-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
1/61
Virgin Mobile
Presented By:
Bhuwan Pathak (2011-13)
Sunchit Grover (2011-13)
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
2/61
Virgin Mobile
Strategy for entering the
Indian Handset market
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
3/61
An Update
On 1st March 2008, Virgin Mobile has
entered the Indian Market, tying up with
Tata Tele-services.
Virgin is primarily an MVNO company, and
retail distribution is only a part of the
overall strategy.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
4/61
However, it is a very important piece.
Even for an MVNO like Virgin, having a
finely crafted retail strategy can mean the
difference between a strong subscriber
uptake rate or a mediocre showing among
the target audience.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
5/61
Agenda
Virgin Mobile - Company Brief
The Indian Opportunity
Competition and Positioning
The Indian Consumer
VMs Entry Strategy Review
Analysis and Recommendations
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
6/61
Virgin Mobile
The Company
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
7/61
Global Reach
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
8/61
Think Hatke.
We are India's first national youth-focused mobile service, With presence
aCross 45,000 outlets reaching over 3,20,000 cities, towns and villages
across India.
Ranked as the No. 1 for customer satisfaction within the first year of its
launch with an overall score of over 95%, we continued to offer you best
service and value. We have Also been adjudged the 'Buzziest Brands of
2009' i.e. the most searched for brands by surfers, in a survey carried out
by a leading online portal in India.
Everything we do, we do a little 'hatke'. We plan different, whether it's
'paying for incoming' or great value deals and cool phones. All to make
you happy because that's what makes us happy. So, think different. think
hatke.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
9/61
Organizational Mission
Keep it simple
Do what you say
Take the leap of faith
Keep on checking
Stay true to your values
Love the locals
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
10/61
Virgins New Venture Strategy
When we start a new venture, we base it on hard research and
analysis. Typically, we review the industry and put ourselves in the
customer's shoes to see what could make it better. We ask
fundamental questions: Is this an opportunity for restructuring a
market and creating competitive advantage? What are the
competitors doing? Is the customer confused or badly served?
Is this an opportunity for building the Virgin brand? Can we
add value? Will it interact with our other businesses? Is there an
appropriate trade-off between risk and reward?
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
11/61
The Indian Opportunity
Market Size, Structure and Segments
for Handset Retail
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
12/61
Mobile Retail - The Numbers
New Connections per month = 60,00,000
Handset Retail = 3,50,00,00,00,000
Airtime + Accessories + Handset =
7,50,00,00,00,000
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
13/61
The Demographics
50%
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
14/61
What Virgin Needs To Know
No Bundling - Handsets sold directly so far, not by
operators. This works in the favor of retailers,
though it has begun to change.
7-9 Models added every month.
Replacement sales account for as much as 60%.
People are replacing handsets every 18-24 months
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
15/61
Organized Retail
There are 95000 retail outlets in all
Only 1% of these are organized retailers
By Sales, organized retail has a share of
7%
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
16/61
The Future - Growth Rates
Handset retail market has been growing at a CAGR
of 60%
Overall, the Mobile retail market is growing at 20%
According to Gartner figures for Sep 07, India
recorded the fastest growth in mobile handset
sales
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
17/61
The Future - Trends
Saturation in the urban market
Rural India will drive growth, accounting for 35-
38% of total handset market.
Aggressive promotions to get more common
Low priced handsets and handset bundle offers.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
18/61
PESTPolitico-Legal Environment
Politically stable country. However, there are
certain parties with vested interests that act as
bottlenecks.
FDI allowed upto 24% for foreign players w.e.f.
April, 2008
Availability of cheap as well as professional labour
Weak consumer protection laws
Increasing recognition of the potential in the retail
space by the government.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
19/61
PEST - Economic Environment
7-9% growth rate; mobile retail growing at 20%.
Credit Sales have started, and Cell Phones are being
sold on EMI.
The Monetary policy aims to contain inflation close to
5.0% in 2007-08 while conditioning expectations in
the range of 4.0-4.5%.
Indirect taxes like service tax on immovable property
adds to the costs. The retailers want to move the
service tax on rent, telephone, etc to sales tax.
Consumer confidence in the organized retail format is
high and encouraging.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
20/61
PEST - Social Environment
21.5 crore people between the ages of 14 25
years
Demographics - A lot of demand is coming from
Rural India, as as much as half of the newly added
subscriber are from rural areas.
Growing middle class and youth with an increasing
propensity to save.
Changing attitude- live for today
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
21/61
PEST - Technological Environment
The mobile sector has grown more than tenfold
from 2001 to around 6 crore subscribers by mid-
2005.
