Research Notes

Segmentation is everyday life for media companies

There will be a larger fragmentation of the future mobile market. The increase in fragmentation will result in segmentation becoming an increasingly important part of the mobile market.
The ability to identify individual customer segments will be a key factor in achieving success on the future fragmented mobile market, where the number of mobile providers focusing on increasingly narrow segments, will significantly increase. The number of mobile providers targeting smaller segments can be compared to how television is developing, where we will be seeing a significant increase in the number of niche channels over the coming years due to the developments in technology that is increasing the number of possible channels and decreasing the costs in creating/operating channels. These channels will target segments with special interests or certain parts of the population. Examples of niche channels are women channels, children’s channels, music channels and sports channels.
Identifying individual segments is necessary to be able to:
–         Identify the different segment’s needs and interests
–         Adapt pricing to customers
–         Adapt product content to customers
–         Adapt mobile content to customers
–         Adapt mobile handsets subsidisation 
–         Identify the correct partners
–         Identify the correct marketing channels 
–         Identify the correct distribution channels
So far segmentation has not received much attention from the MNOs. Most MNOs have mainly been operating with a One-Brand-Fits-All strategy. In other words the MNOs are using only one brand to market themselves to the “average” mobile consumer.
The lack of MNO interest in segmented brands has resulted in an obvious opportunity for media companies to target this niche market, as no one has yet taken advantage of this niche market within mobile telephony. Media companies should therefore focus on having a completely different approach than the MNOs, by having brands targeted towards selected segments. Unlike the MNOs, the media companies are already used to doing business with segments and already have different types of products targeted at special/narrow customer segments.
The increasing competition will result in a radical change of the MNOs branding strategy, moving away from a single brand strategy, over to a multi brand strategy. The change in brand strategy will be a result of the changes of the competitive terms on the market, with a large increase of the number of mobile providers competing for customers.
MNO multi brand strategies will arise from:
·         Brand launches – new brand launches targeted at small/certain segments
·         Wholesale – by using wholesale customers, MNOs can try to expand market shares
·         Acquisitions – taking over successful SPs and MVNOs that thereafter continue as independent subsidiaries of the MNO.
The three strategies above are already being widespreadly used in countries that allow mobile wholesale.
Brand launches has yet to have a major break through, but an increasing number of MNOs are using this method to thereby compete with SPs and MVNOs. For example the MNO E-Plus in Germany has launched Simyo and Ay Yildiz – brands that are targeted at price sensitive customers and Turks and their descendants respectively.
Segmentation in the mobile sector is still a relatively new phenomenon, but media companies have been working with segmentation for many years and have vast experience in different customer segments, thereby giving them a competitive advantage over the MNOs, that only have limited experience with segmentation and the possibilities segmentation gives. The media companies can use their existing customer base and their knowledge of their customers to launch mobile brands targeted at their own existing customers and using their existing popular media content to develop mobile content.
Much more information about media companies doing business as mobile providers is available in our latest report How to get success in the second Generation MVNO Market that analyses the media companies future role in the mobile universe and why media companies need to have a mobile strategy and which market phases the media companies will go through. Included in the report is an analysis of media companies’ assets/strengths and risks/disadvantages when doing business as mobile providers. The report examines relevant and inspiring cases that document that the media companies entrance/involvement in the mobile area is not something that may happen in the future, but is in fact a very current phenomena that will become even more dominant and visible in the mobile industry over the coming years.

Contact us to get a copy of the report

Request the report