Virgin Mobile Harvard Case

The generation of talking face-to-face is slowly fading away, and the technology era is going to keep on growing. One of the most widely used technology services known today is the cellular phone industry. According to the Pew Research Center’s website, 90% of American adults own a cell phone. Of that 90%, the smartphone ownership is at 64% (2013). Verizon Wireless, along with the other major carriers, T-Mobile, Sprint, and AT&T, have taken this data and comprised a growing industry where competition arises from all angles. These companies have battled one another on pricing, plans, and customer service for many years in order to stay on top. Unfortunately, these are major factors in whether or not a customer will choose the particular company over another.

We think that companies should calculate their break-even point for their goods and services and to charge the prices according to that figure. This way, they can make sure that their price covers their expenses. In case of AT&T’s text messaging they are charging much more than the cost. But because there are only four national carriers in United States and they control 90 percent of the market, and text messaging had become widely popular, they can afford high prices. They are considering the demand of the service and pricing the product according to demand and supply.

Since Virgin Mobile is trying to create a bucket (option 2) by considering ARPU at 200 minutes, it should try to keep its price per minute at around 25 cents per minute (Exhibit 10b) for third option

Virgin’s current products and services range consists of telephone, soft drinks, trains, planes, broadband, directory inquiries, television packages, and many others. The time that it takes a product to be released, can effect greatly the overall success of the launch and consequently to the product itself. Nonetheless, Virgin products’ demand remains pretty much continuous throughout the year and that makes their competitors’ actions the main factor that they are dictating their product’s launching time. Because Virgin wants the launch to be successful, they make their promotional material be released at the right time to increase awareness and raise the product’s demand. As Virgin wants to enter the broadband market, is using various promotional ways to increase the consumer’s awareness on a mass scale so that their objective of increasing the number of sales can be achieved. One of these promotional ways that Virgin are using to show the quality of their broadband, is by highlighting the adaptability of the service by showing three very different internet users that are using the broadband in an incredibly positive way. The message guarantees that the consumers know that the product has numerous applications which are fit for a number of different purposes. Moreover, they have designed their broadband HUB in such a way that it appears stylish and sleek, to highlight its fast speed and technological developments that were made. By developing their

Don't let them forget that the First Provider also allows you to order a credit report every 90 days. It offers identity theft protection as well as the accidental death coverage, health discounts, shopping rewards, and buyer's protection and extended warranty. It is helpful to reiterate to the customer all of the other benefits available to them. Sure, there may be 2 benefits (cell phone coverage and free checks) that they won't use; however, there are a lot more benefits that would be beneficial to

XM’s development costs are high as they are introducing a new technology ($1 bn+). Initially, their costs may be high so that can recover some of their investments. However, over time as XM understands the market landscape better, moves up the learning curve and achieves economies of scale, they may be able to operate more cost effectively, which may allow them to charge lower prices over time. Also, with SIRIUS in the market, XM may have to lower their prices to remain competitive. However, if SIRIUS decides to keep costs high or increase them, XM may not be pressured to reduce prices. Also, with time if XM’s customers increase, they can continue to earn high revenues while lowering prices. If for some reason SIRIUS leaves the market or XM locks in a substantial number of customers who may find it difficult to switch i.e. achieve somewhat of a monopoly, they will be able increase their fees. With that said, XM can maximize their 5 years profits with a fee of $10-12 according to Table A. However, the variable market dynamics over time will determine how XM can price their service.

In the opinion of Baumol and Blinder (2011, p. 235), "monopolistic competition is a market structure characterized by many small firms selling somewhat different products." The authors in this case further note that the output of each entity is small in comparison to the market's aggregate output of competing but closely related products. With that in mind, the mobile phone market exhibits some key characteristics of monopolistic competition. In this market, customers in need of mobile phones are presented with a wide range of options to choose from. For instance, a customer who enters a mobile phone handset shop has the option of purchasing a Motorola, Nokia, Samsung, Blackberry or even an LG handset. All these products despite being closely related are also largely differentiated. As Tucker (2010, p. 268) notes, "the key feature of

Virgin mobile is entering the US mobile market. Low brand recognition in USA and limited financial resources for advertisement represents a constraint because to enter successfully in such a market Virgin needs to swiftly attract its potential target customer, in order to establish a critical mass and financial strength to defend itself from incumbent and/or other potential entrants (price-wars, dumping, etc…). The profile of target customers, youth in between 15 and 29 years old with low credit credentials and high income / price elasticity (sensitivity to changes in price and income), is in conflict with the need to retain customers for a minimum period of 17

Solution. Virgin Mobile USA needs to evaluate their suppliers of the mobile phones to ensure these devices are both physically appealing and have the capacity for the services that would be used

Over a quite long period prior, telecommunication system has incredible improvements from the wire to wireless phone technology. “The ability to convey information quickly, accurately, and efficiently has always been one of the main focuses driving human innovation. From prehistoric man with their signal fires to the smartphone-wielding high-powered executives of today, communication still remains a key for survival and success.” (The History of Telecommunication) Telecommunications set a worldwide network helping people closer together. Nowadays, there are many firms with good services, such as AT&T, Sprint, PCS, T- Mobile, and Verizon in the US. Among these firms, AT&T is the telecommunicating firm that I would like to mention here about its mobile share value plans. Besides its services and products supplied, the mobile share value plans are one of the major changes of AT&T in 2014. The AT&T’s competitiveness, which is based on its pricing and servicing policies, is to measure against other companies in the Telecommunication Industry market.

In today’s business and consumer market, technology is a major source of competition for society. One of the most competitive markets is that of the cell phone industry. It seems that every company has a better plan, equipment, coverage, and cost savings for the consumer. Sprint has a very progressive marketing strategy. According to the Sprint website (www.sprint.com, 2016), the company stresses that being able to connect with each other is the key to happiness. As with other cell phone companies, Sprint offers multiple lease options for their equipment, many different mobile plans, a variety of devices, and boasts of an expanding, dependable data network. The company also mentions their devotion to providing an eco-friendly business

Being in the service sector it is important for Virgin Atlantic to study its marketing mix as it works as an efficient tool, while building up marketing plans. It comprises of the seven P’s which are as follows.

First, to determine Virgin Mobile’s strategy it is important to look at the industry. The cellphone market in U.S. seems to have 50 percentage with 130 million mobile subscribers. The age group from 15-29 years are currently less penetrated than other global markets. Expected growth from this group in the next 5 years (Mcgovern 2,10). The needs of this segment has not been met yet, due to their savvy nature, and the vast hidden fees represented in common carriers. Additionally, due to nature of cell phones as a necessity good, the younger generation will

might suggest that customers are actually not as happy as they state they are. Besides, it

Vodafone also segment their market based on the lifetime value of their customers. Individuals who have a mobile phone on a contract payment plan are of higher value to Vodafone than an individual who is on a pay as you go payment plan. This is due to the fact that Vodafone are guaranteed a certain level of income from their customer for a period of 12 to 18 months. This can then help determinate the allowable spend per customer on marketing to help determine return on investment.