Free Essay

Virgin Case

In: Business and Management

Submitted By gailemma
Words 3215
Pages 13
Virgin Mobile

1. Given Virgin Mobile’s target market (14 to 24-yeard-olds, how should it structure its pricing? The case lays out three pricing options. Which option would you choose and why? In designing your pricing plan, be as specific as possible with respect to the various elements under considerations (e.g. contracts, the size of the subsidies, hidden fees, average per-minute charges, etc.) 2. How confident are you that the plan you have designed will be profitable? Provide evidence of the financial viability of your pricing strategy. 3. the cellular industry is notorious for high customer dissatisfaction. Despite the existence of service contracts, the big carriers churn roughly 24% of their customers each year. Clearly, there is very little loyalty in this market. What is the source of all of this dissatisfaction? How have the various pricing variables (contracts, pricing buckets, hidden fees, off-peak hours, etc.) affected the consumer experience? Why haven’t the big carriers responded more aggressively to customer satisfaction? 4. How do the major carriers make money in this industry? Is there a financial logic underlying their pricing approach? 5. What do you think of virgin Mobile’s value proposition (the VirginXtras, etc.)? What do you think of its channel and merchandising strategy? 6. Do you agree with virgin Mobile’s target market selection? What are the risks associated with targeting this segment? Why have the major carriers been slow to target this segment?

1. When examining this case study, Virgin Mobile USA, and evaluating the different pricing options, it provokes the same question we addressed in class on Tuesday, October 23, 2007. How should a company, in this case Virgin Mobile, enter a market and take some of the market share?
I believe Virgin Mobile has two options. The first option is the obvious for their target market and any new product entering a saturated market, the pricing should be low if not the cheapest product out in the market. The second pricing structure that would appeal to Virgin Mobile is pricing their product in the middle or average of the industry standard.
Examining the first pricing structure strategy, it has positive and negative aspects to it. Some of the positive aspects include taking a great portion of the market share for those customers who value pricing in choosing their products. This pricing also goes along with Virgin’s target market, 14-24 year olds. This age group does not have a lot of spending money, if it is their own, or the parents’ do not want to pay a huge phone bill. The pricing would appeal to their target market and help create a young and hip image.
While this pricing structure strategy would help gain consumers that value pricing when choosing their products, it can also work against Virgin Mobile. This pricing can create the image that the phones do not have as high of a quality if they are priced below the industry low. This structure would accomplish the goal of attaining a sizable amount of the market share, but it would not be as profitable as the second pricing structure strategy.
The second pricing strategy looks to gain market share while earning a bigger profit. The pricing structure strategy would be to conduct research to find out what the industry is pricing. For example, if the industry low is $49 to a high of $299 then Virgin Mobile should price itself around $179. This pricing structure strategy would gain a great part of the market share for a couple of reasons. First, it would send the message that their product has a higher quality than the lower priced products in the industry, and it would be priced that it is not the most expensive, so more consumers could afford it. This pricing structure will create the air about the product as being the new hip product to have. Which is a quality Virgin Mobile’s target market cares about. This generation wants the latest products that will make them look cool or good. The negative with this type of pricing is that it won’t gain as big of a portion of the market share as the first pricing strategy, but it would garner more profit. It could also pose the threat of being too expensive, if the industry range is higher.

I would like to choose option “A Whole New Plan”. Even if this option is more risky than the other two, it still can be the most profitable plan if implemented appropriately.

Virgin Mobile’s target market ranges from 14 to 24, it would be better if there is no contract. By considering some teens are under 18, it’s obvious that they won’t be able to purchase the products with contract unless they have guardians. When taking prepaid vs. post-paid into account, it’s more valuable to vote for the third option, because the target market mostly could be occasional users, and this type of consumers is more likely to purchase prepaid plans since they don’t need to provide credit checks. The subsides can be lowered to less than $100, due to the high customer acquisition cost of other competitors, lowering the subsidy is a great idea to get more customers’ loyalty and feel more price valued. Most of Virgin Mobile’s competitors hits their customers with hidden fees, which make consumers feel deceived and it’ll also influence negatively to the brands themselves. If Virgin Mobile eliminate all hidden fees, there is no doubt to appeal their target market or even more. About the off-peak hours, since the youth market has different lifestyle from adults, I would say, most of 14 to 24 years old teenagers using cell phones until 1 am the next day. The company should consider more about when is the off-peak time to teens. And the average per minute charges also depends on it to some extent.

