Introduction about starting a Discount MVNO (Mobile Brands)
Discount MVNOs carve their niche by offering basic Voice, SMS and Data services at competitive rates, often targeting price-sensitive consumers.
Nearly a quarter of existing MVNOs have chosen the discount base MVNO model and their service offering usually includes basic Voice, SMS and Data services at lower tariffs for both prepaid and postpaid customers, adding to it the flavor of cheaper handset devices.
In terms of long-term sustainability the discount MVNO approach can prove to be very difficult since you are always competing on price, and the MNO can always do better.
What do you need to know about starting a Discount MVNO
- What are the advantages and disadvantages ?
- What are the Revenue sources and Pricing strategy?
- What are suitable segments?
- What kind of Mobile bundles are typically used?
- What kind of ARPU can you expect?
- What is the Go-to-Market Strategy?
- What are some points to think of for the Marketing Plan?
- What kind of financing is to be expected?
- What kind of MVNO type is typically used?
- What is the expected time for the launch?
- What is the expected impact of 5G?
- What is the expected impact of eSIM?
- Frequently Asked Question
- Summary
What are the advantages and disadvantages of Discount MVNOs?
Advantages: Discount MVNOs appeal to budget-conscious consumers, offering basic Voice, SMS and Data services at competitive rates. Their advantage lies in affordability, attracting price-sensitive demographics seeking reliable mobile services without hefty expenses.
Disadvantages: Sustaining profits in a competitive market with thin margins poses a challenge. Fierce price wars and evolving consumer demands require constant innovation to maintain a balance between affordability and quality service.
What are the Revenue sources and Pricing strategy?
Revenue Sources: Main revenue comes from prepaid and postpaid voice, SMS, and data services. Focuses on a high volume of customers to offset lower individual margins.
Pricing Strategy: Offers competitive, budget-friendly pricing to attract price-sensitive customers.
What are suitable segments/markets?
- Students: Providing affordable plans catering to students’ budget constraints.
- Older people: Tailoring plans for older people with simplified services and easy-to-use devices.
- Low-Income Families: Offering budget-friendly options for families seeking economical mobile services.
- Young Professionals: Providing basic services at lower tariffs for young professionals starting their careers.
- International Callers: Focusing on customers making frequent international calls with competitive rates.
- Travelers: Offering prepaid services with low roaming charges for travelers and tourists.
- Prepaid Users: Catering to individuals who prefer prepaid plans over postpaid contracts.
- Minimal Users: Providing simple voice and text services for users who don’t require data or extensive features.
- Non-Smartphone Users (yes, they do still exist): Offering plans suited for basic phones without the need for smartphone features.
- Secondary Phone Owners: Targeting customers seeking a secondary phone for specific purposes with affordable options
What kind of Mobile bundles are typically used for Discount MVNOs?
Data: Low to moderate demand for basic internet use, social media, and occasional app downloads. Use case: Checking emails, social media updates, light browsing.
Voice: Moderate demand for essential calls to family, friends, and work contacts. Use case: Casual conversations, arranging meetups.
SMS: Moderate demand for basic texting, notifications, and alerts. Use case: Sending texts, receiving promotions.
What kind of ARPU can you expect?
ARPU: Low to moderate.
Why: Discount MVNOs target price-sensitive customers who prioritize affordability over premium services. Their revenue comes from a large customer base with low-margin plans.
Where It Is Based On: This ARPU is based on offering basic voice, SMS, and limited data services at lower tariffs, attracting budget-conscious customers.
You need to work out the details in your Financial Plan.
What is the Go-to-Market Strategy for Discount MVNOs?
Aggressive online and offline marketing campaigns are essential. Utilize social media, influencers, and strategic partnerships to maximize reach. Focus on highlighting cost-effectiveness and reliability, ensuring potential customers understand the value proposition amid budget-friendly pricing.
- Target Audience: Budget-conscious consumers, students, and young adults seeking affordable mobile services.
- Pricing Strategy: Competitive pricing with emphasis on low-cost plans, discounts, and bundled services.
- Distribution Channels: Online platforms, retail partnerships, and kiosks in high-traffic areas.
- Promotion: Digital marketing, social media campaigns, and referral programs to attract new customers.
- Customer Support: Efficient online support, FAQs, and community forums for issue resolution.
What are points to think of for the Marketing Plan?
Leverages affordability as the primary selling point, often relying on online marketing, social media, and word-of-mouth to reach cost-conscious consumers. You need to work out below points in your Marketing Plan.
USP: Unbeatable low prices with reliable network coverage.
Content Creation: Create engaging content on social media highlighting savings, discounts, and testimonials
Promotions: Limited time offers, student discounts, and family plans to attract diverse customer segments.
Partnerships: Collaborate with universities, communities, and online forums frequented by budget-conscious consumers.
Feedback Loop: Regularly gather customer feedback to enhance service offerings and address pain points.
What kind of financing is to be expected for Discount MVNOs?
