BRAND HEALTH CHECK: MobileOne - Can M1 stay ahead as rivals improve game?

M1 is currently sitting pretty as the second largest telecommunications company in Singapore.

Its balance sheet is healthy, showing double-digit growth in profit for the last two years. Since entering the market in 1997, the upstart rival to one-time monopoly SingTel has cornered a third of the mobile market. But challenges are on the horizon. The once nimble operator is finding that both the marketplace and its rivals have moved ahead.

As such, staying on top of the game is becoming increasingly difficult since the market's third major player, StarHub, has been expanding its offer to include cable television, while market leader SingTel has been sparing little expense to transform itself into a customer-centric brand.

The impact on M1 is clearly apparent. Over the last two years, its market share of 34 per cent at the end of 2001 has since slipped to 31.7 per cent in May this year.

The impending introduction of Mobile Number Portability - which allows mobile users to switch telco service providers while retaining their existing telephone numbers - will provide local users with added flexibility and incentives to switch.

In the ongoing war for market share, M1 - as will the other telcos - will find that customer loyalty will be severely tested.

Alongside this fray, the telecom battle is itself being elevated to the next level where it will be fought on the potentially lucrative 3G and GPRS arenas.

M1 has already had a taste of GPRS' dividends, having seen GPRS data usage increase 130 per cent and MMS usage rise 76 per cent from the first to second quarters of this year. Both areas contributed a 117 per cent rise during the two quarters.

What it needs, and is aiming to get through with its appointment of a new agency - TBWA after five years with DDB - is to achieve a solid lead in wireless communications at a time when its competitors are already making significant inroads to stay top-of-mind - SingTel through its 'Ideas' campaign and StarHub with its 'hubbing' proposition.

VITAL SIGNS
                  JUN 2003 (6 months)             2002             2001
Profit after tax        S$68@8m  S$128@4m  S$100@5m
EBITDA                 S$140@1m  S$270@9m  S$222@9m
Customer base                   1@059m           1@049m           0@982m
Market share                     31@7%              33%              34%
SOURCE: M1
EBITDA = earnings before interest, tax, depreciation and amortisation

DIAGNOSIS

MATTHEW GODFREY, Bates CEO/director, South Asia

In 1997, when M1 launched in Singapore, the marketing landscape was much simpler. Consumers were disenfranchised by the SingTel monopoly.

M1 then arrived and consumers lapped it up in droves - 10 per cent market share in one month.

Six years on and things are now more complex. M1 finds itself between a refocused consumer-centric SingTel and StarHub, who have broadened their product offering from landline, internet and mobile to cable, to become a powerful player in many segments. StarHub's 'What's next?' campaign, backed up by a constant stream of innovations has, in doing so, captured the ground of 'The fresh alternative' away from M1.

Over the last few years, M1's campaigns on the other hand have lacked freshness and innovation and it has perhaps clung to its "sunshine formula" way past its use by date. The appeal of its brand was always about 'freshness, change and challenge'. Its communications has to live up to this mantra.

And now, with the ability to switch operators while keeping the same number, churn will clearly be on M1's mind. And it's no wonder. StarHub's mobile market share recently jumped to 22.4 per cent, while both M1 and SingTel fell back a few percentage points.

BRIAN FISHER, McCann-Erickson Singapore, VP and client service director

Since its launch six years ago, M1 has been firmly rooted as the number two challenger brand in Singapore. M1 was hailed as the 'David' tackling the monolithic and static 'Goliath'.

For a number of years, its vision was clear: "innovate, innovate and innovate some more to give complete customer satisfaction". Subsequently, we have seen another, and perhaps even more nimble, challenger (StarHub) enter the market.

From this point, M1 focused on value for money, promotions and offers - all nice to have, but with it came a younger more price-conscious consumer.

This consumer base is going to be swayed by the 'number retention' offering, as they will chase down the best price deals and switch regularly. StarHub has already started to aggressively target this group with TV advertising.

Unless M1 is careful it will be a classic case of the second brand being squeezed out of the market. The most important challenge for M1 is to demonstrate and exemplify 'thought leadership' in mobile telephony. Unlike its competitors, M1 can claim this space because it is the only operator that specialises in this arena. Inspirational leadership that will lead the industry. By achieving this, it will place M1 in good stead for the challenges ahead.

TREATMENT

GODFREY'S PRESCRIPTION

- Reinvent the marketing communications. Surprise with innovations that are fresh. Back this up with communication that is not formulaic.

- Segment the database to protect the most valuable/profitable customers.

Then target through stealth marketing techniques SingTel's and StarHub's most profitable customers.

- Fight for customers door-to-door. Do not try to outshoot and outspend the competition. Be on the streets meeting people, while the competition are in the papers talking to each other.

FISHER'S REMEDY

- Segment M1's current customers based on satisfaction levels in order to identify the challenges faced by each group. One suggestion is three simple tiers - 'satisfieds'/'neutrals'/'dissatisfieds' - and build different programmes around each group.

- M1 is perceptually at number two, so leverage this in a positive way.

People usually support the underdog, particularly if they are crusading for 'the ordinary man in the street'. Like Avis' tagline, 'We're number two, so we try harder'.