Virgin Mobile USA Pricing for the Very First Time Case Solution

Case Solution

Serta Schulman, the CEO of Virgin Mobile USA, must produce a prices way of a completely new wireless phone number service specific toward clients very youthful and twenties, lots of whom are believed to experience a bad credit rating quality and uneven usage designs. Unlike conventional industry understanding, Schulman thinks he is able to take shape a lucrative business based on this underrepresented target segment. The end result is prices. Schulman is presently talking about three prices options.

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Questions Covered

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)

How confident are you that plan you have designed will be profitable? Provide evidence of the financial viability of your pricing strategy.

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.

How do the major carriers make money in this industry? Is there a financial logic underlying their pricing logic?

What do you think of Virgin Mobile's value proposition ( the virgin Xtras etc)? What do you think of its channel and merchandising strategy?

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?

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)