‘Power to you’: Vodafone’s consumer move

‘Power to you’: Vodafone’s consumer move


Vodafone is taking on a more consumer-friendly marketing strategy to poach customers from its four rivals, with a brand overhaul and new social networking service aimed at ‘giving power back’.

The operator is looking to create a warmer feel to the Vodafone brand in an attempt to escape from its corporate roots. Its strapline, ‘Make the Most of Now’, has been ditched, and has been replaced by ‘Power to You’.

Although Vodafone is strong on the business side, it still trails behind O2, and it does not have a great reputation in the consumer market.

One source tells Mobile that he had a discussion after the T-Mobile and Orange merger, over whether Vodafone might even pull out of the consumer market.

Vodafone had previously insisted it was a high value network and would not compete with 3 and the other operators on price.

But an operator source tells Mobile that this view has changed, adding: ‘Vodafone has had to be more pragmatic – consumers are motivated by price. It has repositioned prepay with freedom packs and free roaming.’

And last month, Vodafone announced plans to make itself more ‘customer focused’ with the launch of Vodafone 360 – a social network integrator that includes an app store – to replace the Vodafone Live service it launched in 2002. It will allow customers to charge the cost of apps to their phone bill, a service that no other app store currently offers.

Vodafone’s new service differs from its rivals’ offerings as it will be made available on as wide a selection of handsets and operating systems as possible – effectively it is an open service.

Internet experience
The philosophy of Vodafone’s new strapline makes sense in terms of the internet experience on a smartphone. A few years ago, Vodafone was a very powerful brand that had its own instant messenger, but differentiation now depends on a good network and devices that ‘will allow you to get where you want to’, according to Strategy Analytics analyst Phil Kendall.

He adds: ‘They have repositioned themselves as a smart enabler, giving power to the consumer on 360. The contacts list is a key battleground. It’s being a smart pipe rather than a dumb pipe. Operators see the address book as a way to dominate presence.’

The company’s chief executive, Vittorio Colao, said at the 360 launch that the idea was to position Vodafone as a company that listens to customers, rather than ‘telling them what to do’. The operator justifies the move ?on the premise that the relationship between networks and customers has become more important than the relationship between manufacturers and customers.

But the company has more than brand image to worry about. As its revenue declines, it not only needs to differentiate itself – it must also reduce ?costs globally to meet a £1bn cost-cutting target set by the operator last year.

Colao has said it does not matter if Vodafone is the third operator by share, as long as the company is a bigger and more profitable third – a ?line dismissed by others in the industry.

Aggressive multimedia
Although operators are struggling to increase revenue to make up for the loss of voice, Vodafone is different – it has always been aggressive on multimedia services – and it is closer to 3 than all of the others, according to one executive source. The challenge for Vodafone, as it will be for all operators, is how it is going to continue to be profitable as revenue from voice declines.

But in an industry where entertainment such as music and film are at the heart of both operator and manufacturers’ strategies, Vodafone has a cold, corporate feel. Despite its best efforts it has always remained a distant brand, far removed from the young consumers, who it is now hoping to target.

O2 has differentiated itself and become the brand of younger consumers with its sponsorship of music venues, offering its customers priority tickets for events. It can also add sponsorship of the England rugby team, among other sports, to its list of credentials. Most recently, the network launched a financial services arm, with cards aimed at helping consumers to manage their cash.

Meanwhile, Orange has a quiet sponsorship of Glastonbury festival under its belt, alongside Orange Wednesdays, its two for one cinema offering, and its ‘Rock Corps’ scheme, which encourages consumers to do community service in exchange for gig tickets.

T-Mobile is not as prominent on the sponsorship side, but it did manage to get 13,000 people to congregate in London’s Trafalgar Square in a flash mob that made the papers, and received around one million hits on YouTube.

Meanwhile, 3 has differentiated itself through its internet services offering, is a ruthless campaigner against termination rates, and offers free Skype to all its customers, as well as those with an unlocked handset.

Vodafone does have a music offering that includes record labels such as Warner, and some sports sponsorships – its most prominent being the high profile Formula One deal.

Kendall says: ‘In terms of sponsoring brands, they [Vodafone] haven’t done very much. But they have amassed a credible library of music. They sponsored Formula One and cricket, aiming at the white collar middle class, but have now backed out of football. I think they might be re-evaluating that and going to the working class, or lower end.’

Social networks
The main issue in the UK is that apart from 3, all the operators are a similar size and it is hard to see exactly who each network is targeted at. Kendall says: ‘O2 has cracked that. Orange did the same thing in the 90s, so O2 has taken over from what Orange were doing. There is a general feeling from consumers that O2 is talking their language.’

What all the networks have in common is their focus on social networks and a new emphasis on integrating them, but Vodafone needs to do more than just 360 to turn its brand around.

Vodafone has been losing UK share over recent years. After the Orange and T-Mobile merger it will be the second to last operator by share, with only 3 tailing behind.

However, Kendall says: ‘A lot of this doom and gloom is overstated. Clearly they are faced with a much larger and financially sound competitor with the merger, and in a way it makes things a bit trickier. But the biggest concern for rival operators will be in the business market, where Vodafone is a significant player in the UK.’

In a time of increasing competition, consumers are motivated by price as well as the proposition. The 360 service is a step in the right direction for Vodafone, but the challenge now will be whether the operator can get closer to its customers than O2, as the T-Mobile and Orange merger looms.

Written by Mobile Today
Mobile Today


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