2008

VIRGIN MOBILE-THINK HAT

KE

MARKETING PROJECT
PREPARED BY:-
9/12/2008
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Why Virgin Mobile

In Indian mobile market, Virgin mobile is a unique player based on its business model and
strategy. It is the only service provider which does not hold any bandwidth and mobile setup
infrastructure but uses Tata Teleservices spectrum and is penetrating market totally on its
branding and marketing strategy. Creating a niche brand and promoting it to specific customer
segment with proper marketing has been key to success for virgin mobile across the globe. So,
from marketing and customer understanding point of view, this is a very unique company to
study.

Understanding Virgin’s business Model

Virgin has promoted itself as the brand for young India, keeping the Indian youth as its target
customer segment. The idea behind targeting this segment can be found inherited in virgin’s
business model. The salient features of Virgin’s business model from customer perspective are:

1) With intensive competition and reducing voice tariffs, the profit margins for voice service
are decreasing day by day. So, the future profit strategy is maximizing profit margins
through data services and it is youth segment which provides maximum data service
revenues.

2) Future projection of increasing young and working population of India as 65% of overall
population by 2020.

3) Increased use of data services in future due to technological advancements.

So, in mobile sector where all other players are trying to provide similar service to different
customer segments, virgin is targeting specific segment with tailor made plans keeping its long
term goals in mind.

Communicating the Virgin Brand:

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Virgin mobile has communicated itself as the youth oriented brand of India through various
communication channels. They are:

a) “Think Hat ke” advertisement campaign targeting youth

b) Red and vibrant website look with youth focused language

c) Tailor made plans for young segment

d) Getting paid for incoming calls: a source of recharge option for youth

Fig 1. Virgin Mobile website depicting youth flavor

The Target Market:

The Virgin Mobile Brand targets Indian youth aged between 14 and 25 years. There are 215
million people in this age group and is expecting to add another 50 million new mobile phone

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subscribers in next three years. Though young subscribers constitute only 30 percent of the total
mobile subscribers, they contribute more than 50 percent of the revenues of telecom industry. By
2010 this group is expected to contribute 60-70 percent of total revenues.

The distinct mobile phone usage habits of the young users provide a huge advantage to Virgin
Mobile. They make more and longer out-bound voice calls, which means huge billing potential
for service providers. The usage of SMS, data services in the form of mobile internet, mobile
shopping and other value added services like ring tones, caller tunes, wallpapers, etc are very
high in this group which again provides a huge opportunity to be tapped. Moreover young users
have a short handset upgradation cycle-under 12 months as compared to two years for people
above 25 years of age.

Customer acquisition and retention strategies

The company knows that they are trying to position themselves into a very established and
competitive market. They understand the fact that they cannot start making profit from day one
neither they have plans for it; they anticipate to achieve a subscriber base of 5 million in next
three years and will make profit afterwards they will be able to break even in three year or so.

According to the patron, Sir Richard “We want to deliver a more tailored and relevant offering
for a single segment.” Company targets only 10% of the above mentioned segment and have
plans to acquire and retain them by various innovative propositions, some of them are-

1) Providing services which were not offered so far

a) Get paid for incoming calls.

b) 50 paisa for all calls across the country.

c) A brand truly meant for the young India which is reflected at each & every touch point.

d) Extensive data service offers in the form of vbytes.

e) Excellent value added plans.

f) Go online facility for enquiry, purchasing phone, recharging and everything.

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g) One touch VAS access from every virgin mobile.

2) Providing services which others are not providing meticulously

a) Easy to change the handset from a wide range of handset providing at very reasonable
prices.

b) Boring customer care services telling you are in queue.

c) One customer care officer dedicated for all queries of one customer leading to transparency.

d) No jammed or bad network coverage.

e) Tailor made customized plans without any hidden charges.

f) No monthly bills.

Value Creation Through Product Design

Various steps that Virgin is taking to add value to the customer are on price, quality, technology
and social front. Company is providing the best prices in whichever plan you go, quality of
signals is not only comparable but better than most of the service providers, on technology front
it is the first in India to go for one-touch VAS access from every Virgin Mobile.

Marketing Mix

The marketing mix is the combination of marketing activities that an organisation in so as to

best meet the needs of its targeted market.

Product: Virgin Mobile offers six RUIM enabled handsets with colour screen, FM radio and
include one touch access for Vbytes-Virgin Mobile’s VAS portal.

Price: The handsets are priced in the range of Rs2000-5000.The call tariff is very nominal which
is 50p per call both local and STD subject to terms and conditions.

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Place: The focus of Virgin Mobile on customer acquisition has so far been in the top 60 cities of
India and is set to extend to more cities. The product is available across a host of modern retail
outlets The Mobile Store, Hotspot, RPG Cellucom, Croma,etc.

