Would a telecom megabrand create intentional confusion for customers?
So Wednesday another new cell phone brand was launched to the Canadian market, hospital and the public response? Deafening. (cue loud cricket noises) Well, viagra 40mg Beg to Differ thinks you should care. Not about the service, but about the brand strategy logic behind it – and maybe even get a little bit angry. Because this is a case of brand managers using their awesome powers for evil. On purpose.
A bit of background
For those who may not be familiar with the Canadian Cell Phone market, the landscape has long been dominated by three hulking gorillas – Bell Mobility, Rogers Wireless, and Telus Mobility – and more recently, more than two dozen smaller “discount” monkeys – including the range of products below.
If you’re not, there are a few highly paid brand managers who will be sorely disappointed. That’s because many of the biggest “stand-alone” brands above are actually wholly owned and operated by the big three – Koodo by Telus, Solo by Bell, and Fido by Rogers – but are branded to hide or obscure the relationship with the parent company.
And now Rogers is doing it again with their new Chatr brand – which launched this week into mall kiosks in Canada’s biggest cities, with no availability in Rogers outlets or any explicit Rogers branding.
CBC notes that Chatr is supposed to become the “low end” of the Rogers line, with Fido as the middle, and Rogers own services as the Cadillac of the line. And according to Chatr’s senior vice-president Garrick Tiplady “The company isn’t afraid of cannibalizing existing Rogers business, since (Chatr) caters to different market segments, much like the Fido and Rogers brands have done for years.”
But isn’t choice good?
If you read the Differ, you’ll know that the answer is: No! Not always!
The first problem is VOLUME of choice: Humans can only handle so many choices before they go “tharn” (see Beg to Differ the Great Brain Freeze for more).
The second problem is when the choice only seems like a choice but really is not a choice at all (we’ve called out Telus and Google AdSense on this one before).
And third is when choice is designed to confuse.
That’s the most serious and the least ethical: Rogers is intentionally creating confusion in the marketplace and making life more difficult for consumers.
Does that sound like wild-eyed conspiracy? Nope just unpacking the “flanker brand” strategy they have said they’re using – where a large dominant brand “flanks” itself with smaller phantom brands to create the illusion of choice in a market where smaller players may be beating the big guy on price, service, or general non-evilness – or all three in this case.
This is a calculated move to undermine competition (and damn the consumers). And we’re not alone in saying so:
Globe and Mail The so-called “flanker” brand is supposed to complement Rogers’ existing brands, Fido and Rogers Wireless, by targeting a lower end of the market. But some analysts suspect that it is designed to muddy the crowding market with yet another brand, in an attempt to fight back against new competition.
CBC: Mobilicity chair John Bitove has said… “We welcome competition, but it’s the way they’re competing that we object to,” he told CBC News recently. “It’s right in the Competition Act.… You can’t create flanker brands to try and defeat the competition.”
MyCellMyTerms.com: While Rogers’ intention is offer more choice I believe that this adds to the confusion in the marketplace and consumers will be thoroughly confused with all these brands.
And what’s worse, rumour has it that both Telus and Bell are intending to do exactly the same thing in very short order. So like it or not, more artificial choice is coming your way.
So what do you think?
Is this added choice good for consumers? Is Rogers evil for using accepted brand strategy practice to muddy the water around its slower, more nimble competitors?
Dennis Van Staalduinen says
I guess this would also be your answer to my Twitter question: “Your thoughts: is Rogers intentionally screwing with our brains with “Chatr”?”
Did you know that the Chatr coverage map for the East end of Ottawa is pretty much identical to the Wind coverage map?
Really, Rogers? Really? Somehow your network of well established towers doesn’t work for Chatr coverage in Rockland? Nice use of subtlety.
I can’t summon the energy to check, but imagine this is pretty well the case everywhere.
Scott Wright says
Isn’t this a bit reminiscent of the brand confusion we had in the North American auto industry – and still have, to some extent? GM had Chevrolet, Pontiac, Saturn, Buick, Oldsmobile, Hummer, Cadillac and Corvette; Chrysler had Chrysler, Plymouth, Dodge, plus all the old AMC and Jeep brands; Ford had Mercury, Ford, Lincoln, and maybe some others.
