Virgin Mobile Case Study

This case speaks of Dan Schulman who has just recently taken the position as CEO of Virgin Mobil USA. In the summer of 2001, he assembled a team and set a goal of 1 million subscribers by the end of the first year, and 3 million by the end of year four. Virgin although a top brand in the UK had a weak following in the states at this time. They had success in the UK with the launch of their mobile network and devices, but did not fare well in the Singapore market. Despite their setbacks, they decided to launch a joint network with Sprint in the United States purchasing minutes from Sprint on an as-used basis.

The mobile phone market in the US at this point was considered to be at its “Maturity” level in economic terms. However, consumers aged 15-29 did not use cells phones or have access to them as much as the segment above them. Schulman saw that this demographic was projected to be robust in the next five years, therefore he would target this segment that has not been targeted by the big players. Seeing that their target was pretty much the youth of America, Virgin mobile decided to include bonuses and extras such as access to the MTV network, phone face plates, ring tones, and online real-time billing. In an effort to set themselves apart from the big carriers, they packaged their phones in “consumer electronic” see through type packaging which would include all the information the customer needed to start using Virgin mobile that day, without the help of pushy sales people.

Seeing that Virgin Mobile only has a small budget set aside for advertising, Schulman must focus on a pricing strategy that would attract and retain mobile phone subscribers.

When looking at the options available to Virgin mobile and their small budget, they must tread carefully in order to grab this niche market away from the big carriers. As advertising comes, I believe that all of the information needed for the consumer to be able to buy the phone, activate the phone, and choose a plan for minutes should be readily available to them on the packaging. This way the consumer doesn’t have to deal with pushy sales people in order to get enough information to make their purchase. Since these phones will be located in known retail stores, the packaging and phone should sell themselves. Seeing that pricing and plans for big carriers are very similar in many respects, “cloning” or copying these prices would not be an ideal move for Virgin mobile.

Therefore, I believe that they should go with a completely different type of pre-paid minute plan, with varying prices and minutes available for use that customers may choose from. Since their target all have varying amounts of minutes used, there should be pre-paid cards or pay online options with costs ranging from 35-50$ depending on the type of user they are. 35$ would give them a minimum amount of minutes like 100-300 for the low user, and up to 2000 minutes at 50$ for the heavy user. This way, the customer has the power to choose which plan, which phone, and how many minutes they want to purchase, which would result in higher customer satisfaction and possibly a very large market in the future.