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Lecture 4

ADM3326 Lecture 4: TELUS(1).pdf

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University of Ottawa
Raluca Balan

T E L U S This case was prepared from publicly available sources by Douglas Judson, under the supervision of Professor Michael Guolla. Copyright © 2008 by The Telfer School of Management at the University of Ottawa, Ottawa, Ontario, Canada. TELUS is a Canadian national telecommunications company providing a wide range of communications products and services, including internet, voice, entertainment, and video. Based in Burnaby, British Columbia, TELUS emerged as an underdog in the Canadian telecommunications industry, but has consistently seen growth in its consumer mobile phone service, for which it is most widely known across the country. Having fought for market share against giants Bell and Rogers within the mobility sector, TELUS has successfully adapted its “future friendly” brand for each new evolution of the mobile phone industry in Canada. The challenges of ever-changing technology and technological integration, increasingly tech-savvy consumers, and gradual regulatory liberalization have been met with continued extension and modification of TELUS’ message. History of the Brand 1984-1996: Early Days for the Industry & Brand While cell phones have been available since the 1980s, the cost of handsets and airtime in the early days were exorbitant by contemporary standards. For the most part, outside of key business clients, cellular providers had not engaged the consumer market. When Clearnet Communications, the predecessor of present-day TELUS’ brand image, came onto the scene with its initial consumer cell phone offerings, marketing efforts were largely one dimensional. Providers offered basic rate plans and few handsets, which was concurrent with the technological capabilities of the devices. Most promotional efforts at this stage were focused on educating consumers on the need to ‘go mobile’, in a market where household and business phone lines were the norm. This was not an easy task for fledgling Clearnet, who faced tough competition against the established credibility and profile of longstanding telecommunications contenders Rogers and Bell. In addition, existing cell phone users were largely tied to long-term contracts for analog service, offering slim returns for carriers wishing to target their marketing efforts at this more-experienced audience. Given these obstacles, Clearnet opted to prioritize the brand itself and differentiate on image, rather than to fixate their strategy on pricing, which would easily be copied by competitors in the tightly-controlled market. Media investments in this industry are among the largest in Canada. Thus, larger competitors with deep pockets and established brand recognition were at an advantage. Clearnet had to successfully promote itself both as a company and as a service in order to gain the same credibility as a viable option for consumers. To maximize return on a more limited media budget, execution was paramount to building brand equity. 1 1997-2000: Establishing Product Basics Launch of Mainstay Theme It was not until the mid-1990s that the consumer market opened up, following technological advancement in mobile phone hardware and the issuance of digital licensing agreements with Industry Canada. Prior to this time, cellular phone service operated exclusively on inefficient and limiting analog networks, which lacked the capacity for data transmission. In the fall of 1997, the expansion of digital services ushered in contemporary Personal Communication Services (PCS). Clearnet’s own campaign used TV, print, and out-of-home media which focused on creating desire for cellular phones. The campaign transformed a very general promotion of cellular phones into an exclusive promotion of the Clearnet brand by taking on the tranquility and simplicity of nature. Clearnet’s agency, Taxi, created a campaign 2 “that would deal with consumers’ unconscious fear of technology.” Creator Paul Lavoie drew his inspiration from a documentary about insects, where he found that the music and camera work made the insects’ activities make them appear almost human. The launch campaign included images of bees and foliage, set against simplistic white backgrounds (Figure 1). The intent to create a “future friendly” message was evident in the vibrant images. Figure 1 1 2“TELUS,” CASSIES Case Library (, 2007, p. 3. Bellett,Gerry, "The future is friendly for those Telus critters," Vancouver Sun , 24 December 2002. 2 Into 1998, Clearnet capitalized on the few product features available. Clearnet offered free calls on a subscriber’s birthday and unlimited weekend calling (Figure 2). The ads reinforced the “future friendly” positioning by communicating in a very conversational manner. Figure 2 The 1999 series of ads honed in on the millennial mindset of change. Ads featuring a series of reptiles (some of which are reputed for changing colour) questioned the utility of maintaining a home phone at all. By promoting free evenings and weekends on PCS phones, TELUS’ campaign worked to unseat the perceived necessity of paying for a landline. In the ads, the frog’s escape from the jar represented freedom and independence (Figure 3). The gradual transition to the use of the clinging lizard helped to freshen up the home phone message – reinvigorating the ‘future friendly’ thrust of the campaign. 