Financing: Moderate
Discount MVNOs primarily focus on low-cost services and affordable handsets. Initial investment is required for network infrastructure, marketing, and handset subsidies. However, the focus on low prices often means a thin profit margin, requiring careful financial management.
You need to work the details in your Financial Plan.
What kind of MVNO type is typically used for Discount MVNOs?
MVNO Type: Branded Reseller / Thin MVNO
Discount MVNOs primarily focus on low-cost services and affordable handsets.
Initial investment is required for network infrastructure, marketing, and handset subsidies. However, the focus on low prices often means a thin profit margin, requiring careful financial management. Important here is that you are ale to create your own (discount) bundles.
See also: Different types of MVNOs
What is the expected time to launch?
Expected Time to Launch: 3-6 months
Discount MVNOs, focusing on basic voice and SMS services, can leverage existing infrastructures, which expedites the launch process. The primary focus is on marketing strategies and customer acquisition.
You might be able to expedite the launch process with a specific Strategy: For example, focus on ready-made packages from MNOs, utilize their existing packages (bundles), and leverage their customer support services. Rapid market entry is achieved by simplifying services and tariff structures..
What is the expected impact of 5G for Discount MVNOs?
5G enables more cost-effective data delivery, allowing Discount MVNOs to offer higher data allowances without increasing prices significantly. Faster speeds enhance user experience, attracting more customers seeking budget-friendly, high-speed services. For more details see the Mobile Network section.
What is the expected impact of eSIM for Discount MVNOs?
Frequently Asked Questions
1. How can a Discount MVNO effectively balance affordability with quality service to attract and retain customers in a competitive market?
Answer: Balancing affordability with quality service is crucial for a Discount MVNO to attract and retain customers in a competitive market. By leveraging existing infrastructure and focusing on low-cost plans, the MVNO can offer basic voice, SMS, and data services at competitive rates. Emphasizing reliability and network coverage while highlighting cost-effectiveness in aggressive marketing campaigns ensures potential customers understand the value proposition amid budget-friendly pricing.
2. What strategies can a Discount MVNO employ to differentiate itself from competitors and maximize market penetration?
Answer: To differentiate itself, a Discount MVNO can leverage partnerships, online marketing, and strategic pricing. By targeting price-sensitive demographics such as students and low-income families, the MVNO can tailor affordable plans and offer discounted handset devices. Aggressive online and offline marketing campaigns, coupled with strategic partnerships with universities and communities, maximize reach and enhance brand visibility. Additionally, limited-time offers, student discounts, and family plans attract diverse customer segments, maximizing market penetration.
3. What financial considerations are involved in launching and sustaining a Discount MVNO, and how can they be effectively managed?
Answer: Launching and sustaining a Discount MVNO require careful financial management due to thin profit margins. Initial investment is needed for network infrastructure, marketing, and handset subsidies. However, focusing on low-cost services and affordable handsets can mitigate risks and ensure financial sustainability. By leveraging existing infrastructures, ready-made packages from MNOs, and customer support services, the MVNO can expedite the launch process and minimize costs. Additionally, monitoring expenses, optimizing pricing strategies, and maximizing operational efficiency are crucial for long-term success.
4. How can a Discount MVNO capitalize on emerging technologies like 5G and eSIM to enhance its service offerings and attract new customers?
Answer: Emerging technologies like 5G and eSIM present opportunities for Discount MVNOs to enhance service offerings and attract new customers. With 5G, the MVNO can offer higher data allowances without significantly increasing prices, leveraging faster speeds to enhance user experience. This attracts more customers seeking budget-friendly, high-speed services. Additionally, eSIM technology simplifies onboarding processes for prepaid customers, allowing instant activation and plan selection directly from devices. This streamlines onboarding costs and enhances customer convenience, contributing to increased market penetration and customer acquisition.
5. What strategies can Discount MVNOs employ to sustain profitability in a competitive market with thin margins?
Answer: Discount MVNOs can employ several strategies to sustain profitability in a competitive market with thin margins. Firstly, they can focus on cost optimization by negotiating favorable terms with network operators, streamlining operational processes, and investing in efficient customer support systems. Additionally, Discount MVNOs can differentiate themselves by offering value-added services such as loyalty programs, bundled offerings, and innovative pricing structures. By continuously monitoring market trends and consumer behavior, Discount MVNOs can identify new revenue opportunities and adapt their business models accordingly. Furthermore, strategic partnerships with device manufacturers, content providers, and other telecom companies can help Discount MVNOs enhance their service offerings and attract a larger customer base. Finally, investing in marketing and branding initiatives to increase brand awareness and customer loyalty can contribute to long-term profitability and sustainability for Discount MVNOs.
Summary
In summary, Discount MVNOs play a vital role in making mobile phone service accessible to budget-conscious consumers. By targeting specific demographics and offering competitive rates for basic phone services, they cater to a significant market segment. However, navigating the fiercely competitive discount mobile market and turning a profit requires careful planning and strategic execution.
MVNO Business model examples
