A multi-brand strategy is key to success
Germany is a leading sub-brand market
Corporate Brand
Master Brand
Service Brand
Stand Alone Sub-Brand
Joint Venture Brand
Wholesale Brand (MVNO)
Blue
Sub-brands drive subscriber growth of major
UK Sub-brand Parent brand Net subscriber additions to 2016, since launch of major sub-brands
France
Germany
Source: Red Dawn Consulting
-4m
-2m
0m
2m
Case study
4m
Etisalat Sub Branding Project
Objective
Solution
To develop a platform to launch multiple sub-brands and MVNOs in several geographies
Service Gateway
BSS for sub-brands & MVNOs
Outcome
Master Brand
layer 1 BSS layer 2 OSS layer 3 Network
Talk to us about building a sub-branding strategy
Architected a service gateway. Designed three brand ideas (JV, stand-alone, MVNO)
Launch of sub-brand Five Sunrise in UAE for the Asian customers
White paper
Sub branding
What’s in this report? Sub-brands are an increasingly important part of mobile operators’ strategy to attract new segments. In this paper we look at the winners, and take some valuable lessons from the less successful.
We explore best practices and why more operators are turning to subbranding to grow their customer bases.
Sub-branding not only presents a wave of opportunity for operators: such a strategy is best underpinned by a flexible, innovative ‘service enablement’ business architecture. This creates opportunities for vendors including OSS/BSS providers and enablers.
We have drawn on interviews with leading operators that support subbrands and projects we have undertaken to launch new segmentation strategies to help drive your sub-brand strategy.
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3 themes covered
How to launch subbrands?
Why launch subbrands?
What subbrands succeed?
We expect the number of sub-brands globally to double by 2020
Your report at a glance What are the emerging segments?
What brand options exist?
How do sub-brands differentiate?
What are the success factors?
What are the benefits of sub-brands?
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Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity Why? Why?
Why launch sub-brands? • Fast-track a tailored service for underserved segments
Successful sub-brands offer a unique product and be operationally distinctive. We have observed some unique market propositions from leading operators:
• Test tariffs and innovations • Bundle alternative value added services or devices • Counteract a stale master brand
• Differing download speeds, based on customer’s willingness to pay
• Avoid development disruption to the core business
• SIM-only or with a range of legacy handsets
• Win back control from MVNOs
• New device payment plans: monthly fee, separate to a pre-paid contract • New, low cost distribution channels – e.g. no store-based retail presence
• Satisfying regulatory need for increased customer choice.
Global sub-brand breakdown, 2016
• Pared-down customer service - e.g. online only, no phone-based support • Zero-rated data for OTT content customers already pay for on a monthly basis • Alternative language service
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271 sub-brands
MNOs use sub-brands to differentiate whilst retaining control Why? Why?
There are a range of other benefits to sub-branding (with examples) Control
Innovation Test tariffs, customer support and other propositions before featuring them in the master brand
Retain the customer relationship, avoid wholesale margin loss
Leverage core business assets of team to reduce OPEX
Satisfy regulatory need for choice
Competition
Fast-track service launches: avoid corporate constraints Fast-track
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Cost
Manage subbrands alongside MVNOs on the same flexible platform Flexibility
Successful operators use multiple models to target new segments Telefonica has mastered a multi-brand strategy What? Why?
Corporate
The corporate brand tends not to be recognised by subscribers. It identifies a group of brands and adds credibility Subscribers would recognise the master brand as their mobile provider. The master brand may be used by a corporate brand in multiple countries
Master
Service
A service brand identifies a group of tariffs or products. It may be used in different countries by a master brand
Stand alone sub-brand
Sub-brands are used by MNOs to target specific customer segments, including business, ethnic and youth
Joint venture sub-brand
An MNO may partner with a third-party to launch a sub-brand. The third-party needs to have a USP that resonates with specific segments
Wholesale (MVNO) Example brands
An MNO may provide third-parties with access to its network and more control over service development and customer ownership
MNO business models
Description of models
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A number of sub-brand innovations are emerging Options for sub-brands to achieve differentiation What? Why?
Pure price/ tariff led
Channel to market
Customer care
OTT content
Service
Increasing complexity and differentiation
Like MVNOs, sub-brand propositions range from very simple price plans to more complex service-led ideas (e.g. differing download speeds). Sub-brands must have a USP e.g. in The Netherlands, KPN closed its Hi youth-brand in May 2015, because its tariffs were not differentiated from its master brand and other market brands.
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Discounted or tariff led propositions account for 38% of sub-brands Price and tariff-led proposition examples: What? Why?
Pure price / tariff led
Offer no-frills prices DE
Offer a simpler, low maintenance range of tariffs
Try new business models, e.g. sponsored tariffs
Offer tariff innovation e.g. chose to combine different voice and data bundles, as well as pay an additional monthly fee to access LTE
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A new distribution models are being used to minimise operational costs Channel-led proposition examples: What? Why?
Channel to market
Leverage the retail presence of a JV partner
Use bricks and mortar affiliates to re-sell services
NL
Minimise costs by adopting an on-line only model
Target higher value customers, by using the master brand’s or sub-brand retail outlets
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Customer care can also be pareddown to minimise costs Customer care propositions examples: What? Why? Why?
