Case ID: 504028     Solution ID: 31003     Words: 1556 Price $ 45

Virgin Mobile USA Pricing for the Very First Time Case Solution


Not at all like the customary practices in the US market, Virgin Mobile has chosen to focus available of 14 to 24 years of age. Virgin Mobile is occupied with focusing on this business sector portion due to low entrance rate. Additionally, the development rate of this business sector fragment is likewise entirely high. Then again, there are additionally numerous dangers connected with this business sector portion. These dangers thwart significant transporters from entering this business sector fragment. As a matter of first importance, this objective business sector is portrayed by poor credit quality. Thus, the demographic of this objective business sector is likewise known for utilizing versatile premise on occasional premise, which makes it unfeasible for the venture. To pull in this objective business sector, Virgin Mobile will be utilizing prepaid and without contract estimating structure. Notwithstanding this, Virgin Mobile will be giving quality included administrations through Virgin Xtras. This will permit the organization to separate itself in the business sector and make a supportable client base for itself.

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Questions Covered

  1. Given Virgin Mobile's target market (14-24 year olds), how should it structure its pricing?. the case lays out three pricing options, evaluate those options. which option you choose and why? in designing your pricing plan, be as  specific as possible with respect to various elements under considerations( e.g., contracts, the size of the subsidies, hiddenfees, average per minute charges, etc)
  2. How confident are you that plan you have designed will be profitable? Provide evidence of the financial viability of your pricing strategy.
  3. The cellular industry is notorious for high customer dissatisfaction. Despite the existence of service contracts, the big carriers churn roughly 24% of their customers each year. Clearly there is very little loyalty in this market. What is the source of this dissatisfaction? how have the various pricing variables ( contracts, pricing buckets, hidden fees, off- peak hours, etc effect the customer experience? why haven't the big carriers responded more aggressively to customer dissatisfaction.
  4. How do the major carriers make money in this industry? Is there a financial logic underlying their pricing logic?
  5. What do you think of Virgin Mobile's value proposition ( the virgin Xtras etc)? What do you think of its channel and merchandising strategy?
  6. Do you agree with Virgin Mobile's target market selection? What are the risks associated with targeting this segment? why have the major carriers been slow to target this segment?
  7. Provide evidence of the financial viability of your pricing strategy. You should be able to provide information on acquisition costs and breakeven*(either as a monthly charge or per minute charge)