Sub-brands can help European mobile operators become profitable
|it’s already happened in Korea.|
|Every company wants to be a household brand name, but not all companies actually benefit from their efforts to market their products under a single brand name.|
Today consumers are more segmented than ever and have never been so difficult to target with advertising. Also, consumers are more aware of their choices and will often opt for products that match their needs, rather than go for what’s “in fashion” or has the biggest marketing budget.
Many European mobile operators are pushing a single brand strategy, trying to make their name known across Europe. This was actually maybe not a bad idea a few years ago, where almost all mobile consumers simply used their phones to talk on – but today, mobile services are on the rise, the mobile phones are becoming more and more advanced and consumers are becoming more aware of their needs and are not willing to pay for e.g. services they have no use for.
In other words, the European mobile operators would benefit immensely from starting to seriously think about splitting their offerings into sub-brands targeted at different segments of their customer base. The main advantages of sub-brands are:
· Easier to address and fulfil a segments needs for combination of voice/data/services/content
· Easier to differentiate your mobile offerings from the competitors
· Sub-brands actually reduce churn
· Easier to target and acquire new segments – e.g. pre-teens and silver generation
· Differentiated price-plans for sub-brands raises ARPU considerably
· Greater customer satisfaction gives less incentive for regulative authorities to lower tariffs
Is this wishful thinking? No, it has all happened during the past year in Korea and is fully documented in Strand Consults new report “The Korean Mobile market, a window to 3G”.
The Korean operators were forced to change their single brand marketing strategy, when the regulative authorities in Korea banned the subsidisation of mobile phones in June 2000.
The sub-brands have been a great success, so much so that in Korea today only around 24% of Korea’s largest mobile operators subscribers, are still on a standard price plan which is pretty good going out of the operators subscriber base of around 15 million mobile users!
As mentioned earlier, these new sub-brands are not just new price-plans but full-fledged brands in their own right. The main elements of the brands are
· Separate targeted branding/communication of each brand
· Special offerings for each segment – including mobile portals – selected content etc.
· Community services – rebates on goods and offline activities in cooperation with partners
· Innovative differentiated price-plans including data traffic, services and content
Data services on Korea’s 2.5G platform have become so popular, that the mobile operators are now marketing new separate sub-brands for the 18 – 25 year olds that focus on mobile data services.
There is no doubt that the mobile consumers feel that they are getting extremely good value for money with the sub-brand offerings, but on the other hand, ARPU has risen so much mainly due to a huge increase in data traffic, that the mobile operators and the service- and content providers business case has been excellent. The increased satisfaction of the mobile users has also lead to a significant decrease in churn – a problem that European mobile operators still are fighting at great cost.
Korea’s new sub-brand strategies, the ban on mobile phone susidies and a number of other factors have resulted in over 25% of Korea’s mobile subscribers switching to 2.5G mobile phones and services in just the past year!
Today, Korea is somewhere between 3 and 5 years ahead of the European mobile markets and is described in detail in Strand Consults most comprehensive report to date “The Korean Mobile market, a window to 3G”. Strand Consult spent almost 9 months analysing the worlds most advanced mobile market. We met with all the players in the Korean mobile value chain and been honoured to have access to information not previously disclosed. We describe what the operators, the content owners and the technology companies business case actually looks like for real. With key figures and information we give a detailed description of a mobile market with over 30 million mobile customers – of which 9 million are 2.5G users, with mobile services and download speeds very similar to what we will see in Europe on 3G!
With the lessons learnt in Korea, this report is the closest thing to a roadmap on how to implement a successful rollout of a 2.5G and 3G mobile market. The results the Korean mobile operators and service- and content providers have achieved are astounding and a gift to a hard pressed European mobile industry, that still has doubts as to whether there is a profitable business case in 2.5G and 3G.
|More information on the report|