Virgin Mobile

Good Essays
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 product entering a saturated market, the pricing should be low if not the cheapest product out in the market. This age group (14-24 year olds) does not have a lot of spending money, if it is their own, or the parents’ do not want to pay a huge phone bill. The second pricing structure that would appeal to Virgin Mobile is pricing their product in the middle or average of the industry standard. For example, if the industry low is $50 to a high of $250 then Virgin Mobile should price itself around $150. Option three is titled “A Whole New Plan.” The idea behind it is starting afresh and coming up a different pricing structure that is different from everything out on the market now. Some specifics Dan Schulman discussed that would be incorporated into this option would be: no contracts, prepaid compared to post-paid, no hidden fees, and off-peak hours. Prepaid vs. post-paid minutes is another important variable when considering option three. The consumers might be occasional users and this quality would be ideal for them. Virgin Mobile’s solution to hidden fees is simple, eliminate all hidden fees. This will create the image of “what you see is what you get,” which will help attain more of the youth market and even some unhappy customers of their competitors.

2. How confident are you that the plan you have designed will be profitable? Provide evidence of the financial viability of your pricing strategy.

I am very confident the plan I have designed will be profitable. The

You May Also Find These Documents Helpful

  • 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

    • 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
  • Satisfactory Essays

    Virgin Mobile

    • 746 Words
    • 3 Pages

    1 AEM 4160: STRATEGIC PRICING PROF.: JURA LIAUKONYTE VIRGIN CELL CASE: EXCERCISES Pricing Structure from the Carrier Perspective ¨ Contracts: ¤ ¤ ¤ Annual churn rate WITH contracts Annual churn rate WITHOUT contracts The difference: =2% * 12 months = 24% (p.8) =6% * 12 months = 72% (p.8) 72% - 24% = 48% Take AT&T example: customer base = 20.5 million If AT&T abandons the contract based plan how many new customers would it need to acquire to offset customers from an…

    • 746 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    A Report on Virgin Mobile

    • 1815 Words
    • 8 Pages

    Virgin Mobile India-Think Hat Ke Vision To be the favourite mobile service of India’s youth Company Overview Virgin Group, Ltd. operates as a venture capital company. The company engages in various businesses, including mobile telephony, travel and tourism, financial services, leisure and pleasure, transportation, social and environment, music, holidays, shopping, media, publishing, and retailing. It has operations in Africa, Asia, Australia, Canada, Europe, the United Kingdom, and the United…

    • 1815 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    Virgin Mobile Usa

    • 1643 Words
    • 7 Pages

    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…

    • 1643 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Virgin Mobile and Market

    • 888 Words
    • 4 Pages

    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…

    • 888 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Virgin Mobile Usa

    • 2359 Words
    • 10 Pages

    Case Analysis: Virgin Mobile USA What we are analyzing here is pricing of a service in a market which is saturated, as it has reached maturity, is highly capital intensive and in which a large amount of competition prevails. Virgin however is a known brand name with an extremely diversified portfolio. It has experimented successfully with the telecom business in the UK but failed in Singapore. It now targets the USA market; the problems before it are to: come up with an appealing offer and ensure…

    • 2359 Words
    • 10 Pages
    Powerful Essays
  • Better Essays

    Virgin Mobile Company Analysis Critically analyse and evaluate the macro environment in which Virgin Mobile (VM) operates. What do you believe to be the key drivers affecting the mobile segment in the UK? Virgin Mobile is part of Virgin Group Limited, a venture capital conglomerate founded by British business tycoon Sir Richard Branson. Virgin Mobile was the first Mobile Virtual Network Operator which launched in United Kingdom in 1999 as a joint venture between T-Mobile and Virgin Group. This means…

    • 813 Words
    • 3 Pages
    Better 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