Virgin Mobile Presented By: Bhuwan Pathak (2011-13) Sunchit Grover (2011-13

)

Virgin Mobile
Strategy for entering the Indian Handset market

An Update
On 1st March 2008, Virgin Mobile has entered the Indian Market, tying up with Tata Tele-services.

Virgin is primarily an MVNO company, and retail distribution is only a part of the overall strategy.

having a finely crafted retail strategy can mean the difference between a strong subscriber uptake rate or a mediocre showing among the target audience.However. it is a very important piece. . Even for an MVNO like Virgin.

Agenda Virgin Mobile .Company Brief The Indian Opportunity Competition and Positioning The Indian Consumer VM‟s Entry Strategy Review Analysis and Recommendations .

Virgin Mobile The Company .

Global Reach .

All to make you happy because that's what makes us happy. We have Also been adjudged the 'Buzziest Brands of 2009' i. in a survey carried out by a leading online portal in India. Ranked as the No. the most searched for brands by surfers. towns and villages across India. think hatke. whether it's 'paying for incoming' or great value deals and cool phones.000 cities. we continued to offer you best service and value. . Everything we do. With presence aCross 45. we do a little 'hatke'.e.20. So.Think Hatke….000 outlets reaching over 3. We plan different. 1 for customer satisfaction within the first year of its launch with an overall score of over 95%. think different. We are India's first national youth-focused mobile service.

Organizational Mission Keep it simple Do what you say Take the leap of faith Keep on checking Stay true to your values Love the locals .

We ask fundamental questions: Is this an opportunity for restructuring a market and creating competitive advantage? What are the competitors doing? Is the customer confused or badly served? Is this an opportunity for building the Virgin brand? Can we add value? Will it interact with our other businesses? Is there an appropriate trade-off between risk and reward? . we base it on hard research and analysis.Virgin‟s New Venture Strategy When we start a new venture. we review the industry and put ourselves in the customer's shoes to see what could make it better. Typically.

The Indian Opportunity Market Size. Structure and Segments for Handset Retail .

000 Handset Retail = 3.000 .00.Mobile Retail .00.00.50.00.50.The Numbers New Connections per month = 60.000 Airtime + Accessories + Handset = 7.00.00.00.

The Demographics 50% .

What Virgin Needs To Know No Bundling . 7-9 Models added every month. This works in the favor of retailers. though it has begun to change.Handsets sold directly so far. People are replacing handsets every 18-24 months . not by operators. Replacement sales account for as much as 60%.

organized retail has a share of 7% .Organized Retail There are 95000 retail outlets in all Only 1% of these are organized retailers By Sales.

The Future . the Mobile retail market is growing at 20% According to Gartner figures for Sep 07.Growth Rates Handset retail market has been growing at a CAGR of 60% Overall. India recorded the fastest growth in mobile handset sales .

Aggressive promotions to get more common Low priced handsets and handset bundle offers.The Future . accounting for 3538% of total handset market.Trends Saturation in the urban market Rural India will drive growth. .

April. 2008 Availability of cheap as well as professional labour Weak consumer protection laws Increasing recognition of the potential in the retail space by the government. there are certain parties with vested interests that act as bottlenecks.f. .PEST – Politico-Legal Environment Politically stable country. FDI allowed upto 24% for foreign players w.e. However.

telephone. The retailers want to move the service tax on rent.0-4. mobile retail growing at 20%. .5%. Consumer confidence in the organized retail format is high and encouraging. Indirect taxes like service tax on immovable property adds to the costs. etc to sales tax.0% in 2007-08 while conditioning expectations in the range of 4.PEST . and Cell Phones are being sold on EMI. The Monetary policy aims to contain inflation close to 5. Credit Sales have started.Economic Environment 7-9% growth rate.

as as much as half of the newly added subscriber are from rural areas.live for today . Changing attitude.PEST .Social Environment 21. Growing middle class and youth with an increasing propensity to save.5 crore people between the ages of 14 – 25 years Demographics .A lot of demand is coming from Rural India.

PEST .Technological Environment The mobile sector has grown more than tenfold from 2001 to around 6 crore subscribers by mid2005. .000 crores and is growing at an annual rate of 60%. 35. 10% of the ISPs have 90% of the subscribers The country‟s mobile market stands at Rs.