2. I am very confident the plan I have designed will be profitable. I will not hide the fact it will be very hard at first, but that is expected with a highly saturated market. The evidence is in the stock reports. Virgin Mobile entered the New York Stock Exchange and showed moderate growth. Granted in today’s time, the stock market is a hard place to judge any business, but it provides enough evidence that Virgin Mobile is earning revenue or profit.
According to Yahoo.com, Virgin Mobile, or VM (NYSE symbol), has a 25.40% quarterly revenue growth. This figure shows that the company is profitable that grows each quarter. This statistic is also telling due to the industry percentage, 19.20%. What concerns me is what the stock is being traded for. It is slowly declining; however, this is commonplace for many stocks. The real test will be time, whether or not this company can continue to be innovative enough to compete with the industry while continuing to earn a profit.

Each one of the three different options provides a unique way Virgin Mobile USA can enter the market and gain a following. However, one option stands apart from the others and fits with what Virgin Mobile is trying to convey.
That option is option three. Option three is titled “A Whole New Plan.” The idea behind it is starting afresh and coming up a different pricing structure that is different from everything out on the market now. This is the most radical and risky of the three options, but if executed correctly can proved to be profitable and the right choice.
Some specifics Dan Schulman discussed that would be incorporated into this option would be: no contracts, prepaid compared to post-paid, no hidden fees, and off-peak hours. Declaring

Virgin Mobile would not have contracts is huge, but when considering their target market, it fits. When considering Virgin Mobile’s target market ranges from 14 to 24, it would guarantee the younger teens would be able to purchase their products. If they had contracts Virgin Mobile’s under 18 target market wouldn’t be able to sign the contracts, they would have to get a guardian or parent. Another fault with their younger target market is their bad credit. If Virgin Mobile eliminated contracts then they are creating that setting for more customers. Those customers would be a mixture of those that wouldn’t be credit approved at Virgin Mobile’s competitors.

Prepaid vs. post-paid minutes is another important variable when considering option three. This detail takes into mind the different lifestyles of their target market. The consumers might be occasional users and this quality would be ideal for them. It also goes along with the group of consumers who do not have good credit. This group of consumers tends to purchase prepaid plans since they don’t require credit checks.

When purchasing any item or service, you do not want to be deceived. This is the idea behind no hidden fees. Most of Virgin Mobile’s competition hits their customers with hidden fees which causes them to be unhappy and distrust the company and brand. Virgin Mobile’s solution is simple, eliminate all hidden fees. This will create the image of “what you see is what you get,” which will help attain more of the youth market and even some unhappy customers of their competitors.

While eliminating hidden fees, Virgin Mobile also looked more closely at their off-peak hours. They decided to reexamine them. The company recognized that their target market doesn’t live the same lifestyle as an adult, so Virgin Mobile created the service which made sense to their target market.
All these features that Virgin Mobile would incorporate into their “A Whole New Plan” set them apart from the competition. Option three provides Virgin Mobile with the ability to stick with the company’s value proposition of always being innovative and supplying the best products and services to consumers.

3. I am very confident the plan I have designed will be profitable. I will not hide the fact it will be very hard at first, but that is expected with a highly saturated market. The evidence is in the stock reports. Virgin Mobile entered the New York Stock Exchange and showed moderate growth. Granted in today’s time, the stock market is a hard place to judge any business, but it provides enough evidence that Virgin Mobile is earning revenue or profit.
According to Yahoo.com, Virgin Mobile, or VM (NYSE symbol), has a 25.40% quarterly revenue growth. This figure shows that the company is profitable that grows each quarter. This statistic is also telling due to the industry percentage, 19.20%. What concerns me is what the stock is being traded for. It is slowly declining; however, this is commonplace for many stocks. The real test will be time, whether or not this company can continue to be innovative enough to compete with the industry while continuing to earn a profit.

