Virgin Mobile USA: Case study - Essay Example

Virgin Mobile USA Case Analysis According to Mcgovern (2007), Virgin Mobile is a company located in the U.K. It is well recognized for its brand extension and the first organization to have had Mobile Virtual Network Operator (MVNO). It is also known for its stylish position of the mobile market targeted for the youth market from age 15 to 29 years. I agree with this choice of target market selection as young people mostly use mobile phones to communicate and socialize with their friends and loved ones.

Globally, it is known that young people interact more effectively than older people do. There are mostly likely to purchase the commodity to fulfil their need of socializing. Youths particularly teens mostly use MMS and SMS that is affordable. Mcgovern continues to indicate that, young people are so much addicted to mobile phones that they can hardly live without them. Internet and media contact via mobiles is much preferred by youths as compared to other segments. Online games and internet is most used by youths as most identify themselves with the emerging technology.

With this in mind, I agree with the Virgin mobile’s target market selection of young people as their lives revolve technology. However, the risk associated with targeting this market is that most of them depend on their parents for their needs thus becomes hard to purchase an expensive choice. Most people in this target selection are students and few working. Secondly, there is a risk in targeting this target group in that a Company needs to set affordable prices that meet this group’s needs.

Lastly, either most consumers are leaving at home or in college, thus their usage is inconsistent as a time they may not use the phone especially when in school or vacation. Given the Virgin Mobile’s target market (14-24 years old) the Company should structures it’s pricing at an affordable price that is not too low to the Company and still not high for consumers. This flexibility makes youths to modify their plans to purchase what they want and need. The case lays out three pricing option that include Clone to the Industry Prices, Prices underneath the Competition, and the Whole New Plan Option.

From the three pricing options, I would choose the third policy of the Whole New Plan that entails introducing different pricing structure with different pricing dimensions. When this is done, it eliminates contracts that would create a competitive advantage to reach the target group. In facts, the target group particularly those under 18 years would not need signing of contracts thus this would result to high customer acquisition. Lowering handset subsidies is a superior strategy that makes consumers feel more loyal and proud of the brand thus increasing their buying power.

Off-peak hours are essential as they increase sales. Lack of hidden fees will beneficial as youths do not like such charges. By having simple pricing and marketing in a competitive way augment customer acquisition. Therefore, this option is best for the company for it has essential features like off-peak hours, prepaid package, no contract, and low subsidies that align to the target market. Financial Viability of the Whole New Plan Market share Subscribers (1st page) 1, 000, 000 Total Subscribers 130, 000, 000 Market Share 0.

77% Monthly Revenue from call Minutes per customer 200 Charges per minute 0.425 VAS revenue 12.82 Total Revenue 97.82 Retrieved from: http://www.scribd.com/doc/49332062/Virgin-Mobile-pricing-for-the-1st-time Lastly, the cellular industry is notorious for customer dissatisfaction despite the existence of service contracts, the big carriers churn roughly 24% of the clients yearly. The source of all this dissatisfaction is lack of planning as most companies fails to comprehend various strategies that retain clients and augments the company’s growth.

This entails poor pricing plan that comprises of poor structure that is not competitive, and does not create profit. As a result, it creates dissatisfaction and in turn results to great loss. Typically, different pricing variables affect consumer experience differently. For instance, the Clone Industry Pricing has no real price distinction and consumers may not be willing to buy products. Pricing below the Competition has high chances of attracting consumers due to affordable prices. Lastly, the Whole New Pricing Plan motivates consumers to purchase products as most products are in different pricing and packaging.

Categorically, Virgin Mobile is an organization with an exceptional image that gives consumers innovation, quality, fun, and value of money. In future, the Company intends to offer valuable products better than those of competitors do. Its choice of market requires innovation that attracts young people. Youths.The Company intends to create a friendly packaging similar to that of electronics item that in turn would enhance better appealing. Works Cited Mcgovern, Gail 2007, Virgin Mobile USA: Pricing for the Very First Time.

Harvard Business School.