New Entrants Supplier Power Competitive Rivalry Buyer Power Supplier Power: Mode rate Supplier s have strong brands and often have a presence in retail themselves Network Operators are able to push cheaper brands (e. but numerous national and foreign players are interested to enter Competitiv Rivalry: e Mode rate Margins are thin at mere 4%. Pressure from Second hand sales makes it worse. . Reliance Classic) Buyer Power: Buyers Demanding greater variety at lower prices Threat of Substitution Th re at of Substitu tion: Second hand phone market and unorganized retail is strong. Most demand is from rural areas Š where organized retailers donÕ t have a presence.g.Porter‟s Five Forces Th re at from Ne w Entrants: High Rising cost of retail real estate makes nationwide competition difficult.

but numerous national and foreign players are interested to enter .Porter‟s Five Forces Threat from New Entrants: High Rising cost of retail real estate makes nationwide competition difficult.

Porter‟s Five Forces Competitive Rivalry: Moderate Margins are thin at mere 4%. Buyer Power: High Buyers Demanding greater variety at lower prices . Pressure from Second hand sales makes it worse.

Reliance Classic) .Porter‟s Five Forces Supplier Power: Moderate Suppliers have strong brands and often have a presence in retail themselves Network Operators are able to push cheaper brands (e.g.

Most demand is from rural areas – where organized retailers don‟t have a presence.Porter‟s Five Forces Threat of Substitution: High Second hand phone market and unorganized retail is strong. .

Competitive Landscape Players. Positioning and Strength .

Existing Players Nokia Samsung Sony World ConvergeM (Future Group) Mobile Store (JV between Essar and Virgin) MobileNxt Univercell Hotspot (Spice Telecom) RPG Cellucom Subhiksha M Bazaar .

Nokia Around 50% market share in Indian mobile market Focus on “Mother Brand” than on “Another Brand” Addressed all five needs “REAPS” of Indian Consumer Strong focus on distribution network Reduced their prices to counter the grey market .

large medium and compact.18 to 45 years Eyeing 10% market share.dilutes brand value . in 20:60:20 ratio Against Franchising .entered Jan 2007 Target Segment .Mobile Store Essar Group venture . 600 cities. 2500 stores. and breakeven by 2010 Plans to invest 1250 cr by 2010 3 Formats .

Positioning Map .

Buyer Behavior and Gaps .Consumer Need Analysis Segments.

Young customers .The Indian CellPhone Buyer Replace handsets every 18-24 months High demand from upgraders Price Sensitive .bulk of demand from sub 5000 price range VAS such as Texting very popular among Urban.

The Opportunity Urban youth: Distinct mobile needs More and longer out-bound voice calls Large calling circles for both making and receiving calls Large users of SMS Both the earliest adopters and highest users of valueadded services Higher usage for both voice and SMS at weekends .

35. Incremental urban youth subscribers between 2008 and 2010 will be more than 5 crores. Urban youth mobile service revenues > Rs.Urban Youth: More Than Just A Segment India has 21.000 crores by 2010 Mobile as a badge of self-expression: brand and style very important .5 crore people between the ages of 14 – 25 years old.

Indian Market Entry Strategy Target Segment. Positioning and Objectives .

Virgin India Strategy Target Segment . 35000 Crores by 2011 (including connections. handsets and accessories) Image Objectives Establish the brand name Market Share Objectives 10% of the market in 3 years .Urban Youth Sales Objectives Revenues of Rs.

Positioning .Seeking Youngistan Mainstream Youth and Materialists 14-25 years Young executives / students / Youthful Adults .

Virgin India Strategy - Differentiation
Win a 10% share of the urban youth market by… Delivering imaginative solutions that offer Value for money & flexible tariffs that reflect their unique needs Innovative, game-changing value-added services

Great handsets at great prices

Personalized customer care

Virgin India Strategy - Cost
Whilst achieving a low operating cost per customer

through
Sharp focus on India‟s top youth markets Fewer, stable propositions with low support and

service costs
Imaginative, eye-catching advertising & PR that gets youth talking A lean, enthusiastic team supported by simple processes

Differentiation Strategy Customer Care
Taking the hassle out of buying a cell phone Try before you buy Real conversations: no scripts End-to-end ownership of problems: same Champ call-back Champ empowerment: authorized to resolve issues on the spot Welcome calls: all customers are personally welcomed to Virgin Mobile A real returns policy

Here‟s a list of our service center . *conditions apply. But don‟t get scared about it. Tension nahin leneka. Whatever your problem you can walk into any service center and get replacements for faulty* items in your pack. Lost my charger. . battery fell off and someone threw my phone…gasp! a.Returns Policy q.