4. The source of all the dissatisfaction stems from many different things. Most consumers do not trust the industry pricing plans. Companies advertise, “free this” or “free that”, but young people know that there are many different hidden charges, and they resent this. Consumers these days are savvy, and they hate feeling like they are being used. Other factors include contracts, pricing, buckets, hidden fees, and off peak hours. Over 90% of all subscribers in the U.S. have contractual agreements with their cellular providers. The contracts are generally for a period of one to two years, and require rigorous credit checks. This is very unsettling for many consumers. People don’t like being “tied down” to a cellular provider or the strenuous credit check.
Hidden prices play another factor in this dissatisfaction. These include taxes, universal service charges, and many one time costs. Many plans also have established “buckets” of minutes. Customers then sign-up for a bucket of minutes. However, if the customer exceeds their allotted bucket of minutes they are penalized with extremely high rates. On and off peak hours are also concerns. Originally, off-peak hours began at 6:00pm, and then it gradually changed to 9:00pm. All of these various pricing strategies have led to the dissatisfaction of the consumer’s experience. These pricing strategies have also excluded a demographic that is projected to be very robust for the next five years; the consumers aged 15 to 29. With the rigorous credit checks needed to attain a cell phone this huge demographic does not qualify. Many younger consumers either have no credit or bad credit. Another stipulation to obtain a call phone is that you have to be 18 years of age. This alone excludes part of the demographic. However, big carriers have not responded aggressively to this consumer dissatisfaction. The big carriers including AT&T, Cingular, and Verizon carry so much of the market share. Out of the 103 million subscribers in the United States all three of these big carriers have of market share of at least 20 million subscribers. That’s over half of the market. The big carriers have such a monopoly on the cell phone industry that it is not necessary for them to try to improve their customer dissatisfaction rates.

5. 5.According to Virginmobileusa.com, “our team works to provide not only the best wireless products and services, but we also hold fast to fresh style, innovation and championing the consumer.” With this statement which they call part of the Virgin Mobile story, by adding such values as The Virgin Xtras, no hidden fees, exclusive content from MTV, and so much keeps true to their word. Due to their goal of attracting a youth market, Virgin Mobile USA is always trying to add new features that keep their products exciting in the eyes of the consumers.
I believe Virgin is being creative and innovative with their products. These Xtras help not only Virgin but the industry. It helps push their competitors to strive to put products on the market that excel the previous. By making their features more on the entertainment end to attract their target market of 14 to 24 year olds, Virgin Mobile creates the possibility of additional usage. This would also create loyalty among their consumers, which would be very profitable for Virgin Mobile USA in the future. It would also give Virgin Mobile an advantage over their competitors. If they are able to create consumer loyalty with the youth market, which is a market none of their competitors are going after for the fear of low-value subscribers, bad credit, and infrequent usage, it would speak volumes and establish Virgin Mobile USA as a mainstream provider.

Virgin Mobile created a different channel strategy for attracting their target market. They needed to create one that would help get their products to their target. This included the placement of the products at stores were their audience shops. These retailers include Target, Best Buy, Sam Goody, etc.
Virgin Mobile USA also thought about how their target market shops. They want to examine the products and touch them, not talk to a sales person and the products not being kept locked behind the counters. Knowing this information, Virgin created a clear see through packaging that allowed consumers to look and touch the product. Also, this new sales tactic allowed the youth market to examine the products without the store’s salespeople harassing them. The Virgin Mobile USA team also created large point-of-sales displays to showcase and feature the new packaging. The displays were made available to the retailers so that they would feature them.
Virgin Mobile USA not only changed the way they were going to package the product, but they made strides to reach the desired market to make them aware. Virgin Mobile had a different way to approach marketing. They needed to be innovative since they only had $60 million dollars compared to Verizon Wireless and their $650 million dollar budget. Dan Schulman, Virgin’s CEO, said it best, “Unless you’re between 14 and 24, you’re probably never going to see our ads.” They created ads that featured teens and made them stand out to the rest of the industry. Virgin made sure to place the ads in magazines with a youth following and create a buzz by sponsoring and planning street marketing events.

