Virgin Mobile Usa
Virgin Mobile USA: Pricing for the very first time
Executive Summary
Virgin is one of the world’s most recognized and respected brands. The company was established by Sir Richard Branson in 1970 and has been expanded into different areas such as travel, entertainment and lifestyle.
Dan Schulman was appointed as CEO of Virgin Mobile USA in 2001, with 18 years experiences in telecom industry, Dan was confident that he would help Virgin to achieve 1 million subscribers by the end of first year. After the team developed VirginXtras as the key strategy to enter youth market, the key decision was to determine the pricing strategy.
U.S. Mobile Market and Virgin Mobile USA
The U.S. mobile market was saturated at the end of 2001, it comprised six major carriers and other regional and affiliate providers. Industry penetration rate was up to 50% and it was considered as a mature market.
However, Virgin identified a niche market where the customer penetration was much lower among consumers aged from 15 to 29. In particular, this market seemed untapped by big players due to poor credit of young consumers.
The average cost of acquiring a customer was very expensive and it was approximately $370. Therefore, big players did not believe it was worthwhile especially young consumers might not even use phone regularly. In addition, the average mobile phone bill for the national carriers was $52 and the cost of serving a customer was approximately $30 per month, so carriers tend to be cautious about acquiring low-value subscribers.
While young customers may not use phone on a frequent basis, they do use other functions such as text, download music and new ring tones etc. Mobile phone is more than a tool for them, and it is a fashion accessory and a personal statement.
Solutions
Having identified this special needs, Virgin Mobile USA team developed a value proposition for virgin mobile that includes the delivery of content, features, and
Executive Summary
Virgin is one of the world’s most recognized and respected brands. The company was established by Sir Richard Branson in 1970 and has been expanded into different areas such as travel, entertainment and lifestyle.
Dan Schulman was appointed as CEO of Virgin Mobile USA in 2001, with 18 years experiences in telecom industry, Dan was confident that he would help Virgin to achieve 1 million subscribers by the end of first year. After the team developed VirginXtras as the key strategy to enter youth market, the key decision was to determine the pricing strategy.
U.S. Mobile Market and Virgin Mobile USA
The U.S. mobile market was saturated at the end of 2001, it comprised six major carriers and other regional and affiliate providers. Industry penetration rate was up to 50% and it was considered as a mature market.
However, Virgin identified a niche market where the customer penetration was much lower among consumers aged from 15 to 29. In particular, this market seemed untapped by big players due to poor credit of young consumers.
The average cost of acquiring a customer was very expensive and it was approximately $370. Therefore, big players did not believe it was worthwhile especially young consumers might not even use phone regularly. In addition, the average mobile phone bill for the national carriers was $52 and the cost of serving a customer was approximately $30 per month, so carriers tend to be cautious about acquiring low-value subscribers.
While young customers may not use phone on a frequent basis, they do use other functions such as text, download music and new ring tones etc. Mobile phone is more than a tool for them, and it is a fashion accessory and a personal statement.
Solutions
Having identified this special needs, Virgin Mobile USA team developed a value proposition for virgin mobile that includes the delivery of content, features, and