Virgin Mobile Us-edited

Presented by Group 6 Ankit Dokania Dilip Kumar Md. Wasim Akram

Preetam Bose Santosh M.

Utkarsh Chandra

Virgin : Vision Statement “Virgin is about doing things that really work, not just looking the part.” Sir Richard Branson Founder Chairman Virgin Group

Company Background • Started by Sir Richard Branson as a Mail Order Delivery company in the UK.

In the summer of 2001, Virgin, began pursuing its plan to enter the U.S. mobile phone market One of Britain’s top 3 most recognized brands Already over 200 brand extensions

Brand Extensions

US Launch Virgin forecasted that the US market in the age group of 15-29 was not penetrated properly. Their decision to target Niche  Advertise in youth-oriented publications and television networks using a limited budget  Use catchy advertisements  Offer features appealing solely to the identified niche E.g. – ring tones, text messaging, and real-time billing

Sales-oriented pricing objectives  Begin with sales maximization to gain U.S. recognition and move toward a more market-based strategy

Problem /Situation • Develop a pricing strategy that would secure Virgin Mobile a place in the saturated USA mobile communications industry. What strategy should Virgin mobile USA adopt that will attract and retain subscribers?

Competition • USA mobile communication industry : Cingular, Verizon, Alltel, Sprint, AT&T competes nationally in addition to other regional providers.

Options at hand : Go with the Flow Status Quo Pricing  Simplest price strategy  Profit will be higher because middle man can be cut out (high commission sales staff)  Primary competitive aspect will be differentiated applications (MTV) and superior customer service

Consider offering better off peak hours and fewer hidden fees Consider alternative advertising to promote product Can Virgin survive in an already saturated industry with this strategy?

Options at hand : Price Below Penetration Pricing - adopt similar structure as current industry leaders, but price below competition Keep contracts (buckets of minutes) and volume discounts, but attract customers concerned about price differential Better for targeting a mass market; Virgin is focusing on a niche

Cheaper, plain and simple Target market only uses 100-300 minutes per month, so they get the most for their money

Offer better off peak hours and fewer hidden fees

•

Options at hand : Think Hatke! Consider role of contracts – Keep, shorten or eliminate altogether

post paid the way to go? • Is– Consider prepaid service (customers purchase number of minutes/airtime in advance), could –

mean high churn rates Cost may be higher or lower per minute than competitors

subsidies risky, but may be worth it • Handset – Initial phone cost can be expensive

– Consider increasing subsidy to lessen cost for younger consumers

hidden fees and off-peak hours • Revisit – “…Don’t need a math degree to figure it out.”

off-peak/peak hour differentiation – Eliminate hidden fees and roll into minute price or make monthly fees same for everyone and a – Eliminate set amount

The Focus • Target Market : Generation “Y”

• Redefine the value proposition – Introduce “Pay As You Go!” (i.e. Pay per Pulse)

• Concentrate on : – Quality of service – Lower cost for first time buyers

The Focus continues… • Avoid technology trends – Ideas to become the coolest phone in the market – Realize what customer wants

• Ensure and Maintain available network – Form long-term relationship with partners – Invest in infrastructure and competent customer service

• Review value added propositions – Make the phone readily available OTC – Make the phone another consumer utility electronic device

Recommendations • Eliminate Contract-Based Subscription

– Target market does not have available funds/credits – Subscribers cannot commit to high dollar figures

• Implement promotional discounts to secure more repeat customers

Recommendations_contd •

Offer only prepaid service – Prepaid model is used in Finland, UK, Japan – Penetration for 15-29 year olds (Virgin’s target market in US) in those countries is two to three times as high as current US penetration for same age groups – Make purchasing airtime easy and convenient – Offer everywhere – Market this feature to parents – Sadly, the power to buy is vested in them!

Recommendations_contd •

Subsidize price of phones to encourage initial purchase

– Buy Low Cost and Sell Low Cost

Kyocera 2119 The Party Animal

Kyocera 2255 The Supemodel

Recommendations_contd • Eliminate peak and off peak hour structure – Make process simple, unique and trendy

• Roll fees into airtime charges – Introduce flat rates, same honest charges all the time. – Rolling fees into airtime will increase minute rates, but still may be at par or only slightly above competitors – The Company will still have competitive advantage because of added features and ease of use

Conclusion • Pricing option #3(a prepaid service plan) should be pursued • What if!! Competitors create their own prepaid plans • However, if Virgin creates positive image!!! – They should be able to engender customer loyalty

• Understand teenagers and young adults & be in touch with their culture • Potential lies in Virgin’s image and Sir Richard Branson’s antics

The Journey So Far…