Differentiation Strategy Value for Money and Flexible Service Offerings .

100% FM‟ handsets Easy Handset upgrades Personalised Care Safe Secrets .First Time In India Get paid to receive calls 50 paise to any local network TGI the weekend Bolt-on One Touch access to V-Bytes Unlimited access to V-Bytes for a simple daily charge „100% colour.Differentiation Strategy .

Virgin India Strategy Promotions Think Hatke Campaign 10 paise every minutes on incoming .

” Howard Handler CMO.Location And Ownership “You have to be in front of the right people.Virgin India Strategy . Virgin Mobile .

Location Shop in Shop and Kiosks Non exclusive. extensive coverage.Virgin India Strategy . because that's Virgin's core market. lower costs The one commonality all of the retailers share is they are places where teens shop. .

A Virgin Kiosk .

Also. by when it would be profitable. Plan to expand to 1000 cities by 2008-end Aims to acquire 50 lakh subscribers over the next 3 years. Virgin Mobile services were launched in 50 cities with 15. . with 55 Virgin Mobile kiosks & Shop-in-Shops.000 handsets & 40.000 top-up outlets. By the end of 2008. Virgin Mobile aims to offer similar services on GSM as well. when the new GSM players start rolling out their services.Virgin India Strategy Expansion Plans To begin with.

Virgin Mobile Analysis and Recommendations .

Strategic Choices for Mobile Retailers High Volume Low Cost StrategyViable Not sustainable Low Cost StrategyUnviable Premium PositioningViable Low Price High .

Positioning Virgin OFFER SIMILAR ACROSS RETAILERS EXPECTED ASSORTMENT CONSUMER PRICE COMPETIVENESS MORE EVOLVED SHORT LIVED BRAND ENGAGEMENT CAN BE THE ONLY DIFFERENTIATOR .

4bn . an annual Virgin Group turnover of £10. employing 48 500 people.….8bn/US$20.one of the most exciting brands in the world 200 companies worldwide.

20-30% CAGR.Mobile penetration in excess of 40%. 1% by outlets. few Unclear Government Policy on MVNO Falling Handset prices . Most entrants are new.lower margins established competitors Saturation .SWOT Opportunities India a growth story . . volumes. highest handset sales Threats Rising Retail Costs Lack of number portability - switching barriers Organized Retail mere 7% by revenue.

SWOT Strengths Strong Global Brand Limited overlap with Tata‟s existing customers Very low fixed costs as it leases Network Time Not tied to a particular Weaknesses Dependent on Partners for pricing. capacity Non serious image may not go well with conservative Indian consumer. Limited understanding of India Market Technology .

can beat Reliance Good brand recall Structured pricing of airtime serves as a loyalty incentive. encouraging active use .Capitalizing On Strengths Into retailing + service provider If the GoI allows MVNOs then after tying up with GSM players.

Making Weaknesses Irrelevant People not familiar with the MVNO concept Tata Teleservices does not have a good brand image Confusion in the minds of consumer about the Virgin-Tata deal.a re-branding exercise by Tata Teleservices? .

presence in both retailing and airtime Key advantage over operators .Recommendations Key advantage over other (non-operator) retailers .not tied to technology (as an MVNO) .

greater assortment Offer plans for 2 years.Recommendations Forge deal with a GSM player Offer bundled plans .subsidize handset costs with Airtime Offer for both CDMA and GSM . with upgrade options .

etc. M Bazaar.Recommendations VM is moving in the right direction but time is still not ripe for a big bang entry into handset retailing Need to see the response to Airtime and expand in other cities Continue tie-ups with existing Mobile retailers like Univercell. . Hotspot. Vishal. M Port.

Thank You !! .

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