Case Analysis for Virgin Mobile

Powerful Essays
Virgin mobile pricing Document Transcript
VIRGIN MOBILE USA – ‘FIRST PRICE’ STRATEGY (An analysis of the Pricing Decision alternatives that Virgin has to undertake to create an alternate customer segment and monetize their buying power)VIRGIN XTRAS – OVERVIEWThe Virgin Mobile USA service involved content, features and entertainment, called “Virgin Xtras”.Collaboration with MTV networks as it was the most recognized youth brands in the country and unparalleled reach forthe under-30 market segment: Exclusive, multiyear content and marketing agreement. MTV network to deliver music, games and other MTV-, VH1-, and Nickelodeon based content to Virgin Mobile subscribers. Subscribers would have access to MTV- branded accessories and phones, graphics, ring tones, text alerts and voice mails. Promotional airtime on MTV’s channels and website. Virgin mobile subscribers to vote for their favorite videos on a few MTV shows.Other Virgin Mobile services that aimed to appeal to the youth market, generate additional usage and create loyaltywere: Text Messaging Online Real- Time Billing Rescue Ring Wake- Up Call Ring Tones Fun Clips The Hit List Music Messenger MoviesTraditional Channel Virgin’s ChannelServices sold at own proprietary retail outlets, kiosks in Services sold where youth shop especially consumermalls, high-end electronic stores, speciality stores etc. electronic goods in stores like Target, Sam Goody music stores, Best Buy.High-touch sales people who were paid high sales Products packaged in consumer electronics packaging, placedcommission to ensure hands-on service. on a bright red clamshell, which gave it visibility and no salesperson was required.Cost per handset from Nokia, Motorola, Samsung etc. - Cost per handset from Kyocera- $60-$100. Lesser subsidy$150-$300. Entailed substantial subsidy from the entailed by the company.handset makers, a component of acquisition cost.Distributors’ industry avg. Commission- $100/phone Distributors commission- $30/phone.The



References: HBR case study “Virgin Mobile USA: Pricing for the Very First Time”• Wikipedia.com

You May Also Find These Documents Helpful

  • Powerful Essays

    analyze the best possible pricing strategy for the Virgin Mobile venture into the United States. 1.2 Situation Virgin is a global company that has 200 corporate entities involved in everything from planes and trains to beverages and cosmetics. The newest addition is the Virgin Mobile USA entity, which was created after Virgin was able to successfully penetrate the U.K. cellular market. However, the company was not so successful with the mobile services in other parts of the world. The company has…

    • 1586 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Virgin Mobile has strategically shaped its marketing mix to appropriately target the younger demographic. First, lets look at it’s the product element. The younger demographic is more open to new things like text messaging, downloading information from their phones, ring tones, faceplates, graphics, having access to popular entertainment on their phone, etc. For younger people, phones are less of a tool and more of a fashion accessory or personal statement. To appeal to these needs, Virgin Mobile…

    • 783 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Considering the youth that Virgin Mobile is targeting, we conclude that the best strategic decision will be to establish a new plan that offers no contract requirements, lower than industry average minute prices, fixed minute rates with no additional or hidden fees, prepaid plans internet and text messaging included and subsidies of around 40 dollars per cellphone. This new plan is necessary to differentiate Virgin Mobile from its competitors and retain market share. By having the new venture with…

    • 639 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Introduction: Virgin Mobile is a successful company based in the U.K. The company is well known for its brand extension and was the first company to introduce the Mobile Virtual Network Operator (MVNO) in the U.K., where they leased network space form another firm instead of running a network in-house and as a result avoiding infrastructure and large fixed cost. The company was well known for its hip and trendy position in the U.K., and catered to the youth market. Although they have had a couple…

    • 2671 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    Virgin Mobile

    • 1524 Words
    • 7 Pages

    Virgin Mobile Paper A Case Study Analysis Presented to: 1 I. CASE SUMMARY Virgin, a U.K. based company led by Sir Richard Branson, has had a history of brand extension resulting to 200 different corporate entities. One of which is Virgin Mobile which has decided to expand to USA based on their success in the U.K. market. Dan Schulman, Virgin Mobile USA CEO, is tasked to lead the expansion to the U.S. and has decided to focus on consumers aged 15-29 given that there is low penetration…

    • 1524 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    Virgin Mobile

    • 953 Words
    • 4 Pages

    There is nothing that will prevent Virgin from competing to an untapped market. • Threat of Substitutes – Weak o There are very few substitutes available that offer mobile and immediate communication. Alternative like pagers are outdated & this target market cannot afford sophisticated PDA service. • Degree of Rivalry – Strong o Competitors have brand recognition in the US and have the majority of the market share. Financial Analysis: Initially, Virgin may have no great profits since…

    • 953 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    Virgin Mobile

    • 707 Words
    • 3 Pages

    1. Given Virgin Mobile’s target market (14 to 24-year-olds), how should it structure its pricing? The case lays out three pricing options. Which option would you choose and why? In designing your pricing plan, be as specific as possible with respect to the various elements under considerations (e.g., contracts, the size of the subsidies, hidden fees, average per-minute charges, etc.). I believe Virgin Mobile has two options. The first option is the obvious for their target market and any new…

    • 707 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Virgin Mobile Case

    • 7410 Words
    • 30 Pages

    Netherlands. The significant contributions of Jan Peter van der Hoek, Ewald Bruggeman, and Erwin van den Broek in gathering and analyzing case information are gratefully acknowledged. Please note that we prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. We have disguised some case information. Send correspondence to: James A. Narus Babcock Graduate School of Management Wake Forest University Suite 150, One…

    • 7410 Words
    • 30 Pages
    Better Essays
  • Good Essays

    Virgin Mobile

    • 1094 Words
    • 5 Pages

    potential competition which may offer a much better deal. Virgin Mobile became aware of this cellular anarchy and had to decide what pricing strategy would best attract their target niche and offer them unbeatable value so that competitors could not enter into the same market easily. Alternative 1 -Clone the Industry Prices The first pricing strategy Virgin mobile considered was to copy the current industry pricing structure. The angle was that Virgin was to offer the same prices that of their competitors…

    • 1094 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Virgin Mobile - Case Study

    • 1052 Words
    • 5 Pages

    Problem Statement Virgin Mobil is venturing into the US market and their launch date is July 2002. The company’s goal is to have one million total subscribers by the end of the first year and three million by year four. In order to achieve their goals, the company has to come up with a competitive pricing strategy to attract and retain customers in an already mature market. Recommended course of action Despite a mature US market, the cellular service industry has a market penetration of only…

    • 1052 Words
    • 5 Pages
    Good Essays