3 “Clearnet,” CASSIES Case Library (, 2001, p. 4. 3 Figure 3 The same colourful tree frog was used in the 1999 Christmas campaign, with the line “watch their eyes light up.” Transition to TELUS In 2000, then-TELUS, an Alberta-based firm, acquired the fledgling Clearnet Communications for $6.6 billion. This was an astonishing amount for a company launched only three years 4 earlier, and was testimony to the value Clearnet had developed for their brand. Contrary to what is typically expected, it was the larger firm, TELUS, that adopted the branding of the 5 smaller firm, Clearnet. As part of the seamless transition, often both company’s logos were used on advertising media to establish the initial transition (Figure 4). Figure 4 4“Clearnet,” p. 5. 5“TELUS,” p. 3. 4 During this period, the exuberant Disco Duck marked a bold transition to a new and innovative product offering by TELUS (Figure 5). In introducing prepaid phone service, TELUS set up a web portal for customers to manage their accounts, thereby surpassing the level of ‘friendly’ service offered by prepaid-competitors. The duck’s webbed feet provided a metaphor for the web, 6 which at the time was “the word for technical innovation.” In keeping with TELUS’ decision to build brand equity in the face of competition, the use of peppy animals to illustrate user- friendliness was thought to decrease consumer anxiety. 6 “Clearnet,” p. 4. 5 Figure 5 6 2001-2007: Increased Depth of Product Offering After the TELUS name was firmly affixed to the former Clearnet brand, and with the coming-of- age of the consumer cell phone market due to technological advancements and increased consumer awareness, TELUS began to shift the focus of its future friendly messaging onto new or previously inconsequential features. In 2001, a focus on handsets showcased the physical hardware in a fun and lighthearted way. Penguins were the critters of choice (Figure 6). Again, TELUS used the amicable animals to break up the monotony of the technology line-up. Figure 6 In 2002, TELUS built on its campaign of cool phones by emphasizing the phones’ capabilities more heavily – such as games and text messaging (Figure 7). During the holiday season, one campaign attempted to bestow a cult-status flavour, saying “Avoid the re-gift. Ask for a cool 7 phone.” The predominant use of monkeys in this campaign communicated an energetic playfulness through easily characterized expressions. 7 Vinakmens, Kristen, “Telus monkeys reach cult status,”, 7 Figure 7 2003’s added-value component across the market was the camera phone. Memorable ads featured a small pig in a number of different executions, demonstrating likely uses of the new camera function. ‘Spokesporkers’ Lucie and Sparky played off of the phrase ‘when pigs fly’ to illustrate that some events are just so sudden and unexpected that only a photo taken 8 immediately can do them justice (Figure 8). The use of retro music, such as 99 Luftballoons, helped TELUS to bridge the gap for the eighties generation, now in their prime earning years, who may have felt uneasy about any ‘friendliness’ the future had to offer. Notably, TELUS’ identity was pervasive enough at this time that they were able to place a number of out-of- home ‘teaser’ ads – even though these ads did not display the TELUS name, “the iconic look 9 was all consumers needed to know who the message was from.” Figure 8 By 2004, cellular phones had hit the mainstream, and customization options were being sought. The extension of TELUS’ longstanding use of animals and bright-to-white colour contrast was by no means a stretch when it came time to exhibit the range of colourful handsets available (Figure 9). The focus on features by numerous players in the mobile phone industry suggested that consumers no longer needed to be sold on core product uses. 8Kirbyson, Geoff, “TELUS Mobility – animal instincts”,, 9 “TELUS,” p. 7. 8 Figure 9 2005 saw the introduction of TV and gaming functions on mobile phones. TELUS opted to use bunnies to bring to life gaming features like Texas Hold’em, television, and music in an endearing and manner (Figure 10). As a result of their success, the rabbits were used considerably through the year and well into the holiday season as a part of more generic ads. 9 Figure 10 2005’s signature holiday ad series featured Hazina the baby hippo, set to the 1950s classic I Want a Hippopotamus for Christmas. The popularity and recognition of the ads, designed to appeal to a wide audience, quickly escalated, to the point that retailers could not keep stuffed hippos on store shelves. 10 The introduction of SPARK in 2006 formally gave a name to the bundle of the newest services and features on offer through TELUS. The campaign pushed the ease of subscribing to the SPARK bundle (‘future friendly’), while simultaneously courting clients in regards to one of the newest leading features, downloadable music. One researcher observed that initiatives such as the SPARK bundle create a marketing advantage for TELUS over their competitors because it certifies their position as a friendly access provider (Figure 11). 11 10Hall, Jamie, “People,” Edmonton Journal, 21 December 2005. 11Lazarus, Eve, “Ad Advantage,” Marketing. Toronto: 6 February 2006. Vol. 111, Iss. 5, p. 6 (1 pp.). 