Marketing strategy and case analysis of Virgin Mobile

Virgin Mobile

Target Market

Virgin targets the entire United States. Mobile is consumed by almost everybody, and profitability requires economies of scale. Virgin therefore, in general, seeks out all customers because it needs to have a base of millions. Within that, however, Virgin should specifically target the heaviest users of mobile, who are the industry's most profitable consumers. These are young people, aged anywhere from 12-30. They are usually students, though older ones will not be. These consumers are heavy data users. They own high end smartphones, and use them for games and videos, both of which consumer substantial amounts of data. These users spend hours per day on their phone, performing various tasks, though making phone calls is usually among the least of their worries (Yume, 2015). These consumers purchase the most expensive plans in order to support their heavy data usage. These consumers would prefer to have simpler plans, rather than the confusing ones currently on offer, and are likely willing to pay more to be able to cease worrying about their usage (Knight, 2014).

The secondary target market will be those on the outside of this demo -- the 30- to 45-year-olds who typically still have fairly high data usage. The tertiary market is basically anybody outside of that bracket, but particularly older people who do have high data usage on their phones, or younger people who for some reason do not use their phones much.

Service

Virgin Mobile is a marketer of mobile access, and does not usually own its own infrastructure (in the U.S., it is owned by Sprint). As an imprint of Sprint, Virgin can focus on a narrower demographic. The service is to provide mobile access. Usually this is done via an array of plans, offering combinations of talk, text and data at different rates. These are based on the usage that each customer will expect to have. In general, a customer will not use all for which they have paid. This makes the more expensive plans more profitable. The economics of the industry suggest that the incremental cost of data is relatively small compared with what the company can charge for it. Thus, the heaviest users are the most profitable. They pay for the high infrastructure cost. The Virgin brand has consistently sought after younger users, by projecting a "hip" image, at least more so than Sprint, which most certainly does not have a cool factor.

Virgin Mobile often is packaged with other deals. Because Virgin is a captive audience of subscribers, the subscribers themselves can become the product, and marketed to businesses seeking this particular demo. Virgin can offer deals to its customers, for example, through a variety of partnerships, all of which generate revenue for Virgin Mobile. In that way, Virgin can monetize its customer base without relying on spam texts in the way that other mobile providers do. Virgin is also known for conducting a lot of its business online, including making payments and managing one's account. Much of this can be done via a mobile platform as well, as befits a mobile company.

Price

It is recommended that Virgin adopt a flat rate price structure for the heaviest users. It can structure its other plans any way it wants, within the framework of intense competition, but in order to win the target market, Virgin should encourage flat rate pricing for unlimited data. The audience craves unlimited data, and will pay a premium for unfettered access to the Internet, and the marginal cost of data is relatively small. If T-Mobile is doing $100 for two lines, then Virgin can match that. They will be able to attract customers over T-Mobile because of the strength of the brand name, and because of the other benefits that it provides its customers in partner deals. There does not appear to be any reason, or benefit, to entering into a price was with T-Mobile or any other carrier, especially since Virgin has a good brand within this demographic.

Distribution

Virgin should continue with its existing distribution channels. It does some online distribution, but because a SIM card has to be installed in the phone the normal distribution channel is through retail outlets or kiosks. Some are company-branded, while others are third-party. Piggybacking on Sprint's retail network is a good approach. In this industry, saturation appears to be the key tactic, as again economies of scale are essential to profitability, and the cost of retail outlets is relatively low. The store imprint should be focused on shopping areas and colleges where this demo frequents. Further, the retail footprint can be expanded, and such expansion should correlate with an expansion in the customer base.