Sub-branding: Building the fast-track

Sub-brands take over where incumbent brands loose appeal Sub-branding is a proven success model for operators globally to service new segments with ever changing service demands. The sub-brand model has been fuelled in part by the success in the ‘virtual operator’ model and more recently by the increasing flexibility with service delivery platforms. Yet the 210 sub-brands launched over the past 10-15 years account for only 1.5% of mobile subscribers globally. We predict huge growth in customers signing up to operator owned alternative brands, leading to doubling of sub-brand customers by 2024.

One of the constraints operators face to serve emerging segment needs is legacy service development and delivery platforms. To illustrate, let’s take a look at a traditional operator’s ability to keep pace with the millennial segment’s lifestyle preferences. Massive data usage, varied content demands and communication through huge social media environments requires new pricing models, linked to 3rd parties and application delivery capabilities.

Upgrading legacy billing and service support platforms to cope with this change is a daunting task. A solution is to develop a flexible platform to serve a new segment in a parallel incubated environment, to avoid disruption to the core business.

Summary

Content 1 Why launch sub-brands?

Ethnic, 5%

Bundled, 12%

Control

Youth, 14%

Business, 3%

Innovation

Cost

Competition

Flexibility

Other, 21%

Retail, 1% Discount, 44%

Fast-track

2 Which sub-brands succeed?

Enablement platforms Segments Partnerships

3 How should sub-brands launch?

Legacy infrastructure

Business case Governance

MVNOs Cannibalisation Know-how

Drawing on interviews with leading operators and our projects, we are pleased to share with you in this paper the rationale for launching subbrands, success factors and lessons learned.

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More operators are using sub-brands to target new customer segments In Germany, Telefonica has mastered a multi-brand strategy Corporate brand

Master brand

Service brand

Stand alone subbrand

Joint venture brand

Wholesale brand (MVNO)

Free The brand spectrum

Mainstream segments Bundled 12%

Youth 14%

Emerging segment innovations

Ethnic 5% Business 3% Retail 1%

Loyalty scheme models

Other 21%

Other 21%

Media Advertising & m-commerce models Healthcare Un-banked OEMs (e-SIM)

Discount 44%

Figure: Global sub-brand breakdown, Q219 Sub-brand examples include…

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Why launch sub-brands?

Sub-brands are a flexible way for an MNOs use to differentiate operator tosub-brands innovate, whilst protecting its whilst control masterretaining brand’s identity The main benefits of sub-branding

Control

Innovation Test tariffs, customer support and other propositions before featuring them in the master brand

Retain the customer relationship, avoid wholesale margin loss from MVNOs

Leverage core business assets of team to reduce OPEX

Manage sub-brands alongside MVNOs on the same flexible platform

Satisfy regulatory need for choice

Competition

Cost

Fast-track service launches: avoid corporate constraints

Flexibility

Fast-track

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Why launch sub-brands?

Sub-brands are a flexible way for an Sub-brands beenwhilst the saviour of some operator to have innovate, protecting its operators master brand’s identity Prime examples of sub-branding delivering significant subscriber growth Launched Q4 2009

Sub-brand Parent brand

Launched Q4 2011

-10m Subscriber additions to Q2 2019 since launch of respective sub-brands

0m

-5m

10m

5m

Launched Q3 2007

Sub-brand -10m

• • • • •

• • • • •

-5m

0m

5m

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)

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)

• • • • •

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)

Source: Red Dawn Consulting

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10m

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Which sub-brands succeed?

Sub-brands are a flexible way for an Successful multiple models operator tooperators innovate,use whilst protecting its to targetbrand’s new segments master identity

In Germany, Telefonica has mastered a multi-brand strategy The corporate brand tends not to be recognised by subscribers. It identifies a group of brands and adds credibility

Corporate

Master

Free

Service

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

Stand alone sub-brand

Sub-brands are used by MNOs to target specific customer segments, including business, ethnic and youth

Joint venture sub-brand

Wholesale (MVNO)

Example brands

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MNO business models

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

Description of business models

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Which sub-brands succeed?

