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Case study: How Virgin mobile successfully thwarted competition through innovative marketing

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  1. Introduction
  2. Understanding the consumer base
  3. Competition in the cellular market
  4. Virgin and the US market
  5. The three options to quantify the results
    1. Clone the prices
    2. Price below the market
    3. Plan change
  6. Market penetration strategy by Virgin
    1. Data analysis and interpretation

This paper focuses on operations of Virgin Mobile, USA. It would be helpful to see what strategies Virgin used by analyzing the competition, consumers and the company aka the three C's. Let us first look at the company itself. When consumers look at virgin, they are concentrated on the difference the company brings. In customer's eyes, Virgin stands for value for money, quality, innovation, fun and a sense of competitive challenge. The core principle of Virgin is to look for new opportunities in a business sector where they can offer a product that serves the consumer better at a lower price and yields higher satisfaction. The company has tapped in to different markets, e.g. food, airlines, entertainment, travel, etc. In the cellular market they keep their fixed cost low by entering using the MVNO technology or creating joint ventures with existing players. This way they can focus more on the needs of consumers and service provided to them.

[...] Based on Exhibit 3 our cost is only Let look at the marketing penetration used by Virgin. The primary goal of virgin to maximize sales and that will be achieved by lower price. They are willing to target a market that is not being served, which will change the saturated market to open market. That market has a very high elastic demand. There will not be close competition. The churn rate is very high for the pre-paid customers but most of the money will be covered by AC. [...]

[...] Now let us take a peek at the competition in the cellular market. In 2001, the cellular market was over crowded with providers at local and national levels. There were six major national carriers viz. Cingular, Verizon, VoiceStream, Alltel, Sprint and U.S.Cellular. AT&T had affiliates providing services nation wide and there were few local providers. Industry penetration was close to 50% with about 130 million subscribers and the market was considered to have reached maturity. Service providers normally provide their subscribers with handsets at a subsidized rate for about $100 to $200, a convenient charge to acquire consumers. [...]

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