Research Notes

Sub-branding – The key to success

To ensure high overall market share, mobile operators need to make sure they appeal to as many customer segments as possible. And in a market with many niche mobile providers already, they need to ensure that all customer segments are adequately covered. They can do this through their own sub-brands, or through wholesale customers targeted at specific customer segments.
Ideally, operators should focus on getting a broad selection of mobile providers on their networks to supplement their own sub-brand strategies targeting larger segments. Another option available to mobile operators is to acquire the sub-brands of existing successful mobile providers.
This entails a completely different approach to the traditional “one size fits all” strategy of MNOs, which involved trying to serve all types of customers at once. In a fragmented market, MNOs need to focus on having many different types of mobile provider on their networks in order to cater to the many different niche segments out there.
Strand Consult has explored this issue in depth for many years – including the tactics of mobile operators that deploy their own sub-brands to supplement their virtual-operator strategies in the hope of shutting out new entrants from niche segments.
In more mature mobile markets, where there are lots of segmented mobile providers without their own network, MNOs deploy various mobile providers to reach different segments that they cannot attract themselves with their current offerings, or which are too expensive to attract using their own brands or sub-brands. This approach helps to significantly reduce SACs and generate profitability even in low-ARPU or small customer segments.
Even so, it is essential that MNOs do not adopt a segmentation strategy that eliminates any mobile provider from the market. For example, it would be a mistake for an MNO that already has a mobile provider, or sub-brand, on its network targeting a specific segment to resist entering into a wholesale agreement with another provider targeting the same segment.
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How to get success in the second Generation MVNO Market

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