Sub-brands are a flexible way for an operator to …...Sub-brands are an increasingly important part of mobile operators’ strategy to attract new segments. In this paper we look

Sub-brands are a flexible way for an

operator to innovate, whilst protecting

its master brand’s identity

1

2

Sub-brands are seen by operators as a vehicle to target new segments,

where incumbent brands have lost appeal.

A well designed sub-brand infrastructure is a flexible way to innovate,

whilst protecting the master brand.

Today, 282 sub-brands account for just 1.5% of mobile subscribers

globally. However, we believe the number of sub-brand subscribers will

grow significantly and that the number of sub-brands globally will double

by 2022.

Sub-brand

evolution

How

can we

help?

Find new

segments

Create disruptive

propositions

Fast track

launch

Identify underserved

segments by

intelligently profiling

your customer base

Build a highly tailored

service through deep

customer insight and

global benchmarking

Design partitioned

operations and

platform without

disrupting the core.

Rapidly implement a

go-to-market plan

Business

3%

Bundled

6%

Ethnic

8%

Retail

8%

Other

14%

Youth/ Media

23%

Discount

38%

More operators are using sub-brands to target new

customer segments

Figure: Global sub-brand

breakdown, 2017

Sub-brand examples include…

3

A multi-brand strategy is key to success

Germany is a leading sub-brand market

Wholesale

brand

(MVNO)

Joint

venture

brand

Stand

alone sub-

brand

Service

brand

Master

brand

Corporate

brand

Sub-brands drive subscriber growth of major

mobile operators

Net subscriber additions

to Dec 2017, since launch

of major sub-brands

0m 2m 4m-2m-4m

Sub-brand

Parent brand

To develop a platform to

launch multiple sub-

brands and MVNOs in

several geographies

Architected a flexible service

gateway. Designed three

brand ideas (JV, stand-alone,

MVNO)

Launch of sub-brand

Five Sunrise in UAE for

the Asian customers

RDC assists operators to launch sub-brands

Case study: Etisalat

Objective Solution Outcome

Free




4

We cover 3 themes

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 sub-

branding 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 sub-

brands and projects we have

undertaken to launch new

segmentation strategies to help

drive your sub-brand strategy.

Context

How do sub-brands

launch?

Why launch sub-brands?

What sub-brands succeed?

Report contents




5

• Fast-track a tailored service for

underserved segments

• Test tariffs and innovations

• Bundle alternative value added

services or devices

• Counteract a stale master brand

• Avoid development disruption to the

core business

• Win back control from MVNOs

• Satisfying regulatory need for

increased customer choice.

Successful sub-brands offer a unique

product and are operationally distinctive.

We have observed some unique market

propositions from leading operators:

• Differing download speeds, based

on customer’s willingness to pay

• SIM-only or with a range of legacy

handsets

• New device payment plans: monthly

fee, separate to a pre-paid contract

• New, low cost distribution channels

– e.g. no store-based retail presence

• 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

Sub-brand breakdown,

global, 2018

3% 6%

8%

8%

15%

21%

39%

Business

Bundled

Ethnic

Retail

Other

Youth/media

Discount

282

sub-brands




Why launch sub-brands?

HowWhy What




6

Retain the

customer

relationship, avoid

wholesale margin

lossTest tariffs,

customer support

and other

propositions before

featuring them in

the master brand

Satisfy regulatory

need for choice

Fast-track

service

launches: avoid

corporate

constraints

Manage sub-

brands alongside

MVNOs on the

same flexible

platform

Leverage core

business assets

of team to

reduce OPEX

The main benefits of sub-

branding are summarised

below

Innovation

Competition

Control

Cost

Fast-track

Flexibility

HowWhy What

MNOs use sub-brands to differentiate

whilst retaining control




7

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

A service brand identifies a group of tariffs or

products. It may be used in different countries

by a master brand

Sub-brands are used by MNOs to target specific

customer segments, including business, ethnic

and youth

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

An MNO may provide third-parties with

access to its network and more control over

service development and customer

ownership

MNO business

modelsExample brands Description of business

models

Telefonica has mastered a multi-brand strategy

Corporate

Master

Service

Stand alone

sub-brand

Joint

venture

sub-brand

Wholesale

(MVNO)

HowWhy What

Free

Successful operators use multiple

models to target new segments




8

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. Three Denmark transferred its Zenji sub-

brand customers to its Oister sub-brand in April 2018, because it was not

sufficiently differentiated from its master brand and other market brands.

Price/

tariff

Channel

to market

Customer

care

OTT

contentService

A number of sub-brand innovations are

emerging

Options for sub-brands to achieve differentiation

HowWhy What




9

Price/ tariff proposition examples

DE

Discounted or tariff led propositions

account for 39% of sub-brands

Price/

tariff

Offers tariff innovation e.g. chose to combine different voice and

data bundles, as well as pay an additional monthly fee to access LTE

Try new business models, e.g.

sponsored tariffs

Offers no-frills prices

Offers a simpler, low

maintenance range of tariffs

HowWhy What




10

Target higher value customers, by using the master

brand’s or sub-brand retail outlets

Minimise costs by adopting an

on-line only model

Leverage the retail

presence of a JV partner

Use bricks and mortar

affiliates to re-sell services

NL

Channel to market proposition examples

Channel

to market

A new distribution models are being

used to minimise operational costs

HowWhy What




11

AR

Customer care proposition examples

Customer

care

Customer care can also be pared-down

to minimise costs

Provide in-store customer support to higher value customers,

via master brand/sub-brand and third-party retail stores

Rely on subscriber-based customer care via sub-

brand website and social media (member care)

