Virgin Mobile USA: Pricing for the Very First Time Sudarshan Bangalore
RSM 392: Strategic Management 100128512
.
This paper analyzes the entry pricing strategy of Virgin Mobile U.S.A., the subsidiary of U.K. based telecom conglomerate, Virgin Mobile U.K. Virgin Mobile U.K. has a history of brand extensions and previously tried a Singapore entry but failed. Their new endeavor, Virgin Mobile U.S.A. (“Virgin”) formed U.S.A.’s first mobile virtual network operator in a joint venture with Sprint Mobile (“Sprint”.) A mobile virtual network arrangement allowed Virgin to access Sprint’s telecom networks and provide consumers phone plans on a pay-per-minute basis, effectively removing the logistical entry barrier associated with setting up communications …show more content…
A major reason was the prevalence of identical services. There was a fear that pivoting strategies away from the status quo would reduce market share or profits. Changing services also involved trade-offs: for example, reducing hidden fees hit margins, and removing credit checks increased the churn rate. As a result, network operators had similar turnkey platforms from pricing to marketing to point of …show more content…
However, the penetration in consumers aged 15 to 29 was low and had robust growth potential, but was not targeted due to lack of consumer credit quality. This is the niche that Virgin focused on. By performing a Porter’s Five Forces analysis with the understanding that Virgin subverted multiple barriers through their joint venture with Sprint, and various agreements with suppliers, Virgin’s consumer target was strategically sound. There was little competition in the segment, therefore, consumer choice, and subsequently, consumer power was low. The added value through adopting an asymmetrical strategy could be seen through a value chain analysis. Indeed, entering this niche market allowed Virgin to adopt strategy over the current focus on operational effectiveness in the industry. There were risks such as contract churn and low credit scores which could result in delinquency, however, they could be mitigated through a catered strategy as mentioned by Daniel Schulman on
RSM 392: Strategic Management 100128512
.
This paper analyzes the entry pricing strategy of Virgin Mobile U.S.A., the subsidiary of U.K. based telecom conglomerate, Virgin Mobile U.K. Virgin Mobile U.K. has a history of brand extensions and previously tried a Singapore entry but failed. Their new endeavor, Virgin Mobile U.S.A. (“Virgin”) formed U.S.A.’s first mobile virtual network operator in a joint venture with Sprint Mobile (“Sprint”.) A mobile virtual network arrangement allowed Virgin to access Sprint’s telecom networks and provide consumers phone plans on a pay-per-minute basis, effectively removing the logistical entry barrier associated with setting up communications …show more content…
A major reason was the prevalence of identical services. There was a fear that pivoting strategies away from the status quo would reduce market share or profits. Changing services also involved trade-offs: for example, reducing hidden fees hit margins, and removing credit checks increased the churn rate. As a result, network operators had similar turnkey platforms from pricing to marketing to point of …show more content…
However, the penetration in consumers aged 15 to 29 was low and had robust growth potential, but was not targeted due to lack of consumer credit quality. This is the niche that Virgin focused on. By performing a Porter’s Five Forces analysis with the understanding that Virgin subverted multiple barriers through their joint venture with Sprint, and various agreements with suppliers, Virgin’s consumer target was strategically sound. There was little competition in the segment, therefore, consumer choice, and subsequently, consumer power was low. The added value through adopting an asymmetrical strategy could be seen through a value chain analysis. Indeed, entering this niche market allowed Virgin to adopt strategy over the current focus on operational effectiveness in the industry. There were risks such as contract churn and low credit scores which could result in delinquency, however, they could be mitigated through a catered strategy as mentioned by Daniel Schulman on