Pricing for the very first time
Summary of the facts: Company Profile ? The Company is headed by Sir Richard Brandon and the CEO of Virgin Mobile USA was Dan Schulman whose main aim at the start of this great venture was to generate a subscriber list of 1 million by the end of one year of its existence by developing a strong pricing strategy which would enhance the subscribers retention and attraction strategies (pg. 2). It is a UK based company having a number of brand extensions at its purview which helps them to be available in every segment of the corporate portfolio.
Virgin implies value for money, quality, innovation, fun and entertainment by providing something that is fresh, valuable and better than the competitors (pg. 2). Virgin had been successful in the UK market because of its first ever launch of mobile virtual network operator(MVNO) but couldn’t prove to be the same in the Singapore market place because of industry rivalry and it would add to the market clutter in the already saturated market.
In the US market Virgin planned for following up with the same MVNO model for which it carried out a joint venture with Sprint where in the services of Virgin would be hosted on Sprint’s network (pg. 3). Virgin in USA carried out a thorough market research and identified the distinctive market segment group to be the youngsters between the ages of 15 to 29 to be very lucrative for their business. The other competitors didn’t tap this market because of the target segments credibility in payment through credit options.
The only factor which Virgin USA has to think about is the variations which will be caused in the market segment determined by the company. Since the target audience is the college goers, there could be inconsistency in their usage depending on their pocket value they get and moreover their calling patterns would also vary than other businessmen. In order to cater to these young generation who are filled with innovative ideas and will also expect the company to provide a value proposition that would satisfy the needs of the youth market and appeal them.
The salient features of the services provided by Virgin USA is the involvement of the delivery of content, entertainment and the features there by also merging up with MTV networks to provide games, graphics, ring tones, music and other forms of activities for the subscribers. The company would also make use of MTV channels and their web site to promote their products and the services.
Thus the positioning for the under 30 market was a great challenge for Virgin USA in terms of satisfying the varying pattern of the targets usage, the fluctuations in their needs and wants, the pricing structure which in turn would generate value for money on both sides of the business activities. The various channels which it would adopt are the retail outlets, kiosks, high end electronic stores, specialty stores etc that require the high tech and the high touch ability to make the service provided effective.
Virgin has also tried to differentiate their distribution channel strategy by making the product available at the youth stores where the footfalls would be in huge numbers. Consumer electronic packaging is another concept which the company would cater to so that the products are easily viewed in the transparent boxes for the consumers to engage in the purchase deal on their own without the help of salespersons.
The pricing also the firm wanted to make it free of hidden charges and still managing to make huge margins. The handset manufacturer Kyocera would help the firm in providing large point-of-sale displays which will attract the customers. Commissions was another area the company needs to tap on when they decide to choose the distribution channels not missing on the fact of the acquisition and other costs that the company will have to bear.
Statement of the Problem: To be able to meet the needs and the wants of the target youth market by a proper pricing strategy which will help them from eliminating the concept of paying the hidden charges and still making money which among the competitors it has been an issue to market without t he miscellaneous charges. The major problem which Virgin has to undertake is the pricing strategy which needs to be streamlined. The risk of entering into the US market after succeeding in the UK market and after failing in its entry in the Singapore market will surely pose a great challenge