Virgin Mobile
Virgin Mobile
Problem Statement
Virgin is one of the top recognized brands in Britain, and is mostly known for the diversity of products that it represents and the values, which it entails. Now they are looking to go into the US market with their Virgin Mobile brand. The main problem that Virgin Mobile USA was facing was entering a mature, over-crowded mobile industry market. Based on the fact that in the US had six national carriers and the industry penetration was almost 50%, they had to find a way to be successful in the mobile industry.
Situation Analysis
Customers-
Virgin mobile is going to target young customers aged between 15-29. These are customers which needs haven’t been met by the current industry players. Customers in this age group are about to get their first cell phone, in high school, college, or just leaving their homes. At the present time the market penetration by age group in the US was of 17% (ages 15-19) and of 45% (ages 20-29), compared with other countries of similar cellular phone usage was significantly lower. On average countries such as Japan, Finland, and U.K had market penetrations of 70% (ages 15-19) and 75% (ages 20-29).
Competition-
Based on the fact that Virgin wants to target a Niche, they will find competition however they can be leaders if they create a difference in knowing, understanding and meeting their customers needs.
The main competitors are AT&T, Cingular, Verizon, Voice Stream, Alltel, and Sprint although these carriers haven’t targeted this specific segment. The main reasons that major carriers have not targeted this specific segment where:
Young customers usually have poor credit history
The average cost to acquire a customer was $370, and they believed that since these users might not use their cell phones frequently it was not worth to get this low-value customers.
Company-
Virgin is a well-known company, which has more than 200 corporate entities around the world. They have products ranging from beverages to airplanes with the virgin brand name. Now they want to enter the US Cell phone industry with there brand Virgin mobile USA.
Collaborators-
Virgin mobile will enter the US market with a joint venture 50-50 with Sprint utilizing the MVNO model (mobile virtual network operator). This consisted that Virgin would buy minutes from Sprint PCS network.
Other partners included MTV Network which had an impressive reach for the under 30 market. This partnership included that customers would have access to many features such as games, ring tones, text alerts, graphics, and in addition to this they could vote live for their favorite videos with there cell phones on some shows such as TRL (Total Request Live).
In addition to partnerships with Sprint and MTV they had a distribution agreement with Best Buy and Target, which charged $30 commission per phone compared with the average of $100 commission for traditional industry channels.
Context-
Virgin Mobile USA is a company that wants to enter a mature market and has to find a way to capture