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Telus targets youth with Koodo

TELECOM REPORTER

Telus Corp. has the fun fish and lizards in its ads, but is still looking for a better way to catch the attention of the youth market. The company is pushing ahead with plans to launch a new cellphone brand called Koodo Mobile, which it hopes will allow it to boost its share of the market most likely to pay more for services such as ring tones, music and text messages.

The company is saying nothing about its plans, but a kiosk with the name Koodo Mobile is being set up in Toronto's Eaton Centre, and a mall directory at the Pickering Town Centre in Ontario lists Koodo Mobile in its online directory even though the phone number at the outlet is not yet operational.

Last year, Telus registered the name Koodo Mobile in various provinces, along with the Web domain name koodomobile.ca.

The introduction of a separate, youth-targeted brand would let Telus pursue a different strategy than for its mainstream service. That approach has worked for rivals Bell Canada and Rogers Communications Inc. and their Virgin Mobile Canada and Fido brands, respectively.

"It helps to distinguish markets," said Troy Crandall of investment firm MacDougall MacDougall and MacTier.

Mr. Crandall said the brand could be launched as soon as Monday. That would be interesting timing considering that new cellphone hopefuls such as Quebecor Media Inc., Shaw Communications Inc. and Manitoba Telecom Services Inc. this week announced plans to take part in a coming auction of wireless spectrum. Now it looks like they will have another brand from the big cellphone giants to fight.

"If you were a potential bidder, would this spook you out?" Mr. Crandall said.

Telus's second foray into the youth market comes after a failed first attempt last year.

The Burnaby, B.C.-based company brought Amp'd Mobile, a brand for young men with money to burn on content such as wrestling in pools of margaritas, to Canada. But it soon pulled the plug after Amp'd's parent firm in the United States filed for bankruptcy protection.

Telus spokesman Jim Johannsson declined to comment yesterday on Koodo.

When done the right way, a second brand lets carriers take a different path when it comes to marketing and pricing in order to target a distinct group.

Virgin Mobile Canada takes a more edgy approach when it comes to marketing its services than you-know-who's beavers. It ran an ad this week featuring scandal-plagued New York Governor Eliot Spitzer, who is alleged to be known as Client 9 at an escort service, that played into its slogan that it won't treat customers like a number.

Fido has carved out a different niche than the Rogers brand with its dog ads and "discount" carrier pitch. Rogers controls 37 per cent of the Canadian wireless market, while Bell has a 31-per-cent share. Telus is in the rear at a 28-per-cent share.

Observers have said another brand would help Telus go after a youth market that may be less taken with the animal ads that mom and dad love.

"The lizards still have sizzle, but don't have sparkle," said Iain Grant of telecom consultant SeaBoard Group.

Observers believe there is room for the industry to grow in Canada as only about 60 per cent of the population owns a cellphone.

The youth segment is appealing for several reasons. There is always a new batch of first-time users to sign up. Moreover, they buy all the data services that cellphone carriers are relying on to drive revenue growth. As well, costs to acquire these subscribers tend to be lower because they're happy with basic cellphones, according to SeaBoard Group's Amit Kaminer.

By the numbers

70

The percentage of users of ring tones and music on cellphones who are aged between 12 and 29

62

The percentage of users of games on cellphones who are

ages 12 to 29

20

The percentage of prepaid Canadian wireless subscribers, many of them youngsters, with average monthly bills of about $17

Sources: SeaBoard Group; Solutions Research Group

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