Virgin Mobile-the Marketing Strategies

Customer Acquisition And Retention A Marketing Project On

Submitted To: Dr.Rajan Saxena

VIRGIN MOBILE-THINK HAT KE

ACKNOWLEDGEMENT We are thankful to Dr. Rajan Saxena, Distinguished professor of Marketing, NMIMS for giving us the opportunity to work on this project .It was a great learning experience for us and we could actually put in practice, the learning acquired in the classroom. Also the project helped us in understanding the customer perspective of marketing strategies. We are also thankful to Mr.Vivek Lal, Employee of Tata Teleservices for giving us the valuable suggestions through out the course of the project.

Group 11 Members

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DECLARATION We, hereby declare that the information presented in this report is correct to the best of our knowledge and has been prepared on the basis of information gained, collected and processed for utilizing our learning in the class of ‘Marketing Management’.

The report is an original work and has not been presented anywhere before. We have used secondary data in the report, but have provided proper references at suitable places. We, as a group, undertake the responsibility that in case of any issues relating to plagiarism issue being raised, we would be liable to consequent action by the management.

GROUP 11

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TABLE OF CONTENTS Topic

Page No.

INTRODUCTION………………………………………………………..5 UNDERSTANDING VIRGIN’S BUSINESS MODEL………………....5 COMMUNICATING THE VIRGIN BRAND…………………………..7 TARGET MARKET………………………………………………….….8 CUSTOMER ACQUISITION AND RETENTION STRATEGIES...…..8 VALUE CREATION THROUGH PRODUCT DESIGN……………… 9 MARKETING MIX……………………………………………………..10 DISTRIBUTION CHANNEL…………………………………………..10 COMPETITION ……………………………………..…………………12 CUSTOMER RESEARCH…………………………..…………………12 RECOMMENDATIONS..................................................................…...14 EXIBITS……………………………………………..…………………15 REFERENCES………………………………..………………………..23

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INTRODUCTION-WHY VIRGIN MOBILE? In Indian mobile market, Virgin mobile is a unique player based on its business model and strategy. It is the only service provider which does not hold any bandwidth and mobile setup infrastructure but uses Tata Teleservices spectrum and is penetrating market totally on its branding and marketing strategy. Creating a niche brand and promoting it to specific customer segment with proper marketing has been the key success factor for virgin mobile across the globe. So, from marketing and customer understanding point of view, this is a very unique company to study.

UNDERSTANDING VIRGIN’S BUSINESS MODEL: Virgin has promoted itself as the brand for young India, keeping the Indian youth as its target customer segment. The idea behind targeting this segment can be found inherited in virgin’s business model. The different marketing perspectives are explained in fig 1. The salient features of Virgin’s business model from customer perspective are: 1) With intensive competition and reducing voice tariffs, the profit margins for voice service are decreasing day by day. So, the future profit strategy is maximizing profit margins through data services and it is youth segment which provides maximum data service revenues. 2) Future projection of increasing young and working population of India as 65% of overall population by 2020. 3) Increased use of data services in future due to technological advancements. So, in mobile sector where all other players are trying to provide similar service to different customer segments, virgin is targeting specific segment with tailor made plans keeping its long term goals in mind. 5

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Fig 1: Creating Virgin brand through various market channels

COMMUNICATING THE VIRGIN BRAND: Virgin mobile has communicated itself as the youth oriented brand of India through various communication channels. They are: a) “Think Hat ke” advertisement campaign targeting youth b) Red and vibrant website look with youth focused language (Fig 2)

c) Tailor made plans for young segment d) Getting paid for incoming calls: a source of recharge option for youth

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Fig 2. Virgin Mobile website depicting youth flavor

TARGET MARKET: The Virgin Mobile Brand, targets Indian youth aged between 14 and 25 years. There are 215 million people in this age group. Out of this, 70 million own a mobile phone and this segment is expected to add another 50 million new subscribers in the next three years. Though young subscribers constitute only 30 percent of the total mobile subscribers, they contribute more than 50 percent of the revenues of telecom industry. By 2010 this group is expected to contribute 6070 percent of total revenues. The distinct mobile phone usage habits of the young users provide a huge advantage to Virgin Mobile. They make more and longer out-bound voice calls, which means huge billing potential 8

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for service providers. The usage of SMS, data services in the form of mobile internet, mobile shopping and other value added services like ring tones, caller tunes, wallpapers, etc are very high in this group which again provides a huge opportunity to be tapped. Moreover young users have a short handset up gradation cycle-under 12 months as compared to two years for people above 25 years of age.

