Beruflich Dokumente
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Arpita Bahadur
Gaurav Kumar
Manish Gupta
P
avan Kumar
R
anjini Ballal
V
ani Vyas
Virgin mobile USA - pricing for the
very first time
Submitted To:
Prof. Rahul Gupta
Chowdhry
Virgin Company Background:
• Virgin, a leading branded venture capital organization, is one of the
world's most recognized and respected brands.
• 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.
“We believe in making a difference. In our customers' eyes, Virgin stands for
value for money, quality, innovation, fun and a sense of competitive
challenge. We deliver a quality service by empowering our employees and
we facilitate and monitor customer feedback to continually improve the
customer's experience through innovation.”
• The company entered into a 50-50 joint venture with Sprint in which
Virgin Mobile USA’s services would be hosted on Sprint’s PCS network.
• The goal of Virgin Mobile USA is: to have 1 million total subscribers by
the end of 2002 and 3 million by year 2006.
• Rescue Ring
• Wake up Call
• Ring tones
• Fun Clips
• Music Messenger
• Movies
Pros:
• Easy to promote.
Cons:
Pros:
• Expand the size of the market and result in greater sales and
profits
Cons:
• TWO DISTINCTIONS:
– Rarely worry about the cost of calls (Finance Dept can deal with
it)
• PRICE INSENSITIVE!
• Demand is INELASTIC
• TWO DISTINCTIONS
– You make calls whenever necessary and can seek to avoid calls
that come with a higher pricetag
• PRICE SENSITIVE
• Demand is ELASTIC
Demand-based Pricing:
Mobile phone company revenue:
• The revenue gain from increased quantity must be greater than the
revenue loss from dropping the price
• Since our target market is Youth, whose demand is relatively elastic,
downward adjustment in price is relevant!
Assumptions:
Level of subscribers
Conclusion:
What we are analyzing here is pricing of a service in a market, which is
saturated, as it has reached maturity, is highly capital intensive and in which
a large amount of competition prevails. Virgin however is a known brand
name with an extremely diversified portfolio. It has experimented
successfully with the telecom business in the UK but failed in Singapore. It
now targets the USA market; the problems before it are, to come up with an
appealing offer and ensure a run rate of one million subscribers in the first
year and three million by the fourth year. Keeping with the brand strategy
and philosophy of making a difference, it enters areas, which are unserved or
poorly served which in this case is the age group of 15-29 due to their low
frequency of usage and poor credit rating. While targeting this segment
lifestyle and psychographics factors are important as usage is inconsistent