Marketing Management, 14th Edition

Kotler Philip, Keller Kevin Lane

HW - Case Study 9 Virgin Mobile USA - Pricing for the Very First
Time

Course Instructor
Mihai ichindelean

ASSIGNMENT QUESTIONS
Given Virgin Mobiles target market (14 to 24-year old), how should it structure its
pricing?

R: Virgin Mobile should concentrate their efforts in developing good offers for prepaid
users, such as free SMS(teenagers love to text) or recharge bonuses, or free
internet at specific hours. The fees should be at least 20% lower then the
competition and should provide maximum flexibility for its users.(No contracts, no
limitation)

What is the source of consumer dissatisfaction? How have the various pricing

variables (contracts, pricing buckets, hidden fees, off-peak hours, etc.) affected the
consumer experience?

R: The source of consumers dissatisfaction comes from bad contracts that at the
beginning create a good impression for the user but, after being sign becomes a
burden for him. In this case we can exemplify with hidden fees

What do you think of Virgin Mobiles value proposition (the VirginXtras, etc.)?
What do you think of its channel and merchandising strategy?

R: Targeting the youth its not a bad idea. VirginXtras has its good points-text
messaging, MTV-partnership for online votes, thing that are appealing for the
young customer targeted. The idea of creating a new revolutionary distribution
channel is great because it makes things easy, you can go into BestBuy and buy
your phone really fast without going especially to a specialized phone store, and as
a plus this distribution channel is cheaper than the regular distribution channel
(specialized stores).

Thanks!