A multi-brand strategy is key to success

Germany is a leading sub-brand market

Corporate Master Service Stand Alone Joint Wholesale

Brand Brand Brand Sub-Brand Venture Brand
Brand (MVNO)

Blue

Sub-brands drive
subscriber growth of major
UK

Sub-brand

Parent brand France

Net subscriber additions

to 2016, since launch of
major sub-brands
Germany
Source: Red Dawn Consulting
-4m -2m 0m 2m 4m

Case study Etisalat

Sub Branding Project

Objective Solution Outcome

Service Gateway Master Brand

To develop Architected a Launch of
a platform to layer 1 service gateway. sub-brand Five
BSS for BSS
launch multiple sub-brands Designed three Sunrise in UAE
layer 2
sub-brands and & MVNOs
OSS
brand ideas (JV, for the Asian
MVNOs in several stand-alone, customers
layer 3
geographies Network MVNO)

Talk to us about building a sub-branding strategy

White paper
Sub branding
 What’s in this report?
Sub-brands are an increasingly
important part of mobile operators’ 3 themes covered
strategy to attract new segments. In
this paper we look at the winners, and
take some valuable lessons from the
less successful.
How to Why launch
launch sub-
sub- brands?
We explore best practices and why brands?
more operators are turning to sub-
branding to grow their customer bases. What sub-
brands
succeed?
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 We expect the number
OSS/BSS providers and enablers. of sub-brands globally
to double by 2020
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.

5
 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?

6
 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

Successful sub-brands offer a unique
product and be operationally distinctive.
We have observed some unique market
propositions from leading operators:
underserved segments
• Test tariffs and innovations
• Bundle alternative value added
services or devices

• Counteract a stale master brand

• Differing download speeds, based on • Avoid development disruption to
customer’s willingness to pay the core business
• SIM-only or with a range of legacy • Win back control from MVNOs
handsets
• Satisfying regulatory need for
• New device payment plans: monthly
increased customer choice.
fee, separate to a pre-paid contract
• New, low cost distribution channels – Global sub-brand breakdown, 2016
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 271
customers already pay for on a sub-brands
monthly basis
• Alternative language service

7
MNOs use sub-brands to differentiate
whilst retaining control

Why?
Why? There are a range of other benefits to sub-branding
(with examples)

Control

Retain the customer

relationship, avoid
Innovation wholesale margin Cost
loss
Test tariffs, customer
support and other Leverage core
propositions before business assets
featuring them in the of team to
master brand reduce OPEX

Manage sub-
brands alongside
Satisfy regulatory MVNOs on the
need for choice same flexible
platform
Fast-track
service
Competition launches: avoid Flexibility
corporate
constraints

Fast-track

8
 Successful operators use multiple
models to target new segments

Telefonica has mastered a multi-brand strategy

What?
Why?

The corporate brand tends not to be recognised by

subscribers. It identifies a group of brands and adds
Corporate credibility

Subscribers would recognise the master brand as their

mobile provider. The master brand may be used by a
Master corporate brand in multiple countries

A service brand identifies a group of tariffs or products. It

Service may be used in different countries by a master brand

Sub-brands are used by MNOs to target specific

Stand alone customer segments, including business, ethnic and
sub-brand youth

An MNO may partner with a third-party to launch a

Joint sub-brand. The third-party needs to have a USP that
venture resonates with specific segments
sub-brand
An MNO may provide third-parties with access to
Wholesale its network and more control over service
(MVNO) development and customer ownership

Example brands MNO business

models

Description of models

9
 A number of sub-brand innovations
are emerging

Options for sub-brands to achieve differentiation

What?
Why?

Pure price/ Channel Customer OTT

Service
tariff led to market care content

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.

10
 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

11
 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

Minimise costs by adopting

an on-line only model
NL

Target higher value customers, by using the

master brand’s or sub-brand retail outlets

12
 Customer care can also be pared-
down to minimise costs

Customer care propositions examples:

What?
Why?
Why?

Rely on subscriber-
based customer care
Customer care via sub-brand website
and social media
(member care)

Language specific support

(Turkish)

Use on-line and self-

service care only
BE

Also provide in-store customer support to higher value customers,

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

13
 Unique content and zero-rating OTT
content can attract segments

OTT content proposition examples:

What?
Why?

Provide access video-

OTT content on-demand content, as
part of a bundled tariff
e.g. M6 TV

Access streaming music, as part of

a bundled tariff, e.g. Spotify

Generate additional revenue by charging an

additional fee, e.g. a mobile TV service
CA

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

14
 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

15
 Sub-brands can be the saviour of
some operators…

Operators can use sub-brands

What?
Why?
to deliver subscriber growth1

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: Master
Sub-brand
brand

1 – Net subscriber additions to June 2016, since launch of the sub-brands. Master brand net additions excludes sub-brand
16 net additions and other sub-brand net additions where they are known
Source: Red Dawn Consulting
 …with a range of distinct service
innovations

• giffgaff has succeeded by using

social media to target subscribers
and using members to deliver
What?
Why? 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

Source: Red Dawn Consulting, operator websites, news articles

17
 What’s next?

We predict huge opportunities

What?
Why?
lie in emerging segment innovations

Emerging segment innovations

3%
6% Healthcare
8%
Business
Bundled 38%
8% OEMs (e-SIM)
Ethnic
Retail Other
Media
Other 14%

Youth/media
Discount 23%
Un-banked

Loyalty scheme
models
Advertising &
m-commerce models

18
 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

Source: Red Dawn Consulting, operator websites, news articles

19
 How to ensure sub-brand success
Ensure new OSS/ BSS
How?
How? enablement platform
has functionality for
new service innovations

Decide which
segments to control:
Build flexible ‘service
gateway’ to host MVNOs
and sub-brands.

Partner with segment

experts, joint ventures,
brand affiliates
Develop business
case. Be flexible to
take customers back
Separate governance into master brand
and accountability for
a sub-brand unit with
own culture Legacy infrastructure
cannot innovate

Uncertain business
model for segments:
MVNO or sub-brand

Lack of new
segment know-how
Fear of core
customer
cannabalisation
Lack of buy in from
stakeholders: slow
governance process

20
 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

Increasing functionality
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

21
Who can benefit from a fast track sub-
brand and wholesale approach?

How can we help?

Identify incremental customer segments and build a

Operators scalable wholesale infrastructure to support
disruptive propositions

Develop new segmented propositions and identify

MVNOs appropriate enablement platforms

Develop optimsed enablement platforms to help

Vendors 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

22 Trusted advisors to global industry leaders

For more insight on fast-track
sub-branding, talk to us.

Authors:
Arun Dehiri Gareth Williams
Managing Director Head of Research
arun@reddawnconsulting.com gareth@reddawnconsulting.com

+44 (0) 333 301 3450

www.reddawnconsulting.com