6. Do you agree with Virgin Mobile’s target market selection?
I do agree with Virgin Mobil’s target market selection, which is between the ages of fifteen and twenty-nine. If marketed successfully, this demographic had the greatest potential for growth because prior to Virgin Mobile’s entrance, it was the least penetrated. Virgin Mobile did decide to go forth and enter this market, and have now become very successful, not only because they tapped into the consumer needs’ of this younger demographic, but offered services not yet offered by national service providers.
What are the risks associated with targeting this segment?
The largest risk Virgin Mobile faced was the chance of failure; consumers’ not accepting their service plans. With other service providers being already well established, Virgin Mobile took a large risk when entering the United States. Consumers are often very brand loyal, especially with products or services that take up a larger part of their income. This meant that Virgin Mobile must promote their own products and services, and also concentrate on why they differ from the competition.
An issue that arises when marketing towards a younger demographic is that this demographic may not be employed, which is common for high school students and some college students. The older portion of this demographic probably has lower salaries than that of the thirty to fifty-nine age demographic, who many of which have established careers with higher salaries. Multiple risks can come from this issue of lower income. The first of which is quite obvious in that because an individual does not have an inflow of money, they have no way of payment to a service provider. Either this is the case, or the parents of these children do not have enough disposable income to provide a cell phone and service to their child.
Why have the major carriers been slow to target this segment?
During the time of Virgin Mobile’s entrance into the market, there were six national cell phone carriers, none of which marketed towards the younger demographic. One of the reasons why these carriers were reluctant to market towards this demographic was that they required a credit check upon signing a contract with the service provider. This becomes a problem because a large portion of this demographic, teenagers in particular, have not yet acquired credit cards, therefore not possessing any credit at all.
Another reason why other service providers have been slow to target a younger demographic is because they wanted to be “safe”, in that they wanted to target business men and women (the thirty to fifty-nine age demographic). This demographic is consistent with their cell phone use; using a higher number of minutes every month. Because of this high number of minutes used, they pay for a highly monthly rate plan. It would be a risk for these providers to market to a younger demographic because of their inconsistent minute usage per month. Because a lower monthly rate plan would apply, this would result in less profit for the service provider.

Similar Documents

Premium Essay

Virgin Case

...VIRGIN GROUP Resource: Exploring Corporate Strategy Introduction The Virgin Group is one of the UK's largest private companies, with an annual turnover estimated at £3bn per annum by 2000. Virgin's highest-profile business was Virgin Atlantic, which had developed to be a major force in the international airline business. However, the group spanned over 200 businesses from financial services through to railways; from entertainment mega stores and soft drinks to cosmetics and condoms. (Figure 1 shows the breadth of the group's activities.) Its name was instantly recognizable. Research showed that the Virgin name was associated with words such as 'fun', 'innovative', 'daring' and 'successful'. The personal image and personality of the founder, Richard Branson, were high profile; in British advertisements for Apple Computers, together with Einstein and Gandhi, he was featured as a 'shaper of the 20th century'. Origins and ownership Virgin was founded in 1970 as a mail order record business and developed as a private company in music publishing and retailing. In 1986 the company was floated on the stock exchange with a turnover of £250 million. However, Branson became tired of the public listing obligations. Compliance with the rules governing public limited companies and reporting to shareholders were expensive and time-consuming, and he resented making presentations in the City to people whom, he believed, did not understand the business. The pressure to create short-term......