Each of those companies had brands that seemed to deliberately blur the landscape of their competitors, and even cannibalize their own. The only difference was that, most of the time, you could get more than one of them at any given dealer, and they didn’t really try to hide the parent company’s brand.
After the auto-crash, I think it forced some to scale back. But how did it hurt consumers? GM says they’ve paid back the money they had to borrow from the government. Ford says they didn’t have to borrow any.
Presumably, as car buyers (who chose to stay with domestic brands), we probably had to pay for all their extra marketing budgets in the purchase price. This opened the door to more focused foreign brands.
But aside from some confusion, angst/cognitive dissonance during the purchase process, and occasionally some buyer’s remorse, what did it cost the public? If it was a comparable situation to the current cell phone market, why didn’t the car companies get nailed for this under the law?
I’m not disagreeing entirely with the Differ, but just trying to see how these examples of issues with comparable brand situations fit your model, and why they’ve played out rather quietly after the auto-crash.
Thanks for the thought-provocation.
Dennis Van Staalduinen says
You’re welcome for the thought-provocation – or rather sharing, because I’m still wrestling with this stuff myself.
Your points on the car industry are both dead-on and add some further mud to the waters. The “over-branding” of the American car since the 50’s is definitely one big reason for their big decline. The strategy of creating artificial choices in a market with only three real choices served them well until the 60s when suddenly German automakers began to maneuver in their space (VW Bug / Microbus being the tip of the Brandskrieg), followed by the Japanese tsunami of the 70’s, and today’s 100-brand global smörgåsbord. Over-complexity doesn’t work anymore. It is the simplifiers who are creating the power brands.
But the other question is: do big companies with the resources have a responsibility to NOT over-crowd the brandscape? I think they do (and that it is in the industry’s interest in the long term), but I don’t think THEY think they do…
new low cost division, lets call it that way, but is still expensive, I can imagine how expensive is it to run a cellular network , once everything is paid off and technology is running flawlessly. Like the price for the voice mail or caller ID needs to be 7$ each 😀 i think once I add a caller ID to my phone it will consume another power plant just to show me who is calling, why nobody is asking about thouse nonsense prices for nothing ? nothing that comes already with the transmition technology ? its all just lies, no wonder rogers bell and telus is so hardly fighting aganst any competition, its heaven for them here. trimonopololy, they are all agreed on the same, but this we all know already, but why nobody is taking any action against that ?
Dennis Van Staalduinen says
Ah the pricing of Canadian cellphone products / peripherals / “options” is a whole other kettle of smartphones. Don’t get me started on that! Seriously. Don’t.
Chris Schmitt says
This is a really interesting viewpoint. You don’t get real competition from network providers until you have multiple networks. The creation of a “flanking company” is disingenuous unless the flanking company is actually deploying a disruptive technology. For example, IBM created a separate and loosely tied business to develop the personal computer, even though it disrupted it’s mainframe business. What Rogers is doing is really disrupting new network facility-based entrants (i.e. Wind).
Some other examples of the flanking maneuver:
– Bell offered a $5 flat rate LD plan to disrupt (let’s say kill) Vonage in Canada
– Rogers bought Fido (and its network) because Fido started offering free local calls (it could have nearly eliminated the distinction between wireline and wireless local services). That was after Fido successfully lobbied for local number portability. The Competition Bureau and the CRTC should have never let that happen.
– Bell bought Virgin (which offers a disruptive customer experience). It’s too bad Virgin didn’t decide to build it’s own network.
– Rogers is now playing with tiered pricing on it’s high-speed Internet service to prepare for the entry of Netflix into Canada.
It’s probably good to get some innovation coming from flanking companies. But don’t ever confuse it for real competition.
Dennis Van Staalduinen says
Nice. Your IBM / PC example is perfect – which was a similar approach to the old Proctor & Gamble model, where they would create “real” competitors for their own products with separate teams / infrastructure / P&L / opportunities to innovate.
I guess that’s one of the things I was *trying* to say. It’s the appearance of new competition who add complexity without adding value that I object to in the case of Chatr.