Cody Rigsby

1. We decided that that pricing strategy three “a whole new plan” would be

the most effective at positioning Virgin mobile as the brand for adolescents and

young adults in the United States. This pricing strategy is easy for young

consumers to understand and afford. The phones are at the most expensive $100,

which a high school student can afford with half of their part-time job paycheck

or a teenager who has an allowance can save up for a month and buy. It is also at a

reasonable price for parents to spend on a phone if they were to purchase a

handset as a gift or for their child’s safety as a way of instant communication

between parent and child. This plan is also an excellent strategy because it throws

out the idea of contracts, which 14-17 old teens cannot obtain without a parent to

co-sign. This allows a teenager whose parent may not want them to have a cellular

phone to get a cell phone or parents whom are not willing to jeopardize their

credit or risk a high cell phone bill to fulfill their teenagers wants. This strategy

will also be a great tool at building brand loyalty at a young age. If a teenager is

given the freedom to have a cell phone at an early age by Virgin mobile and feels

comfortable and trusting of the provider they will come back to the brand when

their are of legal age to a contractual cell phone plan and opt out of it by choosing

Virgin Mobile. Cell phones are a form of constantly innovated technology and

young consumers are the opinion leader on these products and services in

comparison to mature consumers. Targeting this market and eliminating all hidden

fees such as taxes and service charges is a great way for this market to think of
Virgin Mobile as trustworthy. We believe that the “whole new plan” is the best

way to enter the mobile phone market, but if we were to create our own plan for

the company we would use the same plan but change or give suggestions to

overcome some obstacles. When deciding how minute pricing should be handled,

Virgin should stay with the industry average of about ¢20 per minute because they

should not position themselves as more cost efficient in talk time prices, but rather

focus on their Virgin extras. Text messaging has become such an accepted and

widely used form of communication. In 2001 when virgin was launching their

mobile brand the U.S sent over 253 million text messages, and that number

elevated to 4.3 billion in 2006(Text messages.., Li Yuan, 2005. www.wsj.com).

Text messaging allows you to gather and send information without all the

interference of small talk. Test messaging is much more convenient way of

communication if you don’t have enough time for a full conversation you can let

your friends know your thinking about them or tell them you’re at work with a

simple message. This is where Virgin should differentiate itself when it comes to

pricing strategies. If Virgin were to price their text messages below the regular

rate of other carriers this is where their pricing would become a deciding factor in

a consumers choice to buy Virgin Mobile. The case study mentioned that young

adults are not making business calls and consuming large amounts of minutes, but

students are using text messaging as form of communicating when they are not

allowed to talk, like in class. This is why this strategy would be highly affective.

Another area that could be fixed is the pre-paid feature of Virgin Mobile. This is a

great way for consumers to avoid credit checks and not go over a budget on their
cell phone bill, but the channels of purchasing these products could be altered to

better the customer’s convenience. Buying a calling card looks cheap or tacky and

in a time where being luxuries and spendthrift is very important to teen’s self

image, a teenager is not going to jeopardize their image to insure they have more

minutes. The option to pay online is available, but teenagers cannot obtain credit

cards until the age of 18 and most banks don’t give debit cards till one is 18 also.

Another option for in-store purchasing of minutes would be to have retailers

accept payments on behalf of virgin mobile and credit that payment to one’s

account. This looks less tasteless and is more convenient for the customer because

they don’t need to carry around a card to use their minutes. The virgin Xtras could

also be where Virgin makes there money, since these options are at the consumers

will and are not a necessity the charge on these features could be higher than the

industry standard. Young adults are looking for luxury and individualism; ring-

tones are a great way to project that image. Teens will be willing t pay a little Xtra

for these services especially if Virgin has co-branded exclusive offers from MTV

and Nickelodeon.

2. Customer dissatisfaction stems from the apparent confusion which all

cellular customers have experience at least once from their carrier. It starts with

the fact that over 90% of all subscribers in the US have been required to sign a

contractual agreement with the start of a new service which nine times out of ten

require a credit check be done and the plans that are offered only consist of

“buckets” of minutes as options. Buckets of minutes only allow a certain amount

of talk time and if customers underestimate this amount of time, they either don’t
use all their minutes or they go over the allowed amount resulting in charges per

minute of each additional minute used. Many carriers are also guilty of sneaking

in extra hidden charges and fees which aren’t mentioned to the customers when

they subscribe for service, so a $29 plan could end up costing the subscriber $35.

Advertisements can also be misleading and give customers a sense of receiving

some type of deal or discount. Customers no longer feel as though they can trust

one particular carrier to have their best interest at heart and don’t find it necessary

to remain loyal to one particular carrier because they are all after the same thing,

money. Customers have also taken offense to mergers which have occurred in the

wireless industry between major carriers such as Sprint and Nextel. When people

hear of a merger, they surmise they're going to have problems, and some of their

dissatisfaction is based on perceived rather than real problems. Large carriers

have not attended to customer dissatisfaction due to the fact that they have

trapped their customers into contracts, so they can do as little as possible and

spend very little to please these people. Also many customers are unsatisfied with

hidden fees and overage charges. If a large carrier were to eliminate these fees

sales and revenue would drop.