Rely on subscriberbased customer care via sub-brand website and social media (member care)
Customer care
Language specific support (Turkish)
BE
Use on-line and selfservice care only
Also provide in-store customer support to higher value customers, via master brand/sub-brand and/or third-party retail stores
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Unique content and zero-rating OTT content can attract segments OTT content proposition examples: What? Why?
OTT content
Provide access videoon-demand content, as part of a bundled tariff e.g. M6 TV
Access streaming music, as part of a bundled tariff, e.g. Spotify
CA
Generate additional revenue by charging an additional fee, e.g. a mobile TV service
Zero-rate data for specific apps/social media, e.g. Facebook
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Willingness to pay can be used to segment customers Service-led proposition examples: What? Why?
Services
Restrict data access to 3G NL
Offer a slower maximum data download speed when compared to the master brand
Restrict specific websites/apps/social media to 4G, e.g. Facebook
Offer smaller data bundles when compared to the master brand
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Sub-brands can be the saviour of some operators‌ Operators can use sub-brands to deliver subscriber growth1
What? Why?
UK
France
Germany
- 4m
- 2m
0m
2m
4m
Without the Red sub-brand, SFR would have lost over 10% market share. Red has added back 3.9% market share
Key:
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Sub-brand
Master brand
1 – Net subscriber additions to June 2016, since launch of the sub-brands. Master brand net additions excludes sub-brand net additions and other sub-brand net additions where they are known Source: Red Dawn Consulting
…with a range of distinct service innovations
What? Why?
• giffgaff has succeeded by using social media to target subscribers and using members to deliver customer support • All age ranges attracted to offers, although aimed at youth segment • No-frills/tariff simplicity • >6 years in operation • CAGR of 91% (y1 to y4) • ~2m subscribers Q2 2016 • Congstar attracts the youth segment by offering low-cost voice and / or data tariffs • No-frills/tariff simplicity and tailoring using add-ons • Members provide some support
• >6 years in operation • CAGR of 60% (y1 to y4) • ~3.9m subscribers Q2 2016
• Red has attracted subscribers by offering low-cost, month-to-month tariffs, in particular data only users • Mostly youth focussed • No-frills/tariff simplicity, no minimum contract length • >4 years in operation • CAGR of 70% (y1 to y4) • ~2.5m subscribers Q2 2016
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Source: Red Dawn Consulting, operator websites, news articles
What’s next?
What? Why?
We predict huge opportunities lie in emerging segment innovations
Emerging segment innovations
3% 6%
Business Bundled Ethnic Retail Other Youth/media Discount
Healthcare 8%
38%
8%
Other 14%
23%
OEMs (e-SIM) Media Un-banked Loyalty scheme models Advertising & m-commerce models
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How can operators avoid failure? How? How?
Select sub-brand closures • Rogers Wireless axed Mobilicity, since its unlimited packages were similar to tariffs offered by its other sub-brand Chat
• KPN said it became increasingly difficult to differentiate its offers
• Virgin Mobile USA (Sprint sub-brand) scrapped the ‘Virgin Mobile Custom’ brand, rolled out exclusively for Walmart, since it confused customers
• Sprint closed its no-frills sub-brand, because it duplicated tariffs offered by its other sub-brand Virgin Mobile USA
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Source: Red Dawn Consulting, operator websites, news articles
How to ensure sub-brand success Ensure new OSS/ BSS enablement platform has functionality for new service innovations
How? How?
Decide which segments to control: Build flexible ‘service gateway’ to host MVNOs and sub-brands.
Separate governance and accountability for a sub-brand unit with own culture
Develop business case. Be flexible to take customers back into master brand
Partner with segment experts, joint ventures, brand affiliates
Legacy infrastructure cannot innovate Uncertain business model for segments: MVNO or sub-brand
Fear of core customer cannabalisation Lack of buy in from stakeholders: slow governance process
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Lack of new segment know-how
Emerging innovations require a flexible enablement platform How? How?
Enablement platform functionality increasing in layers BSS separate channel provisioning rapid bespoke tariffing segmented self care enhanced analytics SIM management loyalty & campaign management
OSS • • • • • • •
social media integration real time charging policy control deep packet inspection zero rating direct operator billing API management
Network Enhanced control over: • user registration • signalling • call and data control • numbering and IMSI control • switching • fixed-mobile convergence
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Increasing functionality
• • • • • •
Who can benefit from a fast track subbrand and wholesale approach? How can we help?
Operators
Identify incremental customer segments and build a scalable wholesale infrastructure to support disruptive propositions
MVNOs
Develop new segmented propositions and identify appropriate enablement platforms
Vendors
Develop optimsed enablement platforms to help operators serve emerging innovation requirements
We offer a range of consultancy services across the entire business cycle from market research through to implementation. For more information visit www.reddawnconsulting.com
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Trusted advisors to global industry leaders
For more insight on fast-track sub-branding, talk to us.
Authors: Arun Dehiri Managing Director arun@reddawnconsulting.com +44 (0) 333 301 3450 www.reddawnconsulting.com
Gareth Williams Head of Research gareth@reddawnconsulting.com