CUSTOMER ACQUISITION AND RETENTION STRATEGIES: The company knows that they are trying to position themselves into a very established and competitive market. They understand the fact that they cannot start making profit from day one neither they have plans for it; they anticipate to achieve a subscriber base of 5 million in next three years and will make profit afterwards they will be able to break even in three year or so. According to the patron, Sir Richard “We want to deliver a more tailored and relevant offering for a single segment.” Company targets only 10% of the above mentioned segment and have plans to acquire and retain them by various innovative propositions, some of them are1) Providing services which were not offered so far a) Get paid for incoming calls. b) 50 paisa for all calls across the country. c) A brand truly meant for the young India which is reflected at each & every touch point. d) Extensive data service offers in the form of vbytes. e) Excellent value added plans. f) Go online facility for enquiry, purchasing phone, recharging and everything. g) One touch VAS access from every virgin mobile.

2) Providing services which others are not providing meticulously a) Easy to change the handset from a wide range of handset providing at very reasonable prices. 9

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b) Boring customer care services telling you are in queue. c) One customer care officer dedicated for all queries of one customer leading to transparency. d) No jammed or bad network coverage. e) Tailor made customized plans without any hidden charges. f) No monthly bills.

VALUE CREATION THROUGH PRODUCT DESIGN: Various steps that Virgin is taking to add value to the customer are on price, quality, technology and social front. Company is providing the best prices in whichever plan you go, quality of signals is not only comparable but better than most of the service providers, on technology front it is the first in India to go for one-touch VAS access from every Virgin Mobile.

MARKETING MIX: The marketing mix is the combination of marketing activities that an organisation in so as to best meet the needs of its targeted market. Product: Virgin Mobile offers six RUIM enabled handsets with colour screen, FM radio and include one touch access for Vbytes-Virgin Mobile’s VAS portal. Price: The handsets are priced in the range of Rs2000-5000.The call tariff is very nominal which is 50p per call both local and STD subject to terms and conditions. Place: The focus of Virgin Mobile on customer acquisition has so far been in the top 60 cities of India and is set to extend to more cities. The product is available across a host of modern retail outlets The Mobile Store, Hotspot, RPG Cellucom, Croma etc.

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Promotion: Virgin Mobile entered the Indian market in grand style. The company surprised the readers of a leading Indian daily when all the headlines on the front page were in the colour red. Virgin Mobile has used a very vibrant colour to relate itself with the targeted market. Apart from traditional media, internet and outdoor youth centric advertising has been used wisely to attract the targeted audience.

DISTRIBUTION CHANNEL: Virgin mobile makes its products available to the customer by both retail stores and online distribution. Selective Distribution: Virgin mobile has selected some retail outlets to distribute its products. It does not follow the strategy of intensive and exclusive distribution. The strategy of selective distribution helps the company gain optimum market coverage and more control but at a lesser cost than intensive distribution. Virgin Mobile launched a new mobile handset vBling on 7 July 2008. vBling is available across 15,000 outlets nationally and over 1000 modern retail outlets including The Mobile Store, Univercell, Croma, Convergem, Big C, Vishal Mega Mart, Vijay Sales and Sangeetha to name a few. Apart from this, the handset will also be available in 34 kiosks in high traffic malls across the country. Online Distribution: Virgin Mobile India has announced that customers can now buy Virgin Mobile branded products and services online. They just need to select the handset, plan and number of their choice by filling an online form. Post the payment transaction, handsets will be delivered to the customer within 24 - 48 hours and the requisite documents for proof of identity will be collected in person. Customers taking advantage of online shopping will also be offered additional talk time, extra messages as well as other freebies. 11

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Disintermediation and re-aggregation: The different features of the online distribution are stated as follows: •

Intermediary becomes redundant as customer buys directly from the firm using web technology.

•

Customization becomes easier and feasible which adds to the customer value.

•

Re-aggregation occurs in the sense that companies today encourage customers to lodge their complaints or send their queries on the net. These are then routed to another site where they are dealt with immediately in a seamless manner. So it helps in improving the overall efficiency of the channel.

For the delivery of the ordered products Virgin Mobile has tied up with Blue Dart.

COMPETITION: Virgin Mobile has entered into a very competitive industry where Airtel, Vodafone and Reliance are the dominant players. Virgin Mobile faces stiff competition from Reliance CDMA phones. Virgin Mobile have taken a ‘hatke’ route and launched the brand in the youth segment. The tie up with Tata Teleservices enables it to fight competition as the network quality of Tata Teleservices was ranked first by DOT. The company is spending huge chunks of money to promote their VAS services and it would be interesting to watch out what Virgin Mobile plans to offer.

