Virgin Mobile Usa: Pricing for the Very First Time [Case Study]

2274 Words Jul 21st, 2008 10 Pages
Marketing – Master of Management 78-614
Odette School of Business, University of Windsor

Write-up

Title of case: Virgin Mobile USA: Pricing for the Very First Time

Key person and his / her position in the organization: Dan Schulman, CEO of Virgin Mobile USA

Key issue or decision that must be made: The key issue for Virgin Mobile USA is to select a pricing strategy that will both attract and retrain subscribers.
Basic facts of the case: Virgin is a U.K-based company led by Sir Richard Branson and is one of the three most recognized brands in Britain. The company has a vast history of brand extensions – one of which is their launch of a wireless phone service in the USA. Dan Schulman has been appointed CEO of the Virgin
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6. Should the cellular company offer its service as pre-paid or post-paid plans?
7. Should all hidden fees be eliminated?
8. How should the product be packaged?
Why now? It is important that the decision is made now since the launch date is set to be July 2002. Also if the company wants to succeed in entering the US mobile phone market it will be necessary for the company to possess some kind of unique element which will allow entry into a very competitive and saturated market.
By when must the key person make this decision? Dan Schulman, CEO, Virgin Mobile USA has to make this decision by July 2002 since the new Virgin-branded service is scheduled to launch by this date.

Stakes: What does the organization stand to gain or lose if it makes a good or bad decision?
Potential benefits of a good decision Potential costs of a bad decision
Increases chances of attracting and sustaining of a large number of subscribers Less chance of attracting and sustaining a large number of subscribers
Successful launch of a new brand-extension Unsuccessful launch of brand-extension
Creating customer loyalty Lack of customer loyalty
Reinforce brand name Loss of money invested in launch
Acquire significant market share Unsuccessful entering of a very competitive and saturated market
Be profitable with this target segment Negative impact on the Virgin brand name
Successfully entering a very competitive and saturated market

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