What future for the Orange and T-Mobile brands in the UK?

I was asked this morning about whether I had a view on the future of the Orange and T-Mobile brands in the UK now that Deutsche Telekom and France Telecom have announced that they will be merging their UK operations. It's a fascinating brand problem that they are apparently going to take up to 18 months to decide and that the issue is of "vital importance".

The UK mobile phone market is a really interesting brand landscape. The chart below maps the market a couple of dimensions which split out the top 5 players. Vodafone plays the Incumbent position (the safe, big choice), despite not being the market leader, and is still product, product, product. O2, the market leader, has used design and customer focus brilliantly to differentiate focused on a fresher, younger demographic. VirginMobile, as a virtual mobile network operator (MVNO) partner to T-Mobile, has carved out its now well trodden youth customer focused challenger position.

T-Mobile has always fallen between two stools: not big enough to be an incumbent but with an incumbent like attitude (from Deutsche Telekom ownership I suspect) which has tried to move from product to customer but has been erratic. Orange is the real brand disappointment of the category moving from its original high quality, customer focused, cool, challenger position into a middle ground between an incumbent and a challenger.

The brand and marketing challenges for T-Mobile and Orange will be to decide where the future of the market will be, which customer group they want to use as a focus, what customers want, and then to understand whether the Orange brand, the T-Mobile brand or both gives them the best solution.

The most obvious choice is to bin the T-Mobile brand whilst using the merger to re-invigorate the Orange brand. T-Mobile has always suffered from a patchy (at best) brand heritage (remember Mercury and then One-to-One?) and a down-market feel. Orange is a brand just waiting to be given the kiss of life.

However a more interesting solution might be to keep both brands. T-Mobile to target the more pay-as-you-go, value based customer, perhaps younger. Whilst the Orange brand becomes again the customer-focused, cool challenger to Vodafone and O2. Tactically this solution allows the T-Mobile brand to go to places that the Orange brand wouldn't necessarily want to be seen in such as corner shops, or targeting the super value end of the market with hard hitting direct response marketing. This allows Orange to then be much more aspirational and regain the zeitgeist with a return to their cool, slightly arrogant, brand values.

Of course, as I have discussed in this blog before (Why do big companies struggle to get the customer experience right?), buying and using a mobile phone is a service experience, and all the mobile brands have had significant service issues. Creating a compelling brand strategy is the first step, creating a coherent brand reality will be where the really hard work starts.

It's a great set of brand issues to try to work out and I wish the merger teams the best of luck!

Yours

Justin

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