Promotion: Virgin Mobile entered the Indian market in grand style. The company surprised the
readers of a leading Indian daily when all the headlines on the front page were in the colour red.
Virgin Mobile has used a very vibrant colour to relate itself with the targeted market. Apart from
traditional media, internet and outdoor youth centric advertising has been used wisely to attract
the targeted audience.

Distribution Channel:

Virgin mobile makes its products available to the customer by both retail stores and online
distribution.

Selective Distribution:

Virgin mobile has selected some retail outlets to distribute its products. It does not follow the
strategy of intensive and exclusive distribution. The strategy of selective distribution helps the
company gain optimum market coverage and more control but at a lesser cost than intensive
distribution.

Virgin Mobile launched a new mobile handset vBling on 7 July 2008. vBling is available across
15,000 outlets nationally and over 1000 modern retail outlets including The Mobile Store,
Univercell, Croma, Convergem, Big C, Vishal Mega Mart, Vijay Sales and Sangeetha to name a
few. Apart from this, the handset will also be available in 34 kiosks in high traffic malls across
the country.

Online Distribution:

Virgin Mobile India has announced that customers can now buy Virgin Mobile branded
products and services online. They just need to select the handset, plan and number of their

choice by filling an online form. Post the payment transaction, handsets will be delivered
to the customer within 24 - 48 hours and the requisite documents for proof of identity will

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be collected in person. Customers taking advantage of online shopping will also be offered
additional talk time, extra messages as well as other freebies.

Disintermediation and re-aggregation: The different features of the online distribution are
stated as follows:

• Intermediary becomes redundant as customer buys directly from the firm using web
technology.
• Customization becomes easier and feasible which adds to the customer value.
• Re-aggregation occurs in the sense that companies today encourage customers to lodge
their complaints or send their queries on the net. These are then routed to another site
where they are dealt with immediately in a seamless manner. So it helps in improving the
Overall efficiency of the channel.

For the delivery of the ordered products Virgin Mobile has tied up with Blue Dart.

COMPETITION

Virgin Mobile has entered into a very competitive industry where Airtel, Vodafone and Reliance
are the dominant players. Virgin Mobile faces stiff competition from Reliance CDMA phones.
Virgin Mobile have taken a ‘hatke’ route and launched the brand in the youth segment. The tie
up with Tata Teleservices enables it to fight competition as the network quality of Tata
Teleservices was ranked first by DOT. The company is spending huge chunks of money to
promote their VAS services and it would be interesting to watch out what Virgin Mobile plans to
offer.

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CUSTOMER RESEARCH

In order to understand target market’s expectation and virgin customers experience about the
product, we have done two different surveys with a sample size 30 each. They are

1) Survey of target customers expectation including virgin and non- virgin customers in the
age group 15-25

2) Virgin customer survey of product and customer service experience

1) ANALYSIS OF TARGET CUSTOMER’S EXPECTATION:

In order to find target market’s expectation from the brand, we performed a survey and came up
with relevant findings. They are:

1) 78% and 52% of customers rate price as first priority and mobile set compatibility as
second respectively while using a mobile service.

2) 10% of customers surveyed were virgin customers where as 21% of them felt Virgin is
the most cost effective brand.

3) In terms of cost effectiveness, Virgin stands 2nd with 21% share where as Airtel,
Vodafone and Reliance stood at 1st place with 24% share each.

4) 88% of consumers were aware of paid incoming call facility provided by virgin but only
68% knew about 50 paisa STD plan.

5) 14 % of customers surveyed who were not virgin customers wanted to switch to virgin
mobile.

6) 36% of customers did not want to switch to virgin because of holding a non- compatible
handset.

7) A major finding was that 12% consumers surveyed did not know about Virgin mobile
service.

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2) Analysis of Customer Satisfaction Survey

We conducted a survey in order to find out the customer experience with Virgin mobile and
their overall satisfaction level. The data is presented in the form of Pie chart in the exhibit
and analysis is presented below:

1) Most of the customers (80%) feel that the product and service which they are using is
reliable and they are very much satisfied with it.

2) It was found that time gap between the services sought and delivered was high. For e.g.
the online orders did not reach on time on many occasions.

3) The quality of the network was found to be very good. Using the bandwidth owned by
Tata Teleservices, actually helped Virgin in making its presence in the market.

4) It was also found that the customer care were always available to assist and customers
were satisfied with the kind of responses which they got form the staff.

RECOMMENDATIONS:

1) Virgin should try to promote its latest plans like 50 paisa STD calls in advertisements.
Making customers aware about latest pricing will increase its market share in terms of cost
effectiveness.

2) Virgin should try to tap 14% of customer base who want to switch to virgin but not able
to switch because of existing non-compatible handset.

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3) Solving existing non-compatible handset problem and better communication to inform

latest pricing strategies will lead to substantial increase in consumer base for virgin mobile.

4) In order to enhance customer satisfaction, time gap between services sought and
delivered should be minimized.

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