Virgin Mobile USA: Pricing for the Very First Time - CASE STUDY Kiran Chimmiri
Virgin is a U.K-based company led by Sir Richard Branson and is one of the three most recognized brands in Britain. Dan Schulman has been appointed CEO of the Virgin Mobile USA and is now trying to determine what pricing strategy would be most efficient in attracting and sustaining customers in the USA. There are several other decisions which also need to be made, such as unique features Virgin mobile can offer to differentiate from their competition, channels to use in order to sell their product and advertising strategy to market the product most efficiently. The company had couple of failures in the past in MVNO and so is more keen in building a robust strategy to venture into the US market. The key issue for Virgin Mobile USA is to select a pricing strategy for market penetration. There are 3 alternatives provided in regards to the key decision: Clone Industry Prices, Price below the Competition & A Whole New Plan.
Analysis and Evaluation:
The Company decided to target the market which is underserved i.e., in the 15 to 29 age group. For this the company analyzed the strategic issues such as a)Develop value proposition that will appeal the youth market b)Maintain customer loyalty & Life time Value c)Address the unmet needs of the target market d)Make the venture a profitable one e)Don’t want to trigger off competitive reaction
The Mobile communication industry in 2001 was highly competitive, saturated and overcrowded. The US industry when compared to Finland, UK, and Japan could be considered an industry that had room for growth. Finland had almost a 90% penetration rate especially in the ages 20 to 29 age group and Japan had almost an 80% penetration rate. In the USA however, penetration was about 50% in the 30-59 age group and as low as 15% in the 15 to 19 age...