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Virgin Mobile Case Analysis

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Submitted By niroshank
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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 market had already entered the maturity stage when Virgin mobile entered. This means that sales were just peaking, profits were beginning to decline, and competition in the market was very intense. By this time in the industry product life cycle, the major players had already distinguished themselves. The objective for these companies was to maximize their profits, but at the same time defend their

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