10 Figure 11 2007-2008: Market Maturation Segmentation & Transition to Smartphone Technology TELUS has further expanded its messaging by reaching out to specific demographic communities with more than the nuanced appeals in broad-based messaging. Ads reaching out to the South Asian community used the usual bright fish and catchy music, with a combination of English and either Hindi or Punjabi. The ads, for 2008’s smartphones, changed the English tagline of “the ultimate do-it-alls” to a loose translation to “do whatever you want.” Further, the ads drop the names of specific cultural events and first names, to allow for easier identification with the brand for the target segment (Figure 12). Some ads referred to Bollywood movies and arranged marriages, in the same cute humour and “future friendly” theme. The checkbox options visible across TELUS’ still advertising media help to exemplify smartphone’s slurry of communication options and life-simplifying features. 12 12 Lazarus, Eve, “TELUS reaches out in Hindi and Punjabi,”, 11 Figure 12 Wireless Number Portability (WNP) With the introduction of Wireless Number Portability, allowing subscribers to keep their phone number when changing carriers, this year’s campaign reflected a much more developed market for mobile phones. The emphasis wholly shifted from market development to customer retention, given the increased ease of switching cell phone providers. In 2007, TELUS reunited some of the best-loved animals from previous campaigns, leveraging the brand’s likeability to reinforce the appeal of TELUS’ Future Friendly positioning. Customers were encouraged to “get where the going’s good”, subtle draw on competitor’s existing clients, a previously difficult segment to attract. One Bell ad launched for this purpose asserted that Bell had the most powerful network in western Canada. TELUS eventually launched a lawsuit against Bell, claiming that the ad misrepresented the minimal investment that Bell had made to secure its own infrastructure in western Canada. TELUS felt that such ads misled customers at a time when inflated turnover 13 numbers were imminent. Two-Brand Strategy: Koodo Launch 2008 saw TELUS take the first steps to match the two-brand strategy of its competition. Where Bell Mobility had created spin-off Solo Mobile to encapsulate the essence of low-cost cellular contracts, Rogers had acquired Fido for the same purpose. A new player in the Canadian mobile phone market, Virgin Mobile Canada, was also beginning to seek out market share 13McLean, Catherine, “Suits keep flying in wireless service marketing wars,” Globe and Mail, 22 March 2007. 12 through a network partnership agreement between Bell Canada and Virgin. These fighter brands were used as pawns to advance the market share of each of the primary vendors by reaching out to specific demographic groups with low-price strategies and packages that would not compromise the position of the core company’s mobility products (Table 1). Koodo Mobile centered its branding around the concept of “slimming” phone bills by cutting the system access fees, in their own ‘no-additives’ approach to the mobile phone spectrum. In advertising, retro-styled characters in fluorescent ‘80s-era aerobics-wear lead the charge against cutting “cellular cellulite”, curbing the “mobile munchies”, and transforming mobile bills “from porky to puny” (Figure 13). Unlike its competition, Solo, Fido, and Virgin, Koodo doesn’t offer video calling, email, or music – instead focusing on simple talk and text packages. 14 Another defining feature of the Koodo model was that customers could pay off the cost of their handset over several bills. In addition, customers were able to accumulate a ‘tab’ through regular increments added to monthly bills, which could then be placed as a down payment towards the purchase of a new phone. This concept was new to Canada’s consumer mobile phone industry, where most carriers insist on clients committing to a contract in order to subsidize the cost of the phone itself. A break from TELUS’ traditional segmentation of the “future friendly” brand, TELUS hoped to better define its overall product offering to parallel the two-brand strategy offered by competitors Bell and Rogers. 14Laird, Kristin, “Koodo gets back to basics – no TV, no music”, 13 Figure 13 14 Storefront / Subsidiary Carrier Brand Characteristics Point of Sale Koodo kiosks, - ‘Slimming’ phone bills by cutting ‘fatty’ system access fees and billing for only those features used. Koodo major retail - Ability for customers to generate a ‘tab’ through incremental payments on each bill to either pay for Mobile TELUS outlets (ie. Wal- their existing handset or save money towards the purchaseof a new one. Mart) - Back to basics: no TV, no music. - Initially targeted the age 14-21 group with prepaid plans only, eventually moving to include contract- pricing in order to compete more effectively with Fido (including per-second billing). Solo Mobile Bell Bell Canada - Packages tend to offer significantlymore textmessaging flexibility than other providers. outlets - Customer service is administered by Bell Canada, but exclusive access provided by special access number “#SOLO”. - Partnership between Bell and Virgin International, whereby Virgin’s phones, sold through their own Virgin kios
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