Virgin mobile
Content
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. • Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. Virgin Group: Company Values “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.”
Virgin Mobile USA:
• Dan Schulman was appointed CEO. • 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. • Under the agreement, Virgin Mobile would purchase minutes from Sprint on an as-used basis. • The goal of Virgin Mobile USA is: to have 1 million total subscribers by the end of 2002 and 3 million by year 2006. VirginXtras - Focus on Youth The first to offer m-commerce services to all customers via VirginXtras, irrespective of their handsets. • Access to MTV-branded accessories and phones • Text messaging • Rescue Ring • Online Real-time Billing • Wake up Call • Ring tones • Fun Clips • The Hit List • Music Messenger • Movies Overall Goal in Choosing Pricing Structure: • Must reach our target market: Youth! • Create a positive Lifetime Value (LTV) for every customer
Three Main Options for pricing:
1. Clone the Industry Prices 2. Price Below Competition 3. A Whole New plan Option 1: Benefits and Shortcomings (Clone the Industry Prices) Pros: • Easy to promote. • Consumers are used to ‘buckets’ and peak/off-peak distinctions.
• Savings on advertising budget costs. • Simple packaging could save costs on high commissioned salespeople. Cons: • The target youth market is not stressed. • Hard for a new entrant to the market. • No flexibility in calling habits; always paying the same high price. • With no real price distinction, consumers are not willing to switch over just for the Virgin Extras features. Option 2: Benefits and Shortcomings (Price Below Competition): Pros: • Maintain the buckets and volume discounts with price per minute set below industry average. • Offer best off-peak hours and few hidden fees so consumers will know Virgin Mobile is cheaper, plain and simple. • Expand the size of the market and result in greater sales and profits Cons: • Earnings from each consumer will be less. • Sales growth does not necessarily mean big profits. • Risk of being regarded as low-quality service, thus an unfavorable image. • May trigger off competitive reactions Option 3 : The Whole New Plan • An entirely new pricing structure which could be significantly different from competitors Going in for a shortened subscription contracts or eliminating the contracts The cons being the churn rate shooting to 6% each month compared to standard 2% The pros being an attractive deal from customer acquisition viewpoint. Offering pre-paid plans The cons being usually high costs because of prohibitive pricing, the stigma associated with pre-paid, high churn out rates & non loyal customers. Another constraint being some kind of mechanism to add on minutes like a web or physical phone cards The pros being an attractive deal to consumers with no credit card or with poor credit checks & if acquisition costs are below $100 per new gross add Lower subsidy costs to Virgin on handsets because of arrangement with Kyocera Eliminating hidden fees and pointing to the total cost of the product offering A new definition of off-peak hours as the target consumer falls into a different segment.
Pertanyaan diskusi: 1. setujukah anda dengan value proposition yang ditawarkan virgin untuk target pasar yang dibidiknya? 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 lowvalue subscribers, bad credit, and infrequent usage, it would speak volumes and establish Virgin Mobile USA as a mainstream provider. 2. Bagaimana industri telekomunikasi di amerika memperoleh keuntungan dari bisnisnya? 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, Contract provided carrier with a hedge againts churn and a guaranteed annuity stream.
3. Struktur harga mana yang sebaiknya dipilih oleh virgin mobile, dengan mempertimbangkan target pasar yang dibidiknya?
Given the market Virgin Mobile chose to target as it entered the U.S. market for cell phone service, the pricing option it should pursue is #3, a prepaid service plan. Unfortunately, it would be difficult for Virgin to create barriers to its competitors to create their own prepaid plans and also target the teenage and young adult market. However, if Virgin creates a positive brand image with the youth market, they should be able to engender customer loyalty among that market. Teenagers and young adults will want a service provider who understands them and is in touch with their culture. Virgin’s image has the potential to make a connection with consumers in this age group, and Sir Richard Branson’s antics have the potential to capture the imaginations of that market
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 offpeak 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. 4. Seberapa menguntungkan struktur harga yang anda pilih? Jelaskan ?????
