Virgin Mobile

I. Statement of the Problem

How can Virgin figure out a way to create value so that they can successfully enter a very competitive and saturated market, and also create profitability with this target segment.

II. Objectives

To determine what pricing strategy the company will implement to have a successful penetration in a very saturated market.

-clone the industry prices

-price below competition

-a whole new plan.

III. Theoretical Background

Option 1. Clone the industry prices

Pros

• Easy to promote

• Savings on advertising budget cost

• Simple packaging could save cost

Cons

• The target youth market is not stressed

• Hard for new player in the market

• With no price distinction consumers will not switch to virgin just for extra features.

Option 2. Price below the competition

Pros

• Consumers will know that virgin mobile is plain, simple and affordable.

• It will expand the size of the market thus gaining more sales and profits.

Cons

• Earning from each consumer will be less

• Sales growth and profits doesn’t mean necessarily big.

• May be regarded as a low quality product.

• May trigger price war.

IV. ACA