For the exclusive use of N. Ji, 2015.
9-504-028
REV: JUNE 11, 2007
GAIL MCGOVERN
Virgin Mobile USA: Pricing for the Very First Time
When Richard Branson called me to discuss the CEO position at Virgin Mobile USA, I quickly considered
the opportunity: a chance to be the chief executive of a newly formed start-up in an overcrowded, increasingly
mature, capital-intensive, highly competitive industry. Oh yeah, I should also mention that this is not an
industry known for its customer service and we’d be entering with a brand that had little U.S. name
recognition except for possibly as an airline. But then I thought, “It’s these kinds of opportunities where a team
can define itself, and if this could be pulled off, it would be unbelievable.”
— Dan Schulman, CEO, Virgin Mobile USA
Schulman accepted the challenge in the summer of 2001 and began to assemble a team to develop
the new Virgin-branded service with a launch date of July 2002. Schulman had 18 years of
telecommunications experience with AT&T and had most recently been CEO of Priceline.com. He
would need to draw on his experiences from both firms to create an appealing offer that would take
off in a saturated market. His goal was to achieve a run rate in which Virgin Mobile would have 1
million total subscribers by the end of the first year, and 3 million by year four.1
One of the key decisions for Virgin Mobile USA was the selection of a pricing strategy that would
attract and retain subscribers.
Company Background
Virgin, a U.K.-based company led by Sir Richard Branson, was one of the top three most
recognized brands in Britain. The company had a history of brand extensions—more than any other
major firm in the past 20 years—resulting in a vast portfolio consisting of more than 200 different
corporate entities involved in everything from planes and trains to beverages and cosmetics. What
tied all of these businesses together were the values of the Virgin brand:
We believe in...
