Vodafone is reinventing its marketing strategy through a segment-led approach, according to the head of its new youth-focused UK brand VOXI.
Priced between £10 and £20 a month, the 30-day plans include zero-rated use of certain social media apps and unlimited calls, texts and picture messages.
As well as targeted offerings, VOXI uses advertising and customer service channels designed to appeal to younger consumers, including social media.
There won’t be a traditional TV advert, and though plans can be bought in Vodafone stores, the main sales channel is a dedicated new website.
Dan Lambrou, Head of Youth Segment at Vodafone and Head at VOXI, says it is too soon to share any details about take-up but that the aim is to be “a leading brand in this segment over the next two to three years.”
The use of the word segment is telling.
VOXI marks an admission that Vodafone has not connected with the UK’s youth as well as it might like.
The operator has shed a quarter of a million customers of all ages in its home market during the past 12 months, although it remains the UK’s third largest operator with 17.7 million subscribers.
Segmentation, says Lambrou, is now the blueprint for Vodafone’s marketing activities and the reason for the creation of VOXI.
The strategy is to identify a relevant segment of the market where there is an “unmet need or a growth opportunity”, he explains.
Vodafone will then build offers that meet that need before going to market through the best channels to reach those customers.
James Gray, Director of consultancy firm Graystone Strategy and a veteran of the launch of Carphone Warehouse’s MVNO iD Mobile, says Vodafone performs poorly amongst the youngest customers.
He divides the UK market into six distinct segments, including one called Technology Trail Blazers that he says is the “bullseye” VOXI is aiming at.
“This is a younger segment, with a high number of high-end smartphone users and a well above average number of post-pay customers,” explains Gray.
Vodafone segments the market slightly differently, with categories including youth, family, business and high value.
Lambrou agrees with Gray, however, and says the youth segment has been identified as “strategically important”, in part due to its disproportionately high use of mobile.
He says 94 percent of 18-24 year-olds in the UK have smartphones compared to 72-73 percent of the over-25s.
VOXI is not a completely new idea, however, and Vodafone hopes to emulate the performance of YORN - a similar sub brand at young people in Portugal.
Launched in 2000, YORN now boasts the highest market share amongst Portuguese youths.
But why is a new brand needed at all when Vodafone could step up its marketing activities to the youth market?
According to Gray, a sub-brand is the best solution given the overall Vodafone brand has been “caught” between trying to appeal to different segments.
He cites the company’s sponsorship of the Global Radio downloads chart as part of an attempt to appeal to younger consumers, but notes that the overall Vodafone brand “is largely about reliability, quality of service and so on - brand attributes that are not a top priority for the youth segment”.
“On the flip side, they have a strong corporate customer base for whom those attributes are very important,” Gray says.
However, this means Vodafone can’t be “cheeky and irreverent” – qualities the likes of Three, O2-owned giffgaff and iD Mobile trade off – given the potential confusion it might create about how businesses perceive the brand.
Lambrou will not be drawn on whether the overall Vodafone brand was trying to do too much, but says VOXI is not trying to distance itself from its parent.
“Vodafone is well respected and recognised as a British brand, it’s very credible,” he says.
“We’re not an MVNO – we’re clearly by Vodafone and part of Vodafone from a legal and organisational structure point of view.”
The aim is for the overall Vodafone brand and VOXI to benefit from each other.
“VOXI gets the halo from Vodafone of credibility and trust,” Lambrou says.
“Vodafone will get the halo of being innovative, fresh, simple and customer-centric.”
Lambrou says as far as he knows there are no plans to launch any more sub-brands to cater to other segments.
If Vodafone does choose to address other segments, the approach may be very different.
“It depends on where are we [at that point], how the brand fits with that segment and what the strategy is to address the opportunity,” Lambrou says.
By way of example, he cites Vodafone Black in Qatar, which has targeted elite customers willing to pay a premium for the best service.
Back in the UK, sub-brands are certainly flavour of the month.
Three also joined the party last month with the launch of Smarty, billed as “simple, honest mobile” that allows customers to roll unused data from each month over to the next bill as a discount.
We will need to wait a while longer before understanding if these two latest entrants will become a permanent fixture on the UK telecoms scene.