• 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. • Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. Virgin Group: Company Values “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.”
Virgin Mobile USA:
• Dan Schulman was appointed CEO. • 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. • Under the agreement, Virgin Mobile would purchase minutes from Sprint on an as-used basis. • The goal of Virgin Mobile USA is: to have 1 million total subscribers by the end of 2002 and 3 million by year 2006. VirginXtras - Focus on Youth The first to offer m-commerce services to all customers via VirginXtras, irrespective of their handsets. • Access to MTV-branded accessories and phones • Text messaging • Rescue Ring • Online Real-time Billing • Wake up Call • Ring tones • Fun Clips • The Hit List • Music Messenger • Movies Overall Goal in Choosing Pricing Structure: • Must reach our target market: Youth! • Create a positive Lifetime Value (LTV) for every customer
Three Main Options for pricing:
1. Clone the Industry Prices 2. Price Below Competition 3. A Whole New plan Option 1: Benefits and Shortcomings (Clone the Industry Prices) Pros: • Easy to promote. • Consumers are used to ‘buckets’ and peak/off-peak distinctions.
• Savings on advertising budget costs. • Simple packaging could save costs on high commissioned salespeople. Cons: • The target youth market is not stressed. • Hard for a new entrant to the market. • No flexibility in calling habits; always paying the same high price. • With no real price distinction, consumers are not willing to switch over just for the Virgin Extras features. Option 2: Benefits and Shortcomings (Price Below Competition): Pros: • Maintain the buckets and volume discounts with price per minute set below industry average. • Offer best off-peak hours and few hidden fees so consumers will know Virgin Mobile is cheaper, plain and simple. • Expand the size of the market and result in greater sales and profits Cons: • Earnings from each consumer will be less. • Sales growth does not necessarily mean big profits. • Risk of being regarded as low-quality service, thus an unfavorable image. • May trigger off competitive reactions Option 3 : The Whole New Plan • An entirely new pricing structure which could be significantly different from competitors Going in for a shortened subscription contracts or eliminating the contracts The cons being the churn rate shooting to 6% each month compared to standard 2% The pros being an attractive deal from customer acquisition viewpoint. Offering pre-paid plans The cons being usually high costs because of prohibitive pricing, the stigma associated with pre-paid, high churn out rates & non loyal customers. Another constraint being some kind of mechanism to add on minutes like a web or physical phone cards The pros being an attractive deal to consumers with no credit card or with poor credit checks & if acquisition costs are below $100 per new gross add Lower subsidy costs to Virgin on handsets because of arrangement with Kyocera Eliminating hidden fees and pointing to the total cost of the product offering A new definition of off-peak hours as the target consumer falls into a different segment.
Pertanyaan diskusi: 1. setujukah anda dengan value proposition yang ditawarkan virgin untuk target pasar yang dibidiknya? 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 lowvalue subscribers, bad credit, and infrequent usage, it would speak volumes and establish Virgin Mobile USA as a mainstream provider. 2. Bagaimana industri telekomunikasi di amerika memperoleh keuntungan dari bisnisnya? 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, Contract provided carrier with a hedge againts churn and a guaranteed annuity stream.
3. Struktur harga mana yang sebaiknya dipilih oleh virgin mobile, dengan mempertimbangkan target pasar yang dibidiknya?
Given the market Virgin Mobile chose to target as it entered the U.S. market for cell phone service, the pricing option it should pursue is #3, a prepaid service plan. Unfortunately, it would be difficult for Virgin to create barriers to its competitors to create their own prepaid plans and also target the teenage and young adult market. However, if Virgin creates a positive brand image with the youth market, they should be able to engender customer loyalty among that market. Teenagers and young adults will want a service provider who understands them and is in touch with their culture. Virgin’s image has the potential to make a connection with consumers in this age group, and Sir Richard Branson’s antics have the potential to capture the imaginations of that market
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 offpeak 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. 4. Seberapa menguntungkan struktur harga yang anda pilih? Jelaskan ?????
