Virgin Mobile

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Virgin Mobile

Given VMs target market, VM should structure its pricing model based on option 3. Virgin Mobile should institute the whole new plan model based on the fact that it is a radical departure from the rest of the cell phone industry. Refer to the Virgin brand values to find that one of their core values is to move into areas where customers have traditionally received a poor deal and offer something better, fresher, and more valuable. Virgin also takes pride in offering innovation and a sense of competitive challenge. Given the values of Virgin, the radical new pricing strategy offered by option 3 fits nicely with Virgin's core values. However, a final pricing decision should be based on much more than core values. Many other regional carriers and smaller national carriers account for the remainder of market share. While LTV calculated on Virgin's option 3 may not be as high as the industry, Virgin's approach to entering the market may be worthwhile to accept a lower LTV if the entry approach creates demand for their services.

In choosing an option, the core values, target market, and pricing scenarios should all be considered before making a decision. One important note about the target market is that 14-24 year old consumers have little to no experience with contracts and typically have poor credit scores. Additionally, the 14-18 year old consumers must have a parent sign a legal contract. Given these facts, it appears that a marketing campaign directed at 14-24 year old consumers excludes those individuals, typically parents, who must agree to the contract ...

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...yes of the customer.

The major carriers have been slow to target this segment given the reasons listed above and others such as poor credit scores, inability to sign legal contracts, focus on working adults and business needs, and lack of information about this segment. Additionally, this segment has been slow to accept the terms of the existing carriers due to complexity of pricing, long-term contract requirements, and mistrust of the carriers' advertisements and marketing gimmicks. The carriers deem long-term service contracts a necessity of their business model and are unwilling to change this method of pricing. Teens and young adults cannot or will not accept these terms, therefore, the market segment remains unpenetrated.

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