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Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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BUILDING SEGMENTS THROUGH SUB-
BRANDING
A FAST TRACK APPROACH
SUB
Building the fast track
BRANDING
2
Sub-brands take over where incumbent brands loose appeal
Sub-branding is a proven success model for operators globally to service new segmentswith ever changing service demands. The sub-brand model has been fuelled in part by thesuccess in the ‘virtual operator’ model and more recently by the increasing flexibility withservice delivery platforms. Yet the 210 sub-brands launched over the past 10-15 yearsaccount for only 1.5% of mobile subscribers globally. We predict huge growth in customerssigning up to operator owned alternative brands, leading to doubling of sub-brandcustomers by 2024.
One of the constraints operators face to serve emerging segment needs is legacy servicedevelopment and delivery platforms. To illustrate, let’s take a look at a traditional operator’sability to keep pace with the millennial segment’s lifestyle preferences. Massive data usage,varied content demands and communication through huge social media environmentsrequires new pricing models, linked to 3rd parties and application delivery capabilities.Upgrading legacy billing and service support platforms to cope with this change is adaunting task. A solution is to develop a flexible platform to serve a new segment in aparallel incubated environment, to avoid disruption to the core business.
Drawing on interviews with leading operators and our projects, we are pleased to share with you in this paper the rationale for launching sub-
brands, success factors and lessons learned.
Content Summary
Why launch sub-brands?
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Which sub-brands succeed?
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How should sub-brands launch?
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Innovation
Competition
Control
Cost
Fast-track
Flexibility
Retail,1%
Business, 3%
Ethnic, 5% Bundled,
12%Youth, 14%
Other, 21%
Discount, 44%
Enablement platforms
Governance
Business case
Partnerships
Cannibalisation
MVNOs
Legacy infrastructure
Know-how
Segments
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Retail1%
Business3%
Ethnic5%
Bundled12%
Youth14%
Other21%
Discount 44%
Figure: Global sub-brand breakdown, Q219
Sub-brand examples include…
The brand spectrum
Wholesale brand (MVNO)
Joint venture brand
Stand alone sub-brand
Service brand
Master brand
Corporate brand
Free
More operators are using sub-brands to target new customer segments
In Germany, Telefonica has mastered a multi-brand strategy
Loyalty scheme models
Media
Advertising & m-commerce models
Healthcare
Un-banked
OEMs (e-SIM)
Emerging segment innovations
Mainstream segments
Other21%
Source: Red Dawn Consulting
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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Retain the customer relationship, avoid wholesale margin loss from MVNOs
Test 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
Innovation
Competition
Control
Cost
Fast-track
Flexibility
MNOs use sub-brands to differentiate whilst retaining control
1 Why launch sub-brands?
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
5Source: Red Dawn Consulting
Sub-brands have been the saviour of some operators
Prime examples of sub-branding delivering significant subscriber growth
Sub-brand
0m 5m 10m-5m-10m
Launched Q4 2009
Launched Q4 2011
Launched Q3 2007
Subscriber additions to Q2 2019 since launch of respective sub-brands
Launched Q4 2009
Launched Q4 2011
Launched Q3 2007
0m 5m 10m-5m-10m
Sub-brand
Parent brand
• 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• >12 years in operation• CAGR of 60% (y1 to y4)
• 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• >9 years in operation• CAGR of 70% (y1 to y4)
• 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• >10 years in operation• CAGR of 91% (y1 to y4)
1 Why launch sub-brands?
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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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
Corporate
Master
Service
Stand alonesub-brand
Jointventure
sub-brand
Wholesale(MVNO)
Free
Successful operators use multiple models to target new segments
2 Which sub-brands succeed?
In Germany, Telefonica has mastered a multi-brand strategy
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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Options for sub-brands to achieve differentiation
OTT content
Price/TariffCustomer
careChannel to market
Service
Netherlands
Trial new business models
No-frills prices
Simpler tariff range
Increasing complexity and differentiation
Tariff innovation
On-line only minimises costs
Leverage the retail presence of a JV partner
Brick-and-mortar affiliates to resell services
Germany
Target higher value customers by using the master brand’s retail outlets
Self-care customer service through their community
Language specific support (Turkish)
On-line and self-service care only
Provide in-store CS to higher value customers, via retail stores
‘Free’ access 24/7 to Boost TV
Offers zero-rated access to 100+ apps
Includes streaming as part of a bundled tariff, e.g. Spotify
Zero-rates data for specific social media /apps. e.g. Facebook
Offers smaller data bundles if compared to the master brand
Offers slower data download speeds.
Only offers 3G data speeds – not 4G
Restricts specific websites/apps/social media to 4G.
2 Which sub-brands succeed?
Sub-brands are succeeding with emerging innovations
Like MVNOs, sub-brand propositions range from very simple price plans to more complex service-led ideas. Successful sub-brands offer a unique product and are operationally distinctive.
We have observed some unique market propositions from leading operators:
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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• 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
Select sub-brand closures
3 How should sub-brands launch?
A number of lessons have been learnt from failures
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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How can operators ensure sub-brand success?
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-how
Fear of core product cannibalisation
Develop business case, and be flexible to take customers back into master brand
3 How should sub-brands launch?
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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Emerging innovations require a flexible enablement platform
The secret to success in sub-branding is having an innovation platform, sittingalongside the core infrastructure which provides the flexibility to create newservices for new segments at speed and scale.
Examples of new emerging segment innovation:
✓ Self care
✓ CEMs (e-SIM)
✓ Media
✓ Un-banked
✓ Loyalty schemes models
✓ Advertising & m-commerce models
Retail,1%
Business, 3%
Ethnic, 5% Bundled, 12% Youth, 14%
Other, 21%
Discount, 44%
Emerging sub-brand innovations
Business Support Systems Operation Support Systems Network
• separate channel provisioning
• rapid bespoke tariffing
• segmented self care
• enhanced analytics
• SIM management
• loyalty & campaign management
• AI & chatbots
Enhanced control over:
• user registration
• signalling
• call and data management
• numbering & IMSI control
• fixed-mobile convergence
• switching & routing
• security
• social media integration
• real time charging
• policy control
• deep packet inspection
• zero rating
• direct operator billing
• API management
Network
Business Support Systems
Operation Support Systems
3 How should sub-brands launch?
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Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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Operators
MVNOs
Vendors
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
Our areas of expertise
Find new segmentsCreate disruptive
propositionsFast 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
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 Sunrisein UAE for Asian customers
RDC assists operators to launch sub-brands
Case study: Etisalat
Objective OutcomeSolution
3 How should sub-brands launch?
How can we help?
Sub-brands are a flexible way for an operator to innovate, whilst protecting its master brand’s identity
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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 todeliver 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.
Gareth’s LinkedIn
+44 (0) 333 301 3450
www.reddawnconsulting.com
Arun’s LinkedIn
Gareth Williams
Head of Research