Words: 2106 - Pages: 9

Free Essay

Case Study - the Virgin Group

...Case Study – The Virgin Group: Structure, leadership and motivation This essay analyses organizational structuring of the Virgin Group, with a view to understanding the dynamics that have helped create a global conglomerate. A critical assessment is undertaken on three areas: the hierarchical form of the company, the style of leadership exhibited by Sir Richard Branson, and the approach adopted by management to motivate employees. Firstly, a comparative argument is made on whether the Virgin Group can be classified as a centralised or decentralised organization. These terms refer to division of power, capital, technical procedures and control in various units of a business. A centralised organization allows for minimal delegation to managers, with the chief executive retaining power over majority of the decisions. On the other end, a decentralised organization makes it possible for managers to exercise control without ownership oversight at each stage, provided goals and targets are met (Buchanan & Huczynski, 2007). Secondly, the essay aims to determine the leadership style practiced by Sir Richard Branson, Virgin Group’s chief executive officer (CEO). Two styles of leadership are used as reference point: transactional and transformational. According to Bass & Bass (2009), transactional leaders work within the organizational culture as it exists, with an awareness of the link between effort and reward. They motivate their employees by setting goals, and enforce control......

Words: 2556 - Pages: 11

Premium Essay

Virgin Mobile Case Analysis

...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......

Words: 924 - Pages: 4

Premium Essay

Virgin Mobile Case Study Summary

...VIRGIN MOBILE CASE INTRODUCTION: Virgin is a leading branded venture capital organization. It is conceived in 1970 by Sir Richard Branson, the Virgin Group has gone on to grow very successful business in sectors ranging from mobile telephony, to transportation, travel, financial services, leisure, music, holidays, publishing and retailing. Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. TARGET MARKET: The core-competency of Virgin mobile is making a difference in the eyes of the customer in terms of value for money, Quality, Innovation, Fun, A sense of Cool-ness. It identified the age segment where the Industry penetration was the lowest, that is, between 15 years to 29 years of age. Also, by demography, it targeted income segment with a low disposable income and high aspiration for trendiness. Since the target market for Virgin mobile is youth segment, it makes sense to develop a value proposition like VirginXtras. The revenue for mobile entertainment is projected to increase in the next few years (Exhibit 3). So, by offering value added services like delivering music, video and game content of MTV, VH1, and Nickelodeon etc. Virgin can increase its sales. PRICING STRATEGIES FOR THIS SEGMENT: Option 1 – Clone the industry prices Pros: Easy to promote, No need to spend more money on salespeople, Customers are used to ‘buckets’ and peak / off – peak distinctions Cons: Highly competitive market....

Words: 564 - Pages: 3

Free Essay

Sir Richard Brason, Virgin Group, Case Study, Assignment 4

...Sir Richard Branson, Chairman, Virgin Group, Ltd. Case Study Assignment 4 Professor Leadership and Organizational Behavior February 26, 2012 Since the beginning of history humans have lived in groups guided by the group leader; in which leader is either chosen for his characteristics or born into through cast. No matter the culture this is similar through the human race. Humans need someone to guide them, teach them, someone to look up to. Without followers there is no leader. “That is, leader is a term applied by observers to someone whose behaviors and characteristics match the observers’ implicit leadership preferences” (Hellriegel, D., & Slocum, J. W., Jr. (2011). They are different type of leaders and leadership style depending on the situation and solution needed at that moment by the followers. In my opinion good leaders have shown to be flexible enough to switch between leadership styles depending on the demands of the situation. One of the worlds most intriguing, succesful and enduring entrepreneurial business leaders today is Richard Branson, someone who takes control of the situation by conveying a clear vision and goals for the team, a marked passion for the work and an ability to make the group feel recharged and energized. I consider Richard Branson to be a transformational leader, a leader with vision, confident, motivation, passion and determination. He is the founder of Virgin Group Ltd. “Born July 18, 1950, in Surrey, England,......