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Sub-brands are a flexible way for an Sub-brands succeeding emerging operator to are innovate, whilstwith protecting its innovations master brand’s identity 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:

Options for sub-brands to achieve differentiation Price/Tariff

Channel to market

Customer care

OTT content

Service

Germany No-frills prices

Simpler tariff range

Leverage the retail presence of a JV partner

Language specific support (Turkish)

Offers zero-rated access to 100+ apps

Only offers 3G data speeds – not 4G

Brick-and-mortar affiliates to resell services

On-line and selfservice care only

Includes streaming as part of a bundled tariff, e.g. Spotify

Restricts specific websites/apps/soci al media to 4G.

Netherlands Trial new business models

Tariff innovation

On-line only minimises costs

Self-care customer service through their community

‘Free’ access 24/7 to Boost TV

Offers slower data download speeds.

Target higher value customers by using the master brand’s retail outlets

Provide in-store CS to higher value customers, via retail stores

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

Facebook

Offers smaller data bundles if compared to the master brand

Increasing complexity and differentiation

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How should sub-brands launch?

Sub-brands are a flexible way for an A numberto ofinnovate, lessons have been learnt from operator whilst protecting its failures master brand’s identity

Select sub-brand closures • Rogers Wireless axed Mobilicity, since its unlimited packages were similar to tariffs offered by its other subbrand 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

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How should sub-brands launch?

Sub-brands are a flexible way for an How can operators ensure operator to innovate, whilstsub-brand protecting its success? master brand’s identity Ensure new OSS/BSS 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, and be flexible to take customers back into master brand

Separate governance and accountability for a sub-brand unit with own culture

Legacy infrastructure cannot innovate Uncertain business model for segments: MVNO or sub-brand

Fear of core product cannibalisation

Lack of new segment know-how

Lack of buy in from stakeholders: slow governance process

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How should sub-brands launch?

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Sub-brands are a flexible way for an Emerging innovations requireprotecting a flexible its operator to innovate, whilst enablement platform master brand’s identity

Emerging sub-brand innovations

Ethnic, 5%

Bundled, 12%

Examples of new emerging segment innovation:

Youth, 14%

Business Support Systems

✓ Self care

Business, 3% Other, 21%

Retail, 1%

✓ CEMs (e-SIM) ✓ Media

✓ Un-banked

Operation Support Systems

✓ Loyalty schemes models Discount, 44%

Business Support Systems • separate channel provisioning • rapid bespoke tariffing • segmented self care • enhanced analytics • SIM management • loyalty & campaign management • AI & chatbots

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✓ Advertising & mcommerce models

Operation Support Systems • social media integration • real time charging • policy control • deep packet inspection • zero rating • direct operator billing • API management

Network

Enablement platform functionality increases in layers

The secret to success in sub-branding is having an innovation platform, sitting alongside the core infrastructure which provides the flexibility to create new services for new segments at speed and scale.

Network Enhanced control over: • user registration • signalling • call and data management • numbering & IMSI control • fixed-mobile convergence • switching & routing • security

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How should sub-brands launch?

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Sub-brands are a flexible way for an operator to innovate, whilst protecting its How can we help? master brand’s identity Find new segments

Create disruptive propositions

Identify underserved segments by intelligently profiling your customer base

Build a highly tailored service through deep customer insight and global benchmarking

Fast track launch Design partitioned operations and platform without disrupting the core. Rapidly implement a go-to-market plan

Our areas of expertise 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

Develop optimised enablement platforms to help operators serve emerging innovation requirements

Vendors

Case study: Etisalat RDC assists operators to launch sub-brands

Objective To develop a platform to launch multiple sub-brands and MVNOs in several geographies

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Solution Architected a flexible service gateway. Designed three brand ideas (JV, stand-alone, MVNO)

Outcome Launch of sub-brand Five Sunrise in UAE for Asian customers

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Sub-brands are a flexible way for an The content in this publication has been prepared for general information purposes operator to innovate, whilst protecting its only. We do not accept liability for any loss from actions taken based on any master brand’s identity resulting material in this publication.

The contents of this document shall not be copied or distributed for commercial purposes.

When copied or distributed for noncommercial 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.

Arun Dehiri

arun@reddawnconsulting.com

Managing Director Adriana Portela

adriana@reddawnconsulting.com

Senior Consultant

Level 1, Devonshire House, One Mayfair Place, London, London W1J 8AJ United Kingdom

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+44 (0) 333 301 3450 www.reddawnconsulting.com

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