Language specific

support (Turkish)

Use on-line and self-service

care only

HowWhy What




12

Unique content and zero-rating OTT

content can attract segments

OTT content proposition examples

Zero-rates data for specific apps/social media, e.g. Facebook

‘Free’ access 24/7 to boostTV – news, music,

fashion and live broadcasts

Offers zero-rated access

to 100+ apps

Provides access streaming music, as

part of a bundled tariff, e.g. Spotify

OTT

content

HowWhy What




13

Willingness to pay can be used to

segment customers

Offers smaller data bundles when compared to the

master brand

Offers a slower maximum data download

speed when compared to the master brand

Only offers 3G data

speeds – not 4G

Restricts specific websites/apps/social

media to 4G, e.g. Facebook

Service-led proposition examples

Services

HowWhy What




14

Without the Red sub-brand, SFR

would have lost over 10%

market share.

Red has added back 4.1%

market share.

0m 2m 4m-2m-4m

1 – Net subscriber additions to Dec 2017, 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

Sub-brands can be the saviour of some

operators…

HowWhy What

Operators can use sub-brands

to deliver subscriber growth1

Sub-brand

Parent brand




15

• 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

• >8 years in operation

• CAGR of 91% (y1 to y4)

Source: Red Dawn Consulting, operator websites, news articles

• 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



• 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

… with a range of distinct service

innovations

HowWhy What






16

Un-banked

Advertising &

m-commerce models

Loyalty scheme

models

OEMs (e-SIM)

Healthcare

Media

3%6%

8%

8%

14%

23%

38%Business

Bundled

Ethnic

Retail

Other

Youth/media

Discount

Emerging segment

innovations

Other

What comes next?

HowWhy What

We predict huge opportunities

lie in emerging segment innovations

3%6%

8%

8%

14%

23%

38%

Business

Bundled

Ethnic

Retail

Other

Youth/media

Discount




17

• Rogers Wireless axed Mobilicity, since its unlimited

packages were similar to tariffs offered by its other sub-

brand Chat

• Sprint closed its no-frills sub-brand, because it duplicated

tariffs offered by its other sub-brand Virgin Mobile USA

• 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

Source: Red Dawn Consulting, operator websites, news articles

HowWhy What

How can operators avoid failure?

Select sub-brand closures




18

Separate

governance and

accountability for a

sub-brand unit with

own culture

Lack of buy in from

stakeholders: slow

governance process

Partner with segment

experts, joint ventures,

brand affiliates

Decide which

segments to control:

Build flexible ‘service

gateway’ to host MVNOs

and sub-brands.

Ensure new OSS/ BSS

enablement platform has

functionality for

new service innovations

Legacy infrastructure

cannot innovate

Uncertain business

model for segments:

MVNO or sub-brand

Lack of new segment

know-howFear of core product

cannibalisation

Develop business case.

And be flexible to take

customers back into

master brand

How can operators ensure sub-brand

success?

HowWhy What




19

• social media integration

• real time charging

• policy control

• deep packet inspection

• zero rating

• direct operator billing

• API management

• separate channel provisioning

• rapid bespoke tariffing

• segmented self care

• enhanced analytics

• SIM management

• loyalty & campaign management

Enhanced control over:

• user registration

• signalling

• call and data control

• numbering and IMSI control

• switching

• fixed-mobile convergence

Incr

easi

ng

fu

nct

ion

alityOSS

Network

BSS

Enablement platform functionality

increasing in layers

Emerging innovations require a flexible

enablement platform

HowWhy What

Un-banked

Advertising &

m-commerce models

Loyalty scheme

models

OEMs (e-SIM)

Healthcare

MediaOther

Emerging sub-brand innovations




20

Identify incremental customer segments and

build a scalable wholesale infrastructure to

support disruptive propositions

Develop new segmented propositions and

identify appropriate enablement platforms

Develop optimised enablement platforms to

help operators serve emerging innovation

requirements

Operators

MVNOs

Vendors

Who can benefit from a fast track sub-

brand and wholesale approach?

Our areas of expertise




21

Arun Dehiri

Managing Director

The content in this publication has been

prepared for general information purposes

only. We do not accept liability for any loss

resulting from actions taken based on any

material in this publication.

The contents of this document shall not be

copied or distributed for commercial

purposes. When copied or distributed for

non-commercial purposes, it shall include Red

Dawn Consulting copyright notice.

Red Dawn Consulting has provided rigorous

market analysis and winning strategies to

deliver growth for +100 companies in the

Telecom, Media and Technology industry. Our

strategies are grounded with an intimate

understanding of competition, customers and

emerging innovations from around the world.

Talk to us for more insight

on fast-track sub-

branding.

[email protected]

Gareth’s LinkedIn

+44 (0) 333 301 3450

www.reddawnconsulting.com

[email protected]

Arun’s LinkedIn

Gareth Williams

Head of Research

mailto:[email protected]

https://www.linkedin.com/in/gareth-williams-382746/

http://www.reddawnconsulting.com/

mailto:[email protected]

https://www.linkedin.com/in/arundehiri/

Documents

Sub-brands are a flexible way for an operator to …...Sub-brands are an increasingly important part of mobile operators’ strategy to attract new segments. In this paper we look