Words: 2073 - Pages: 9

Premium Essay

Sir Richard Branson, Chairman Virgin Group, Ltd. Case Study

...Sir Richard Branson, Chairman Virgin Group, Ltd. Case Study International success for an organization requires the expansion of the company into the global market for exposure and the goal of increasing profit margins. Strong leadership skills are an essential key in the success for a global company. Judgment, positive attitude and entrepreneurial thinking, and motivational incentives are additional keys that contribute to the success of an organization. The strategic leadership ways and personality of Sir Richard Branson proved to be success in the company he led into the global market. His Virgin Galactic company had the vision to be the first company to offer passengers the opportunity to fly into space at the cost of an expensive price as the world’s first space line. In addition to offering the hopes of the first space line for customers, Branson wanted to expand the global presence even further by participating in joint-venture agreements in telecommunications with China. By incorporating their reputation into the foreign market, the exposure to an untapped market or competitive market, an organization is able to branch out with ideas that will produce additional profits. The leadership traits that Branson portrayed played a huge part in the motivation skills he used on his employees that increased production, Corporate leadership requires two important areas: content leadership (leader’s attributes and decision making skills) and context leadership......

Words: 2407 - Pages: 10

Premium Essay

Read the Sir Richard Branson, Chairman, Virgin Group, Ltd. Case Study Located in Chapter 11.

...Assignment 4: Sir Richard Branson, Chairman, Virgin Group, Ltd. Case Study Due Week 8 and worth 100 points Read the Sir Richard Branson, Chairman, Virgin Group, Ltd. case study located in Chapter 11. Write a six to eight (6-8) page paper in which you: 1. Describe Branson’s leadership style in terms of the leadership models addressed in Chapters 10 and 11 and evaluate the likely effectiveness of that style in the U.S. today. 2. Recommend a different leadership style (or combination of styles) that would make Branson an even more effective leader. 3. Determine how Branson would develop and lead a global team working on a major project (e.g., space tourism). 4. Discuss how you can incorporate some of Branson’s leadership qualities into you role at work or school. 5. Include three (3) external peer-reviewed sources to support your position. Your assignment must follow these formatting requirements: • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions. • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length. The specific course learning outcomes associated with this assignment are: • Explain the variety of leadership theories and roles. •......

Words: 285 - Pages: 2

Premium Essay

Virgin Case

...Reduced budget for advertising (not selling anything really “new”). Cons * Hard to distinct from the competitors (not selling anything really “new”). * Virgin Extras and fewer hidden fees might not be enough to make a consumer shift to the new brand. Option 2: Price below the Competition Pros * Easy to understand for the consumers (same pricing structure as rest of the industry). * Reduced budget for advertising (not selling anything really “new”). * Cheaper off-peak rates could differentiate Virgin from the rest of the industry. Cons * Virgin Extras and fewer hidden fees might not be enough to make a consumer shift to the new brand. * Less margins and lower earnings than the rest of the industry. * The industry can adjust their prices to compete. Option 3: A Whole New Plan Pros * Market penetration in the targeted segment (youth) is 25% (50% in the rest). * Industry is not very much interested in the targeted segment. * Virgin Extras might be interesting (very differentiated proposal) Cons * Targeted Market (youth) with limited expenditure capacity. * High risk of churn among the youth. * Less margins and lower earnings than the rest of the industry. Study of the LTV (refer to spreadsheet) * The industry has high LTV for postpaid contracts: $646.50. Virgin proposal has a lower LTV which is a disadvantage because the industry has room to readjust prices and has enough capacity to fight against a newcomer. ......

