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Virgin Mobile Usa: Pricing For The Very First Time Case Solution & Answer

Virgin Mobile Usa: Pricing For The Very First Time Case Solution

Executive summary and Introduction

Telecom Company Virgin mobile was established by the well-recognized brand Virgin. Their strategy of entrance and the target market segment are the teenagers between the ages of 14-29 years. The key issue here is the designing of pricing strategy for Virgin because they are targeting the highly saturated industry while targeting an unsaturated market segment and want to earn profit from restricted income market. The competitors did not target this segment before. This segment has been ignored and their needs have not been met; therefore, the potential of this segment is yet to be determined.

After analyzing the pros and cons, and LTV of each strategy a whole new plan with optimal pricing would be the better option than other two strategies (Exhibit 1). This option is risky but can be profitable for the company is implemented properly. This strategy will help in attracting the customers who can afford low credits and it allows the individuals of 18 years or younger to purchase the product. Through pre-paid services, customer can choose their own talk plans according to their budgets. Based on these benefits, this strategy will help the Virgin mobile to penetrate into its target market segment.

There should be proper monitoring of the contract by the operating team on daily basis, so that target market ranges from 14-29 would get complete benefit from it. In order to attract occasional users, the company should introduce friendly offering on weekly which motivates them to mobile phone more frequently. As the subsidy price is 100$ which is equal to competitor’s price, therefore operating team must lower its price to gain more loyalty of customers. Research team should research and identify the peak hours of teens, and provide special offers in these peak hours. Marketing teams should advertise the offering in such a way that teenagers get attracted like entertaining ads, colorful packaging etc.

Analysis of marketing situation

Problem statement

The company’s strategy of entrance and the target market segment of individuals between the ages of 14 to 29 years. The users of this age group are different from other traditional cell phone users because they have limited purchasing power. The key decision for the company in the current situation is to adopt the pricing strategy which could help in attracting customers at reasonable cost along with profit for the company.

SWOT Analysis

Strength

  • Virgin mobile provide its service globally, and has operating its services in the USA, UK, and India etc.
  • Services centers are good providing all the facilities to recharge and pay bill.
  • The rates for data and call are cheap which help in attracting customers.
  • Virgin mobile has partnered with leading telecom companies of the world like Tata, Sprint etc.

Weakness

  • Virgin has low visibility and awareness of its brand as compared to its competitors.
  • Some countries have operational issues which can curt the image of brand.

Opportunities

  • The brand image of Virgin mobile can boost up by increasing cellular market.
  • Services can be boost up by low cost technologies.
  • The doors of new market can be opened by increasing branding and awareness.

Threats

  • Due to offers of low prices to customers, market share of virgin can be decreased.
  • Business profitability can be affected by the failures of partnerships.
  • Customer data base can be decreased by mobile network immovability to competitive networks.

The current external environment of the company is quiet competitive because Virgin has to make its brand recognition among customers. Whereas there are many other telecom companies which have higher recognition as compared to Virgin. It has already partnered with some top companies, which reflects the risk of business profitability in case of partnership failure.  In doing so Virgin can offer discount offers along with good quality of service to gain customers attraction.

Implication of Analysis

As the firm is targeting the unsaturated market segment i.e. 14-29 years’ teenagers which can hardly afford the credit cards. Growth rate for this segment is projected to be robust for the next five years. Therefore, their marketing for brand would be different as they will offer different discount offers to attract this age group forces. The force which greatly affect the firm’s strategy is the rivalry among competitors. Therefore, value preposition can play a significant role in attracting customers and creating loyalty. Customers can integrate their entertainment with basic telephone services by using Virgin Extras. Packaging can colorful along with hassle free sale. Availability should be made possible at the places frequented by youth.

Key issues

The key issue here is the designing of pricing strategy for Virgin because they are targeting the highly saturated industry while targeting an unsaturated market segment and want to earn profit from restricted income market. The competitors did not target this segment before. This segment has been ignored and their needs had not been met. Therefore the potential of this segment is not yet determined.

Competition and demand trend

The U.S. had six national carriers along with number of local providers. The Virgin team already aware of the overcrowding in the industry. The market was considered to reach to its maturity phase. But the consumers of the age between 14-29 years has not been targeted yet. It is projected that this group sows robust in the next five years. The users of this age are different from other traditional cell phone users because they have limited purchasing power. These users don’ have credit cards in fact they cannot pass the cellular contracts requirement for credit checks. The consumers in this age group are just leaving their home, or having the first cell phone. Their usage is unpredictable. Some they do not use the phone, sometime they use the often quite frequently depending whether they are on vacation or not. Their calling pattern is also different. They want things like text messaging or downloading form the phone. They are more attracted to ringtones and graphics. For this young generation, phones are more than an instrument…………………….

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