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Jwala - Virgin Mobile Case Presentation
Jwala - Virgin Mobile Case Presentation
Market Research
All Options
Analysis
Theory Application
Calculation
Virgin Response
Conclusion Recommendations
Inviting Questions
2
Introduction Analysis Conclusion
Company
Background
Case
Background
Issue of
Concern
4
Introduction Analysis Conclusion
Issue of 1990s Virgin Rail, Virgin Games, Virgin Cola, Virgin Travel, etc.
Concern
2000s
Virgin Mobile, Virgin Bikes, Virgin Blue, Virgin Digital, etc.
Company
Background
Case
Background …
Issue of
Concern
7
Introduction Analysis Conclusion
Company
Background
Case
Background
Issue of
Concern
8
Introduction Analysis Conclusion
Company
Virgin Group
Background
Company
We believe in making a difference. In our customers'
Background eyes, Virgin stands for value for money, quality, innovation,
fun and a sense of competitive challenge. We deliver a
Case quality service by empowering our employees and we
Background facilitate and monitor customer feedback to continually
improve the customer's experience through innovation.
Issue of
Concern ------- Virgin Group Website
[Source: http://www.virgin.com]
10
Introduction Analysis Conclusion
11
Introduction Analysis Conclusion
12
Introduction Analysis Conclusion
13
Introduction Analysis Conclusion
14
Introduction Analysis Conclusion
180
140
Case
Number of Subscribers (in millions)
Background 120
100
Issue of
Concern 80
60
40
20
15
Introduction Analysis Conclusion
Carrier
35
30
Millions
25
20
Company 15
10
Background 5
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Case Subscribers
Background
17
Introduction Analysis Conclusion
70 ₵
60 ₵
Market
Research 50 ₵
All 40 ₵
Options
30 ₵
Theory 20 ₵
Application
10 ₵
Calculation 0 ₵
70 ₵
Market
60 ₵
Research
50 ₵
All
Options 40 ₵
30 ₵
Theory
Application
20 ₵
et uni Mre P eci r P
10 ₵
Calculation
0 ₵
100 300 500 700
20
Introduction Analysis Conclusion
Calculation Or 3?
21
Introduction Analysis Conclusion
Market
Research
• Simple message:
All
- Pricing competitively
Options - MTV applications
Theory
- Superior customer service
Application
• Better off peak hours
Calculation
• Fewer hidden fees
22
Introduction Analysis Conclusion
70 ₵
All 40 ₵
Options
30 ₵
Theory
20 ₵
Application
10 ₵
Calculation
0 ₵
Minutes
Easy to promote.
Market Consumers are used to ‘buckets’ and
Research peak/off-peak distinctions.
Savings on advertising budget costs.
All Simple packaging could save costs on high
Options commissioned salespeople.
24
Introduction Analysis Conclusion
• Similar structure
Market
Research – Pricing slightly below the
competition
All
Options • Maintain ‘buckets’ of
Theory minutes
Application
– Price per minute set below
Calculation
industry average in certain
key buckets
– Target young market that
uses 100 to 300 minutes
25
Introduction Analysis Conclusion
70 ₵
Market 60 ₵
Research
50 ₵
All 40 ₵
Options Industry
30 ₵
Theory
Application 20 ₵
10 ₵
Virg
Calculation in
0 ₵
27
Introduction Analysis Conclusion
28
Introduction Analysis Conclusion
Market
• Does it make sense to shorten
Research
subscription terms or eliminate them
All
Options
altogether?
– Contract provide a hedge against churn
Theory
Application – Estimated churn rises from 2% to 6%
Calculation • Allows 18yrs and younger to purchase
the product
29
Introduction Analysis Conclusion
30
Introduction Analysis Conclusion
31
Introduction Analysis Conclusion
Hidden Fees
Market
Research • Goal: Make the pricing very simple
– “What you see is what you get!”
All
Options • Rolling all these normally hidden costs that
Theory
include taxes and fees into the final price
Application
Off-Peak Hours
Calculation • Consider the target market: Young People!
- Minute usage is very different
32
Introduction Analysis Conclusion
33
Introduction Analysis Conclusion
34
Introduction Analysis Conclusion
35
Introduction Analysis Conclusion
36
Introduction Analysis Conclusion
Market
Research
Xtras
All Average monthly revenue
Options from minute usage Hidden Fee
= Avg. min + avg. minute charge
Theory
Off-peak (1) hour
Application -Same price of handset offered
-Churn rate of 6%
Calculation
37
Introduction Analysis Conclusion
M
Market LTV = − AC
Research 1− r + i
ARPU CCPU M AC LTV
All
Options
Average Cash Cost per user MonthlyAcquisition Cost Lifetime
Revenue per= 45% of ARPU Margin Value
Theory user = ARPU - CCPU
Application
38
Introduction Analysis Conclusion
Assumptions
39
Introduction Analysis Conclusion
Item Value
Market
Research Hidden Fee $ (6.00)
Off-peak (1) hour $ (3.00)
All Priced below (5c) $ (10.00)
Options
Option 1 Xtras $ 12.02
Theory Option 2 Xtras $ 18.03
Application
Option 3 Xtras $ 24.04
Rev. from minute usage $ 30.00
Calculation
40
Introduction Analysis Conclusion
Xtras Value
Market
Research
All % of the
Options
market
share
Theory
Application
Calculation
# of subscriber x 12 months
41
Introduction Analysis Conclusion
M
LTV = − AC
1− r + i
42
Introduction Analysis Conclusion
43
Introduction Analysis Conclusion
Calculation
44
Introduction Analysis Conclusion
Market
Research
All
Options
Theory
Application
Calculation
45
Introduction Analysis Conclusion
Pricing Strategy
Pricing Objective
Sales Maximization
Virgin
Demand Estimate
Response
Current market penetration of target market is only 25%1
Create Demand amongst remaining 75%
Recommen-
Brand Switch by current users
dations Capitalize on Highly Elastic Demand of Target Market
Cost Estimates
Monthly Cost to Serve per Customer
Networking Cost
Questions
Customer Service Cost
Overhead Cost
Customer Acquisition Cost
Subsidy on Cell Phone set
Marketing Communication Cost
Sales commission
Source: http://www.wirelessweek.com/virgin-mobile-details-launch-plans.aspx 46
Introduction Analysis Conclusion
47
Introduction Analysis Conclusion
Virgin
Response
Recommen-
dations
Questions
48
Introduction Analysis Conclusion
Questions
49
Introduction Analysis Conclusion
Virgin
Response
Recommen-
dations
Questions
50