Based on the outcome of the research the company decided to targetconsumers aged between 15 to 29, since this was the only section of customers where theindustry penetration was close to 20% compared to 50% in other customer groups and the projected growth rate amongst this segment of customers in years to come was expected to berobust.The targeting strategy adopted by Schluman and his team was the best to be adopted by a new entrant into the market, where in the market penetration is already 50% and themarket is heading towards maturity. Under these circumstances a new player should and mustfocus towards open fences, i.e. segments of consumers which have still not participated inmarket penetration and do further research as to find out why the segment of customers didnot participate in the industry penetration. After conclusive outcome of such researches, thenew entrant should carry out a SWAT analysis and evaluate if targeting this group of consumers is beneficial, i.e. whether the company can address to their needs andrequirements and if the answer is ³yes´ the company must go ahead with the plan of targetingthe said customer group, and that is what Schluman and his team finally did
The positioning of the Virgin Mobile Services in the US market is to attractthe customers of aged between 15 ± 29 yrs. Knowing that this segment of consumers is moreopen to new things such as mobile, text and entertainment services and considered mobile phone as a fashion accessory, the Virgin Mobiles concentrated on VirginXtras i.e. MobileEntertainment Services and promoted sleek trendy handsets at no additional costs in their advertisements, so that the target customer can associate with the Virgin Brand and develop a bond once they start using the services.Advertisement in youth media networks. MTV, WB and Comedy Central and YouthMagazines (The Complex, Vibe and XXL). The name of the initial products,³Party Animal´ & ³Super Model´
Launch Price and Communication to achieve the Target Segment
For every customer the cost per customer to be borne by the customer comprises of the following
Companies are providing handset having price range $150 ± 300 with asubsidy of $100 ± 200. Typically end users are charged between 60 - 90 dollars per handset.Virgin has entered into a contract with handset manufacturer Kyocera where in handsets will be available in the price range of $ 60 ± 100, thus Virgin has effectively brought down thehandset subsidy to around $10 per handset. The distribution agreement with Target and BestBuy has reduced the distribution cost to $30 per phone against the industry average of $100.
The firm has a Advertisement budget of $ 60 million for the first year,thus the per capita acquisition cost(AC) works aout to be $60 (assuming Advertisementresults in acquitting 1 million customers). Thus per capitaAC = $10 (handset subsidy) +$30 (distributor) + $ 60 (Advertisement)