3. The Virgin Mobile value proposition is very effective to its target

market. Virgin Mobile core positioning is that they offer a fun, honest brand at an

affordable price. They go above simply providing customer reliable cellular

service; they promise their customer extras that benefit to their youthful lives by

adding relevant content, features, and entertainment that the company calls these

“VirginXtras”. Virgin Mobile customers are exclusively able to access to MTV,

VH1 and Nickelodeon music, game and other features. The company has a

restricted agreement with MTV that allows Virgin subscribes wide variety of

benefits the network can provide to its customers. This was a very thoughtful and

potentially successful strategy by the company because the majority of their

customers are loyal MTV viewers. The exclusiveness of Co-branding with MTV

builds Virgin Mobile’s Brand equity through exclusiveness and having support

from a highly recognizable and trusted youth brand. Customers are giving the

opportunity to vote for their favorite artists on the popular MTV show “Total

Request Live”. Subscriber can also personalize their phones my adding MTV

brand graphics, ring tones, text alerts and voice mail. Beside the deal Virgin

Mobile has with co-branded MTV content they offer customer: text messaging,

online real-time billing, rescue ring, wake up call, fun clips, the hit list, music

messenger, and movies. Text messaging is a key selling point to youth, many text

messages more then they talk on the phone. These customers spend a great

portion of their time at school secretly communicating with friend through text

messaging. Text messaging also provides privacy from overbearing parent. In an

internet savvy world online real time billing is an effective way for owner to keep

track of their bill. The Rescue ring is a fantastic augmented product that we feel ill

appeal to the customer, no one else offers such a service. The rescue ring is an

innovative product offering. Many young people do not own an alarm clock so

they depend on their cell phone to wake them up. In today’s world if you do not

have a ring tone you are not consider cool, and ring tones give a person a sense of

individualism. Virgin Mobile’s teen to young adult target market will be highly
affected by their channeling. Their channeling consists of point of purchase

marketing where consumers can purchase phones, minutes, and Xtras without

pushy sales associates that sometimes neglect younger customers. Teen

consumers also don’t have to worry about having credit to open a phone line they

can simply pick up a starter bundle pack and start their service. Placing the

product in youth oriented retailers such as Target, Best Buy and Sam Goody is a

good strategy, because these retailers are positioned in youth’s minds as places

that are cool to shop with. The way that Virgin developed a horizontal marketing

strategy with sprint to use their technology to carry there service keeps the cost of

developing Virgin’s own technology low and helps them focus on developing

features that attract to their target market. Virgin has a great understanding of the

teen market to the fact that they use E-commerce. Americans are spending more

than ten hours a month on the internet, and using a large amount of that time to

shop and purchase (www.zonalatina.com). The fact that Virgin allowed there users

to purchase minutes and features online makes their target market more likely to

buy there service because of the convenience of dealing with one’s phone bill

through E-commerce.

4. Virgin has taken a market specialization approach to their target market

selection approach. Instead of trying to approach the masses they honed in on a

specific market and made their product appeal to those people. These young

customers are going to be intrigued by this new form of cellular provider. This is a

profitable market because of the account for a large amount of disposable income,

approximately 15 billion in 2005 (http://www.icrsurve

y.com/Teen_Survey_Report_0805.ppt.). They are more willing to spend money

on technological devices like cell phone. Problems that may occur with this target

market are numerous. Teenagers do have a large amount of disposable income,

but it is not steady, teenagers are less likely to have part-time jobs and more likely

to obtain money from their parents

(http://www.icrsurvey.com/Teen_Survey_Report_0805.ppt.). Parent’s way of

controlling their children is restricting their freedoms, one of those being a cell

phone. Another problem is young adult’s fickleness. We are always changing our

minds and after the hottest new product and if Virgin mobile does not fit that

criteria we can easily get out of our service plan and move along with our life.

Another risk is the backlash of unethical marketing of a product that some people

see cell phones as an unnecessary and too sophisticated adult oriented product for

a teenager to have. Virgin having low valued brand equity also doesn’t appeal to

this target market, youth want brands that are familiar and have established mass

appeal. So there is a risk in targeting the young adult market. Another risk that

could occur with this market is that if the Virgin brand extension into the mobile

phone market doesn’t do well this might reflect the way young adults view other

virgin products. Other cell phone carriers have been reluctant to target this market

because of many of the risks stated above. Also the fact that many of these

carriers are on credit approved contracts that teens cannot obtain. Even college

students with credit still do not have a steady flow of income, any high paying

jobs to pay their high bills.

 Sources Used

http://64.233.169.104/search?
q=cache:PEKXp0XETN4J:www.icrsurvey.com/Teen_Survey_Report_0805.ppt+t
eenage+disposable+income&hl=en&ct=clnk&cd=1&gl=us

http://www.zonalatina.com/Zldata371.htm

http://online.wsj.com/public/article/SB112372600885810565-
LVe__t8Ftcj3FzUOWPBs_wCzG9I_20060811.html?mod=rss_free

We abided by the UNCG honor Code

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