Virgin

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Virgin Mobile

Target
‡ To create an appealing offer that would take off in a saturated market. ‡ 1 million total subscribers by end of year 1 ‡ 3 million subscribers by year four.

Company
‡ Was one of the top three most recognized brands in Britain ‡ Most brand extensions in past 20 yrs ‡ Values :
± Believe In making a difference ± Move in areas where the customer has traditionally received a poor deal

‡ In US it launched the mobile operations utilizing the MVNO (mobile virtual network operator) ‡ 50-50 JV with Sprint, where Virgin Mobile USA s services hosted on Sprint s PCS network

The U.S. Cellular Market
‡ At end of 2001 U.S. had 6 national carriers and a number of regional and affiliate providers ‡ Industry penetration was close to 50% ‡ About 130 million subscribers ‡ Market was considered to have matured ‡ Consumer segment aged 15-29 penetration was significantly low ‡ Big players didn t target this segment
± Young Consumers often had poor credit quality

The U.S. Cellular Market (cont.)
‡ Average cost to acquire a customer was roughly $370 ‡ Avg. monthly cell phone bill for national carriers was $52 (417 minutes of use) ‡ Cost to serve a customer was roughly $30 a month ‡ Carriers tended to be wary of acquiring low value subscribers

Virgin s Target
Consumers aged 15-29 Underserved by existing carriers They have specific needs which were not met More open to new things like text messaging, downloading information using their phones ‡ More likely to use ringtones, faceplates, graphics etc ‡ Phones are more than a tool ‡ ‡ ‡ ‡
± A fashion Accessory ± A personal statement

VirginXtras
‡ Delivery of content, features and entertainment ‡ Company signed an exclusive, multiyear content and marketing agreement with MTV ‡ Subscribers access to MTV branded accessories and phones as well as branded content like graphics, ringtones, text alerts and voicemail ‡ Company received promotional airtime on MTV s channel and website ‡ Subscribers could use their phones to vote for shows on MTV

Cont.
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Text Messaging Online Real Time Billing Rescue Ring Wake-Up Call Ring Tones Fun Clips The Hit List Music Messenger Movies

Channel Strategy of Virgin
Distribute in channels where youth shop Kids are used to buying consumer electronic products Clamshell, clear see-through package Bundled with decorated interchangeable faceplates Starter packs easily visible on large point of sale displays ‡ Company entered into distribution agreements with Target and Best Buy (commission $30 per phone) ‡ Company expected its phones to be available at more than 3000 retail U.S. outlets by their service launch in July 2002 ‡ ‡ ‡ ‡ ‡

Advertising
‡ Advertising budget approx. $ 60 million ‡ Campaign to be quirky, offbeat and different from competitive ads ‡ To feature teens ‡ Would make use of strange, indecipherable metaphors ‡ Advertorials for Youth Magazine ‡ High-Profile street marketing events

Pricing Decision
‡ Market research among target segment revealed:
± Audience did not trust the industry pricing plans ± Young people know there are lot of hidden charges

‡ Pricing as an opportunity to differentiate from competition ‡ 90% subscribers in U.S. had contractual agreements with cellular providers ‡ Industry making money from customer confusion ‡ On-Peak and Off-Peak minutes have to be in the right mix ‡ Customers never selected the right plans according to their usage

Objectives
‡ Make sure
± prices are competitive ± Company can make money ± It should not trigger off competitive reaction

Option 1- Clone Industry Pricing
‡ Pricing message have to be relatively simple ‡ Better off-peak hours ‡ Fewer hidden fees

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