Presented by Group 6

Ankit Dokania Preetam Bose

Dilip Kumar Santosh M.
Md. Wasim Akram Utkarsh Chandra
Virgin : Vision Statement

“Virgin is about doing things that

really work, not just looking the
part.”

Sir Richard Branson

Founder Chairman
Virgin Group
 Company Background
• Started by Sir Richard Branson as a Mail
Order Delivery company in the UK.

In the summer of 2001, Virgin, began

pursuing its plan to enter the U.S. mobile
phone market
One of Britain’s top 3 most recognized brands
Already over 200 brand extensions
Brand Extensions
 US Launch
Virgin forecasted that the US market in the age group
of 15-29 was not penetrated properly.

Their decision to target Niche

 Advertise in youth-oriented publications and television
networks using a limited budget
 Use catchy advertisements
 Offer features appealing solely to the identified niche
E.g. – ring tones, text messaging, and real-time billing

Sales-oriented pricing objectives

 Begin with sales maximization to gain U.S. recognition and
move toward a more market-based strategy
 Problem /Situation
• Develop a pricing strategy that would secure Virgin
Mobile a place in the saturated USA mobile
communications industry. What strategy should Virgin
mobile USA adopt that will attract and retain
subscribers?

Competition
• USA mobile communication industry : Cingular, Verizon,
Alltel, Sprint, AT&T competes nationally in addition to
other regional providers.
 Options at hand : Go with
the Flow
Status Quo Pricing
 Simplest price strategy
 Profit will be higher because middle man can be cut out
(high commission sales staff)
 Primary competitive aspect will be differentiated
applications (MTV) and superior customer service
Consider offering better off peak hours and fewer
hidden fees
Consider alternative advertising to promote
product
Can Virgin survive in an already saturated industry
with this strategy?
 Options at hand : Price
Below
Penetration Pricing - adopt similar structure as current
industry leaders, but price below competition
Keep contracts (buckets of minutes) and volume discounts, but
attract customers concerned about price differential
Better for targeting a mass market; Virgin is focusing on a niche

Cheaper, plain and simple

Target market only uses 100-300 minutes per month, so they get
the most for their money

Offer better off peak hours and fewer hidden fees

 Options at hand : Think
Hatke!
Consider role of contracts
• – Keep, shorten or eliminate altogether

• Is– Consider
post paid the way to go?
prepaid service (customers purchase number of minutes/airtime in advance), could
mean high churn rates
– Cost may be higher or lower per minute than competitors

• Handset subsidies risky, but may be worth it

– Initial phone cost can be expensive
– Consider increasing subsidy to lessen cost for younger consumers

• Revisit hidden fees and off-peak hours

– “…Don’t need a math degree to figure it out.”
– Eliminate off-peak/peak hour differentiation
– Eliminate
set amount
hidden fees and roll into minute price or make monthly fees same for everyone and a
 The Focus
• Target Market : Generation “Y”

• Redefine the value proposition

– Introduce “Pay As You Go!” (i.e. Pay per Pulse)

• Concentrate on :
– Quality of service
– Lower cost for first time buyers
 The Focus continues…
• Avoid technology trends
– Ideas to become the coolest phone in the market
– Realize what customer wants

• Ensure and Maintain available network

– Form long-term relationship with partners
– Invest in infrastructure and competent customer service

• Review value added propositions

– Make the phone readily available OTC
– Make the phone another consumer utility electronic device
 Recommendations

• Eliminate Contract-Based Subscription

– Target market does not have available funds/credits
– Subscribers cannot commit to high dollar figures

• Implement promotional discounts to secure more repeat customers

Recommendations_contd

• Offer only prepaid service

– Prepaid model is used in Finland, UK, Japan – Penetration

for 15-29 year olds (Virgin’s target market in US) in
those countries is two to three times as high as current
US penetration for same age groups
– Make purchasing airtime easy and convenient – Offer
everywhere
– Market this feature to parents – Sadly, the power to buy
is vested in them!
 Recommendations_contd
• Subsidize price of phones to encourage initial purchase
– Buy Low Cost and Sell Low Cost

Kyocera 2119 Kyocera 2255

The Party Animal The Supemodel
Recommendations_contd
• Eliminate peak and off peak hour structure
– Make process simple, unique and trendy

• Roll fees into airtime charges

– Introduce flat rates, same honest charges all the time.
– Rolling fees into airtime will increase minute rates, but still
may be at par or only slightly above competitors
– The Company will still have competitive advantage because of
added features and ease of use
 Conclusion
• Pricing option #3(a prepaid service plan) should be
pursued
• What if!! Competitors create their own prepaid plans

• However, if Virgin creates positive image!!!

– They should be able to engender customer loyalty

• Understand teenagers and young adults & be in touch

with their culture
• Potential lies in Virgin’s image and Sir Richard Branson’s
antics
The Journey So Far…