APOSTOLOS KALLIS APOSTOLOS KALLIS SVP Business Development - Etiya

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Will sub-brands help operators break the mould?

  • Secondary or sub-brands are certainly nothing new in the mobile communications industry. Indeed, many mobile operators have used one or several sub-brands to target different sections of the market, with varying degrees of success.

     

    In recent years, sub-brands have become an important tool for operators in their efforts to fend off competition from new players that threaten the status quo with more disruptive business models. Take France, for example. After Free Mobile broke into the market with a highly competitive offer in 2012, incumbent rivals were under pressure to find a solution to stem the customer exodus. Orange launched the Sosh sub-brand, which offers a simpler range of plans at a lower cost. SFR focused on Red by SFR, and Bouygues Telecom provided SIM-only plans under B&YOU.

     

    In the UK, Vodafone and Three both recently launched sub-brands to focus on the youth market. Vodafone UK’s Voxi brand offers three plans with “endless social data”, while Three UK’s Smarty focuses on “honest” mobile data usage — meaning that subscribers only pay for the data they actually use.

     

    The impression I get from this somewhat simplistic use of sub-brands is that they are still regarded as a necessary evil by operators — something they are forced to do in order to secure a share of the “youth” market, or other key demographics. Most of their energy is still directed towards the main, established brand, which they believe has to be protected from the cannibalisation effects of sub-brands as much as possible. The legacy brand is still very much their day job.

     

    However, these legacy brands are now proving to be the problem. Aside from one or two exceptions, mobile operators have so far not proved to be very adept at reinventing themselves as cool, trendy brands that appeal to younger or more digitally savvy sections of the customer base. The traditional brands are still burdened with a bewildering range of plans, complex back-office systems, and a poor track record in customer service.

     

    There are now some glimmers of hope. The good news is that this mindset is starting to change, and there are signs that sub-brands are emerging as a way for established brands to be all the things they want to be but can’t within the confines of their legacy operation.

     

    Although it is still very early days, some operators are beginning to realise that a new approach to service provision is essential, and that cannibalising the existing brand is not as important as they once thought. They are trying to model themselves on the digital pioneers by disrupting their traditional modus operandi and finding new ways of making money.

     

    The successful operators will be those that realise this is the new day job. The creation of a new, digitally focused and app-based brand with a fully automated experience has to become the number one priority, involving the full commitment of management including the CEO. New talent will have to be brought in, with the focus placed less on engineers and more on people who understand user groups, marketing and branding. Although such people have high expectations of what the technology can do, they regard it merely as a commodity that functions as the smooth-running engine of the business. They may not have a clue how the technology actually works, but that should no longer matter in this brave new world.

     

    The emergence of these new brands brings a glimpse of what the future will be, as operators come to terms with the fact that the provision of mobile services will only form part of their overall business in the years to come.

    APOSTOLOS KALLIS
    About APOSTOLOS KALLIS APOSTOLOS KALLIS works as SVP Business Development at Etiya
    More information : www.etiya.com

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