VMUSA - Noris Pasic Matt Aistrich BA 303H April 5, 2007...

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Noris Pasic BA 303H Matt Aistrich April 5, 2007 Virgin Mobile USA Problem Identification Virgin Mobile, a subsidiary of Virgin Media Inc. in the United Kingdom is introducing its service into the United States and before its great launch has to figure out many vital processes and configurations which could make or break them in an already matured market. The primary problem that they encountered was its pricing. They needed to determine how to make their prices attractive for their target market, while at the same time ensuring that they make a profit. According to their CEO, Dan Schulman, they also had to consider along which lines their services would be offered. Issues included, the roles of contracts, prepaid versus billing, discounts on the cell phones, and the hidden fees and off-peak hours dilemma. Analysis of the Situation Virgin Mobile has had great success in the United Kingdom, where it enjoys being one of the top three most recognized brand names. They successfully signed on 2.5 million customers to their services in a manner of just three years. Virgin Mobile used a venture called mobile virtual network operator (MVNO), meaning that it did not have to host its own network, and in contrast they could just lease it from another firm. In the United Kingdom they used Deutsche Telekom as their provider, whilst in the United States they would use Sprint’s Personal Communications Service (PCS). The company did have to endure some failure in their mobile services entity of the Virgin brand. When they attempted to launch its service in Singapore in October 2001, they only managed to gain 30,000 subscribers. Reasons stated behind this collapse were that either
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the market was simply too saturated, or that Virgin’s hip and trendy appearance simply did not strike a chord with the market. Although the US market was marked to have already reached maturity, Virgin Mobile did not see it as a problem, given their target market. They predicted that they would not have the failure that they saw in Singapore, because the very thing that drove them out of Singapore was the thing that would lead them to great success in the United States. This was their hip and trendy appeal, which they would aim to their target market of 15 to 29 year olds. In their target market they noted that in the United States there was significantly lower
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VMUSA - Noris Pasic Matt Aistrich BA 303H April 5, 2007...

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