Virgin Mobile Case Study

Topics: Price, Economics, Cost Pages: 2 (312 words) Published: July 15, 2013
Case Study :: Virgin Mobile : First time Pricing

Professor : Dr. Atish

Group members :
Prathmesh Thergaonkar
Samriddhi Sharma
Sibi Saseendran
Divyashu Garg

Case :

Issues implementing stratergy 1
:Is highly inaffective for a new entrant and just a service diffrentiation at same cost will not have customer moving to virgin at that larger no : Same cost will not help target the required market

Issue implementing Stratergy 2
:High risk factor but will give out a setteled chunk in market in long run :High intial advertising cost
:This may totally fail as players with larger chunks may reduce cost that will remove their edge :Not very much into product diffrentiation
:Still existance of contracts
:Losing focus on target segment
:Overall cost is not getting reduced by that margin (Approx 10$ ) which is not a big amount

Advantages of Stratergy 3

·If the contracts are done away with, this will ensure more loyalty of the target segment as the majority of them are not credit worthy. ·The positioning of Virgin Mobile USA and its collaborations with partners like MTV will attract more customers which are loyal. ·The cost of acquisition of a customer comprises of advertisement, sales cost and subsidy given. Since these costs are much lower than the other competitors, they can price themselves lower than competitors. ·They can also be transparent in their cost structure, eliminating hidden costs .

LTV Post paid : LTV = US$ {(22*12)/(1-0.8+0.05) } - 360 =550$

LTV Prepaid : LTV = US$ {(20*12)/(1-0.9+0.05) } - 360 = 1240$

Hence company should venture into differential pricing if at all it wants to deviate. But considering the high acquisition turnover time and e can see that even with modest assumptions, the LTV is maximized for Pre paid , hence the recovery time of almost 29 months, it is a risky strategy because of very high mobility in the targeted segment.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Virgin Mobile
  • Virgin Mobile Case Study Essay
  • Virgin Mobile Case Analysis Essay
  • Virgin Mobile Case Analysis Essay
  • Virgin Mobile Harvard Case Essay
  • Virgin Mobile USA Case Study Analysis Essay
  • Virgin Australia Case Study Essay
  • Case Study of Virgin Group Essay

Become a StudyMode Member

Sign Up - It's Free