CUSTOMER RESEARCH: In order to understand target market’s expectation and virgin customers experience about the product, we have done two different surveys with a sample size 30 each. The questionnaire 12

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(Exhibit 1) was prepared and sent across to the customer online and also the feedback was collected in person. Two different surveys are: 1) Survey of target customers expectation including virgin and non- virgin customers in the

age group 15-25 2) Virgin’s customer survey about product and customer service experience

Analysis of target customer’s expectation survey: In order to find target market’s expectation from the brand, we performed a survey and came up with relevant findings. They are represented in the form of Pie chart (Exhibit 3): 1) 42% of customers rate price and 33% rate mobile set compatibility as first preference while using a mobile service. 2) 10% of customers surveyed were virgin customers where as 21% of them felt Virgin is the most cost effective brand. 3) In terms of cost effectiveness, Virgin stands 2nd with 21% share where as Airtel, Vodafone

and Reliance stood at 1st place with 24% share each. 4) 88% of consumers were aware of paid incoming call facility provided by virgin but only 68% knew about 50 paisa STD plan. 5) 14 % of customers surveyed who were not virgin customers wanted to switch to virgin mobile. 6) 36% of customers did not want to switch to virgin because of holding a non- compatible handset. 7) An important finding was that 12% consumers surveyed did not know about Virgin

mobile service. Analysis of Customer Satisfaction Survey: We conducted a survey in order to find out the customer experience with Virgin mobile and their overall satisfaction level. The data is presented in the form of Pie chart in the Exhibit 2 and analysis is presented below: 13

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1) Most of the customers (80%) feel that the product and service which they are using is reliable and they are very much satisfied with it. 2) It was found that time gap between the services sought and delivered was high. For e.g.

the online orders did not reach on time on many occasions. 3) The quality of the network was found to be very good. Using the bandwidth owned by Tata Teleservices, actually helped Virgin in making its presence in the market. 4) It was also found that the customer care were always available to assist and customers were satisfied with the kind of responses which they got form the staff.

RECOMMENDATIONS: 1) Virgin should try to promote its latest plans like 50 paisa STD calls in advertisements. Making customers aware about latest pricing will increase its market share in terms of cost effectiveness. 2) Virgin should try to tap 14% of customer base who want to switch to virgin but not able to switch because of existing non-compatible handset. 3) Solving existing non-compatible handset problem and better communication to inform latest pricing strategies will lead to substantial increase in consumer base for virgin mobile. 4) In order to enhance customer satisfaction, time gap between services sought and delivered should be minimized.

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EXHIBITS: Exhibit 1 Questionnaire for target customer’s expectation: Please fill this questionnaire and help us in finding target customer’s expectation from the firm. Please select the option which according to you is most suitable: 1. Do you own a virgin mobile connection? a) Yes b) No 2. Which is the most important factor while using a mobile service? a) Price b) Mobile handset compatibility c) Mobile service of friends and relatives d) Free extra services like internet, downloads e) Others 3. Which is the most cost effective brand in mobile service? a) Virgin b) Reliance 15

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c) Tata Indicom d) Airtel e) Vodafone f) Idea g) Bpl h) Don’t know 4. Are you aware of 50 paise national call plan of virgin mobile? a) Yes b) No 5. Are you aware of paid incoming call facility by virgin mobile? a) Yes b) No 6. If not a virgin customer, will you like to switch to virgin? a) Yes b) No c) Can't say 7. Why you do not want to go for virgin mobile? a) CDMA technology b) Limited Handset c) Price d) Switching from existing handset e) Others

Questionnaire for the Virgin Customers: 16

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Please fill this questionnaire and rate Virgin Mobile on the following aspects from 1 to 5, with 5 representing excellent i.e. highly satisfied and 1 being poor i.e. highly dissatisfied. 1. How is the proximity of the service centre? 1

2 3

4

5

2. Is the delivery point user friendly? 1

2 3

4

5

3. How satisfied are you with time gap between services sought and delivered? 1

2 3

4

5

4. How accessible is the customer care on phone? 1

2 3

4

5

5. How well does the customer care respond to the queries of the customer? 1

2 3

4

5

6. How is the Network quality? 1

2 3

4

5

7. The overall satisfaction level with Virgin Mobile? 1

2 3

4

5

Exhibit 2

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Proximity of service center Excellent Poor 7% 3% Very Good 30%

Average 23%

Poor Average Good Very Good Excellent

Good 37%

User friendliness of delivery point Poor 0%

Excellent 33%

Average 7% Good 7%

Poor Average Good Very Good Excellent

Very Good 53%

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Service Time Excellent 3% Very Good 3% Poor 20%

Poor Average Good

Good 47%

Average 27%

Very Good Excellent

Availability of customer care Excellent 13%

Poor 0% Average 7% Good 20%

Poor Average Good Very Good Excellent

Very Good 60%

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Quality of service by customer care Poor 0%

Average 0% Good 10% Very Good 20%

Poor Average Good Very Good Excellent

Excellent 70%

Network Quality Average Poor 0%Good 0% 10% Very Good 17%

Poor Average Good Very Good Excellent

Excellent 73%

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Overall Satisfaction Level Poor 0% Excellent 20%

Average 7% Good 13%

Poor Average Good Very Good Excellent

Very Good 60%

EXHIBIT 3

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REFERENCES: 1. www.virginmobile.in 23

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2. www.tatateleservices.com 3. The Marketing Management Book by Mr.Rajan Saxena 4. Marketing Management by Philip Kotler 5. www.wikipedia.com 6. www.timesofindia.com

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