Words: 335 - Pages: 2

Premium Essay

Virgin Case

...to involve. Mission statement, business objectives. Eg: Virgin- airline industry, what segment we want to compete. Business level: how do we actually compete? What market force, microenvironment. What’s the competitive advantage, cost leadership? Key influence: Regulation PEST Organizational culture and belief systems (part of org control system) as well as national culture (part of org control system) • Organisational structure • External environment
(Porters 5 forces) • Size
(scale and complexity) • Technology EG: Virgin- High-end, premium 1. goal emphasis An 'organizational control system' may be defined as a set of mechanisms - both processes and techniques - which are designed to increase the probability that people will behave in ways that lead to the attainment of organizational objectives. CORE SYSTEM: consisting of four subsystems (planning, operations, measurement, and evaluation-reward) Informal: informal meeting Leisure market- type customer- when people go to holiday, disposable income, seasonality, risky. Business- to achieve the lower price airline ticket. More volume base. Hard to profit from margin. 2010: ship focus to more corporate and government focus that low seasonal, more Melbourne-Sydney line. Higher margin, charge more. More focus on cost control, measurement- feedback survey on quality service. But cost and quality might conflict Virgin move away from the low cost market, but still want to......

Words: 294 - Pages: 2

Premium Essay

Virgin Atlantic Case Study

...• Virgin Atlantic provides a very exceptional service to its customers. People have been transported with a high level of accommodation and efficiency that is not provided by their competitors such as British Airways, Qatar airline etc. Virgin Atlantic pride themselves of how they treat their customers on each flight. However, they provide, food, drinks, entertainment with advanced technology and a welcoming staff. The geographic scope in presence is minimal. “They concentrates on Europe and especially North America, and has not taken advantage of emerging markets in Asia. For instance, in Asia, the Airline operates routes to Shanghai, Hong Kong, and Delhi, only; while in the Middle East, they fly to Dubai only” Entry and Exit Barriers Both...

Words: 1188 - Pages: 5

Free Essay

Virgin Mobile Case Analysis

...Kazakov MKTG 489 02/05/14 Virgin Mobile Case The Virgin Mobile USA case exemplifies a challenging dilemma faced by CEO Dan Schulman when faced with the task of introducing Virgin Group’s mobile service to the American public. The Virgin Group led by Richard Branson, is a British based company with Virgin branded products extending into industries from apparel to airplanes. In 2001, the Branson led Virgin Group made the decision to extend their mobile service into North America: a market dominated by companies such as Verizon, At&t, and Sprint. In order to better distinguish themselves as a brand and to appeal to an emerging youth market, Virgin Mobile needed a pricing strategy that served the needs of their target market while being profitable. In In 2001, the mobile phone market in the U.S. was entering the maturity stage with a 50% industry penetration rate. However, the penetration rate for consumers age 15-19 was much lower. The main factor preventing this age group from being active mobile phone users was poor credit. Most mobile carriers overlooked this market due to high customer acquisition costs of about $370 per customer. However, Virgin Mobile USA CEO Dan Schulman was determine to reach the fast growing youth market stating that “By focusing exclusively on the youth market from the ground up, we’re putting ourselves in a position to serve these customers in a way that they’ve never been served before”. Schulman positioned the Virgin Mobile brand as a......

Words: 877 - Pages: 4

Premium Essay

Virgin Mobile Case Analysis

...Case Analysis “Virgin Mobile USA: Pricing for the Very First Time” Marketing II – BUSI2202U Group 40, Tuesday Session Word Count: Paper 2,912, Appendix 345 Problem Definition The unimpressive performance numbers in the market belonging to Virgin Mobile are mainly due to the lack of an attractive pricing strategy that would appeal to the target market group. The target market group (consumers aged 19 to 25) have different characteristics than other market groups and Virgin Mobile’s current pricing strategy is clearly not complementing those characteristics. As a result, a re-evaluation of the target market group is required in order to choose a better and more correct pricing strategy to appeal to the majority. The re-evaluation should result in a more successful pricing strategy as well as a solid entrance strategy to get the largest amount of exposure. Situation Analysis External Variables The American cellular market was not an easy market to penetrate as it was already overcrowded. Adding another service provider would not be an easy feat for Virgin Mobile. By 2001, there were already six national carriers and many regional players as well. Based on market share there were only four main industry players; Verizon, Cingular, AT&T, and Sprint. These companies controlled over 60% of the market along with VoiceStream, Alltel, US Cellular, Leap and number of smaller carriers. On top of there being many competitors, it was also believed that the cellular......

