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LatAm Mexico The Telecom Market

Mexico's recent telecommunications reform has created a setting full of important challenges for the competing brands. These will have to adapt their strategies to the new rules of the game, including the incorporation of new players.

In this changing environment, it’s important to keep sight of the brand evaluation made by consumers and users of this category. Analyzing their perception of competing brands is useful for the consideration of possible routes the market might follow once the reforms become established.

Building a work agenda for telecoms brands

Learning how consumers value telecom brands is essential for establishing a starting point and developing strategies aimed at consumers' satisfaction and business profitability.

Based on consumers' valuation, we have analyzed the category using 4 essential brand valuation aspects or cornerstones: Differentiation, Relevance, Appreciation, and Familiarity.

The evolution of each of these aspects has been followed from 2010 to 2013. The study was developed based on data from surveys conducted with users of the mobile phone services category using the Y&R Group Brand Asset Valuator (BAV) from 2010 to 2013.

Necessary differentiation

Differentiation, or the distinctive, unique and original added value that a brand can offer is an essential aspect of appeal within a market. Differentiation leads to an increased competitive dynamism, while enabling businesses to achieve a higher average profitability since consumers agree to pay an "extra price" for those differential aspects. Differentiation is closely linked to innovation in terms of communication, marketing, and products.

As for mobile phone services in Mexico, consumers perceive that differentiation levels have decreased by 8% from 2010 to 2013. This constitutes a significant challenge for both the category and its current players, since a category with low differentiation levels represents a remarkable opportunity for new players to arrive with new value proposals. Additionally, low levels of differentiation perceived among brands in a category might undermine the likelihood of increasing their profitability.

Comparatively, users of the category feel they receive less value. The performance of the attribute "Good Value for My Money" in this category has shown a 41% decrease from 2010 to 2013. It is essential to take these aspects into account for the analysis and outlining of strategies for the industry in the post-reform context.

The challenge of Relevance

The Relevance perceived by consumers is fundamental to increasing brand value and also category value. Relevance refers to consumers' perception of the extent to which the brand value proposal fits their likes and needs. This index encompasses the aspects related to the business proposal brands offer to their users (offering, distribution, benefits, availability and so on).

Relevance Index levels for this category have decreased 15% from 2010 to 2013. Consumers feel that the existing value proposal is less useful to their interests and benefit in terms of suitability. Furthermore, there has been a decrease of 4% on average for the category in the "Reliability" perceived by consumers concerning their brands.

In a new competition scenario, it is important to address Relevance. Creating new services and products that meet consumers' needs will determine this industry's health and prosperity.

Strengthening Appreciation

Appreciation is a key element in brand value, since it indicates its capacity to generate emotional bonds with users – and therefore loyalty. This aspect is important for making a business profitable, since it makes consumers' life cycle longer, allowing the optimization of investments throughout the business cycle.

Users' Appreciation of the mobile phone service category has not changed in the analyzed period, but continues showing medium levels: 60 points at the most out of 100 points.

This means that the development of the emotional bond and the capacity of brands to trigger loyalty have been relatively stable. However, the future work agenda for the new context requires this aspect to be enhanced so as to make clients' portfolios both stable and profitable.

The importance of familiarity

This factor indicates the degree of closeness and intimate knowledge users have of their favorite brands. The importance of this index lies in users' disposition to receive new offers that are consistent and coherent with their view of the category. An individual's openness to consider and accept, for instance, innovations in different fields, will depend on previous familiarity.

This aspect has grown 1% from 2010 to 2013, which suggests stability and an increase of associated expectations. It is important that brands encourage more closeness, in order to exploit the potential of their existing relations with users.

The challenge of competing in a new market

The telecommunications reform brings new rules to the game, changing the prevailing conditions in the industry. The mobile phone service category, an important part of the telecom market, has shown no significant advances in the value perceived by consumers. Addressing this is important to ensure that brands gain value, making the market healthier and stronger in case new challenges have to be confronted. The reform may create new competitive conditions favoring the development of brand value and enhancing businesses. More importantly, it might even lead to the establishment of more valuable relations with users, so that both parties win.

Juan Bonilla

Chairman, Y&R and Wunderman Mexico

“About Y&R”

Y&R global agency is the first agency worldwide to be managed by a creative director, Raymond Rubicam, who claims that their mission or task is "To Resist the Usual". With a staff of 6,500 individuals, it has 187 offices in 91 countries.