1) Do you agree with Virgin Mobile’s target market (14 to 24-year-olds) selection? What are the risks associated with targeting this segment? Why have the major carriers been slow to target this segment?
As a group, we all agreed to this TM. We find this strategy suit extremely well with virgins advertising budget, as niche market will mean that advertising can be specifically targeted towards the target market rather than as a whole. Specific media vehicles can be used such as interactive marketing and facebook rather than advertising in newspaper for instance. -
In terms of the risk associated with this TM, we concluded that virgin is very ‘gutsy’ with their move. Not only that they are narrowing their potential market, but are risking the virgin image in the U.S. For example, individuals who find the whole ‘VirginXtras’ as a gimmick rather than a value proposition, or even associating Virgin branding with teenage characteristics; unreliable, unpredictable, experimental. In addition, due to the nature of teenagers being ‘tech-savvy’ and ‘easily bored’ increases the level of risks associated with this market. Not only that is costly for virgin to retain their customer (further more with handset subsidies), these segment possesses a great chance of trialling other services or even moving from one provider to another.
How can yield management be applied to mobile phone services?
Relating back to our textbook texts above, we brought in the basic economic theory of supply and demand to Yield Management, as we feel that it is important to do so. First of all, during low demand situations (where we have excess line capacity) Virgin should stimulate current demand by creating additional value proposition in the forms of promotions in such a way that it will stimulate demand, thus increasing sales and at the same time eliminating resource wastage. Promotion can be in a form of product bundling, such as; faceplate+credit+free sms.
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