Words: 3467 - Pages: 14

Premium Essay

Case Analysis of Virgin Mobile

...Virgin Mobile Pricing Strategy Situational Analysis Virgin Mobile, a MVNO is planning to launch its services in USA. It’s target is underserved Demographics of 15-29 years as this age group is underserved by the regular telecom operators due to their low credit score ( Under 18 demographic cannot go for contract). They are planning to launch their product with service offerings that focuses on value added services. Problem Statement * The industry structure is such that supports post-paid user base and is completely different from UK industry structure. * Virgin will have to attract the new user base with lower budgets and this segment does not have a credit score * The industry has matured and the big players already have their decided segment. * Any pricing strategy should be such that it does not start a price war. * Virgin wants to break even as soon as possible SWOT Analysis of Virgin Mobile Group Strength * The company does not have a fixed cost in infrastructure. This gives them freedom to lower their customer acquisition cost * The VAS are created with a focus on target market with JV with MTV. * Brand Image represents fun, honesty, a sense of competition and value for money, which other Telecom operators don’t represent. This brand image resonates with the target group * Low cost of handsets at subsidised prices. Weakness * The company has low budget allocations for the advertising and customer education. Opportunity ...

Words: 823 - Pages: 4

Premium Essay

Virgin Mobile Case Study

...Attn: Virgin Mobile The Virgin Conglomerate is known globally for disrupting industries with innovative practices. It is a highly diversified company with many different business entities operating in various, unrelated industries. Today, Virgin Mobile is on the brink of green-flagging a new cable business designed to solve some of the problems that have long afflicted cellular companies. In essence, Virgin Mobile strives to transform an industry by targeting a younger demographic. Their target market consist of 15-29 year olds since they are believed to be a growing market. However, large companies tend to shy away from this segment since they often have poor credit quality. Considering all the factors involved with entering a new market, a SWOT analysis and Porter’s 5 forces model will analyze the industry’s attractiveness. Porter’s 5 force model effectively assess all factors which include: threat of new entrants, threat of substitutes, bargaining power of customers, bargaining power of suppliers, and rivalry among existing competitors. The threat of new entrants will be rather low since other organizations in the industry have already established their claims on most of the market share. Therefore, Virgin Mobile must assess the barriers to entry to ensure a competitive advantage can be maintained over other rivals. Moreover, mobile phones have become a necessity for everyday life, so these devices cannot be easily replaced, which lessens the threat of substitutes.......

Words: 564 - Pages: 3

Premium Essay

Virgin Portfolio Marketing Essay

...Composition Of Virgins Portfolio Marketing Essay The Virgin Group is a multi national corporation with a hugely diversified business portfolio. This essay examines how the Virgin Groups corporate strategy has allowed it to sustain competitive advantage. The first area that is covered is the composition of Virgins portfolio, namely what businesses Virgin is in and what is the logic of their portfolio. Within the composition section it puts forward two models that help to show why Virgin has chosen particular avenues for achieving growth and sustaining competitive advantage. The Core Competence Theory and Parenting Concept are then reviewed critically in regard to Virgin. Porters three tests are then related to the Virgin Group. Next the co-ordination of Virgins portfolio is addressed, how Virgin has managed its portfolio in its quest for growth and a sustained competitive advantage. Within the composition section of the essay is the issue of control versus the co-operation of Virgin and its business units. It then handles the four concepts of corporate strategy and how Virgin can and has used them to add value to its business units. The link between Virgins Corporate and Marketing strategy is then discussed before the other side of the argument is considered, looking at how Virgins corporate strategy destroyed rather than added value. Finally having synthesised the various diverse elements the essay concludes by using the knowledge gained to raise questions for Virgin about......

Words: 2006 - Pages: 9