying to expose and propose to potential clients of wealth management services with

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added services to the package. We are trying to select our target market and try to
convince them about our new product.
We are using the 5 promotional mix and the steps in order to develop an effective
promotional plan.

Our steps are as follows:

• We identify the target audience that is will be the high income class people.
• Our promotional objectives will be to grow, be profitable and sustain in the wealth
solution and have at least 100 billion of assets to manage until 2015.
• Our killer line is “Wealthvantage your dream”.
• We will use television channel and press media to do our launching.
• The pie chart shows our advertising expenses:

• Our total budget will be 3 million:

ADVERTISING QUANTITY TOTAL COST

Brochure 1000 12000
Express newspaper 3 204000
Billboard 3 1600000
Bill board plastic 3 placed in 3 main branch 155000
premises
Extra large poster 10 135000
MCB Night four points 200 280000
MBC static poster 30sec(3 month) Madvi give the price
Golf day Belle Mare 25 Asvin will give the price

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 Chapter 1 - Introduction

Plage
BUDGET 3 million

• Our promotional mix is as follows:

• Advertising: billboard, newspaper, business magazine
• Sales promotion : special offer packages for first 100 customers
• Direct Marketing :face to face and customized solutions
• Public relations/Publicity : sponsor a night at Sheraton hotel with press
coverage

• Finally we will do small questionnaires in order to get the feedback of our

customers.

Advertising and promotional campaign are done in order to make people familiar with
this new product MCB is launching. Details and explanation need to be given to people
so that they understand and are willing to opt for this new product.
There is a budget allocation of three million for the promotional and awareness
campaign.
We will do a marketing concept that is a product with added value and more effective
vis-a-vis to competitors in order to attract more people from the target market.
Our mode of promotional and awareness campaign will be according to the pie chart
below:
Budget of 3 million:

• 1000 Brochures at R12 rupees for 1 A4 coloured glossy paper excluding design at
Sokhee limited
• 3 Wednesdays in the Express economy section (freely attached to the Wednesday
express) in colour at the cost of 68000 rupees for one Wednesday.
• 3 billboards at 3 business strategic place one in Ebene cyber city near tower1 in
BPML premises , the second one at Caudan waterfront near Labourdonais hotel
and the third one at grand bay near the Grand Bay Conference Centre each costing

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155000 VAT included and to set up but excluding fees for renting the space
occupied by the boards.
• 10 extra large plastic posters done at xyz studio each costing 9000+15 % VAT
excluding design fees which will be placed at 10 most important MCB branch.
• A Friday MCB night at Sheraton four points with 100 target customers and a
guest per target customers and free buffet and juice will be offered costing 1400
per person.
• MCB 30 second static poster before the 19h30 news on the MBC

ADVERTISING QUANTITY TOTAL COST

Brochure 1000 12000
Express newspaper 3 204000
Billboard 3 1600000
Bill board plastic 3 placed in 3 main branch 155000
premises
Extra large poster 10 135000
MCB Night four points 200 280000
MBC static poster 30sec(3 month) Madvi give the price
Golf day belle mare plage 25 Asvin will give the price
BUDGET 3 million

This is the perfect right moment that we are going to launch our product since
interest on savings are at 4.5% and our aim is to make our target market realise its
more profitable to invest the money rather than having interest on large fixed
deposit. We are going to play with psychology and try to compare wealth
management advantages to that of fixed deposit and making the target market
aware of the higher the risk involved the higher will be the gain.

5.0 INTRODUCTION

This chapter provides an overview of the product being marketed and information on the
institution and its environment.

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 Chapter 1 - Introduction

5.1 RECOMMENDATIONS

6.0 INTRODUCTION

This chapter provides an overview of the product being marketed and information on the
institution and its environment.

6.1 CONCLUSION

7.0 CONCLUSION

In the light of the above, it is obvious that Wealth Management Solutions being a new
product in the arena of financial sector, its marketing to attract High net Worth
Individuals is quite a big challenge. But as said by Charles Dicken of the French
Revolution in A Tale of Two Cities, written 100 years ago: “It was the best of times; it
was the worst of times.” Today, with its new killer line “MCB Futurise your Dreamzzz”,
MCB is surely providing convincing reasons to believe that they can and they know how
to achieve their goals. This makes MCB’s knowledge the central theme of the campaign
and focuses the advertising more clearly and directly on its unique capabilities. Hence,
WMS will continue to evolve MCB to meet changing clients’ needs and expectations and
to survive in this dynamic competive environment.

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