Virgin Mobile

Antavious Mannings

MKT 600

November 11, 2014

Virgin Mobile USA: Pricing for the Very First Time

Problem Statement

Virgin, a UK based company ran by Sir Richard Branson, has remained of the world’s most renowned and esteemed brands. In 2001, Dan Schulman was appointed CEO of the Virgin Mobile USA and had the task of determining an efficient pricing strategy that would attract US consumers. Other important decisions that needed to be made were figuring out what target market will be, finding unique traits to differentiate Virgin from their competitors, choosing which channels to use and how to effectively advertise their products. Dan Schulman and Virgin USA now face the decision of defining a pricing strategy that allows penetration the youth segment (ages 14-29) while creating brand differentiation from the rest of the carriers in the market.

Situation Analysis and SMART Objectives

Virgin is a UK has nearly 200 corporate entities ranging from airlines to mobile carriers, and they now have decided to enter the mobile carrier market of the US mobile industry as Virgin Mobile. They plan on adopting an unlikely channel strategy that most USA carriers have never encountered, offering prepackaged mobile phone or what they call a “Starter Pack” kit that has a phone plan already set in place. Virgin Mobile decided to position their products by targeting the youth segment, with ages ranging from 14 to 29 year olds. They want to target customers that probably cannot sign a mobile contract on their own or undergo the credit checks of some mobile carriers.

The US mobile carriers industry is exceedingly saturated, so barriers to enter are high due to the immense amount of competition. Virgin Mobile decided to enter as a mobile virtual network operator, which was very successful in UK and not very common in the USA. They planned to target a younger age group, which has not been exploited in the US. Virgin Mobile USA’s biggest competitors are Verizon, which at the...