10% of the ISPs have 90% of the subscribers
The countrys mobile market stands at Rs. 35,000
crores and is growing at an annual rate of 60%.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
22/61
Porters Five Forces
New
Entrants
Competitive
Rivalry
Threat of
Substitution
Supplier
Power
Buyer Power
Th reat from New Entran ts:
High
Rising cost of retail real
estate makes nationwide
competition difficult, but
numerous national and
foreign players are interested
to enter
Su pplier Power: Mode rate
Supplier s have strong brands
and often have a presence in
retail themselves
Network Operators are able to
push cheaper brands (e.g.
Reliance Classic)
Buyer Power:Buyers Demanding greater variety
at lower prices
Threat of Substitution:
Second hand phone market and
unorganized retail is strong.
Most demand is from rural areas
where organized retailers dont
have a presence.
Competitive Rivalry:
Moderate
Margins are thin at mere 4%.
Pressure from Second hand
sales makes it worse.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
23/61
Porters Five Forces
Threat from New Entrants: High
Rising cost of retail real estate makes
nationwide competition difficult, but
numerous national and foreign players are
interested to enter
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
24/61
Porters Five Forces
Competitive Rivalry: Moderate
Margins are thin at mere 4%. Pressure from Second
hand sales makes it worse.
Buyer Power: High
Buyers Demanding greater variety at lower prices
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
25/61
Porters Five Forces
Supplier Power: Moderate
Suppliers have strong brands and often
have a presence in retail themselves
Network Operators are able to push
cheaper brands (e.g. Reliance Classic)
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
26/61
Porters Five Forces
Threat of Substitution: High
Second hand phone market and
unorganized retail is strong.
Most demand is from rural areas where
organized retailers dont have a presence.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
27/61
Competitive
Landscape
Players, Positioning and Strength
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
28/61
Existing Players
Nokia
Samsung
Sony World
ConvergeM (Future Group)
Mobile Store (JV between Essar and Virgin)
MobileNxt
Univercell
Hotspot (Spice Telecom)
RPG Cellucom
Subhiksha
M Bazaar
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
29/61
Nokia
Around 50% market share in Indian mobile
market
Focus on Mother Brand than on AnotherBrand
Addressed all five needs REAPS of Indian
ConsumerStrong focus on distribution network
Reduced their prices to counter the grey
market
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
30/61
Mobile Store
Essar Group venture - entered Jan 2007
Target Segment - 18 to 45 years
Eyeing 10% market share, 2500 stores, 600 cities,
and breakeven by 2010
Plans to invest 1250 cr by 2010
3 Formats - large medium and compact, in 20:60:20
ratio
Against Franchising - dilutes brand value
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
31/61
Positioning Map
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
32/61
Consumer Need
Analysis
Segments, Buyer Behavior and Gaps
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
33/61
The Indian CellPhone Buyer
Replace handsets every 18-24 months
High demand from upgraders
Price Sensitive - bulk of demand from sub
5000 price range
VAS such as Texting very popular among
Urban, Young customers
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
34/61
The Opportunity
Urban youth: Distinct mobile needs
More and longer out-bound voice calls
Large calling circles for both making and receiving calls
Large users of SMS
Both the earliest adopters and highest users of value-
added services
Higher usage for both voice and SMS at weekends
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
35/61
Urban Youth: More Than Just A Segment
India has 21.5 crore people between the ages of 14
25 years old.
Incremental urban youth subscribers between 2008
and 2010 will be more than 5 crores.
Urban youth mobile service revenues > Rs. 35,000
crores by 2010
Mobile as a badge of self-expression: brand andstyle very important
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
36/61
Indian Market Entry
Strategy
Target Segment, Positioning and
Objectives
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
37/61
Virgin India Strategy
Target Segment - Urban Youth
Sales Objectives
Revenues of Rs. 35000 Crores by 2011 (including
connections, handsets and accessories)
Image Objectives
Establish the brand name
Market Share Objectives
10% of the market in 3 years
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
38/61
Positioning - Seeking Youngistan
Mainstream Youth and Materialists
14-25 years
Young executives / students / Youthful Adults
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
39/61
Virgin India Strategy - Differentiation
Win a 10% share of the urban youth market by
Delivering imaginative solutions that offer
Value for money & flexible tariffs that reflect their
unique needs
Innovative, game-changing value-added services
Great handsets at great prices
Personalized customer care
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
40/61
Virgin India Strategy - Cost
Whilst achieving a low operating cost per customer
through
Sharp focus on Indias top youth markets
Fewer, stable propositions with low support and
service costs
Imaginative, eye-catching advertising & PR that gets
youth talking
A lean, enthusiastic team supported by simple
processes
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
41/61
Differentiation Strategy -
Customer Care
Taking the hassle out of buying a cell phone
Try before you buy
Real conversations: no scripts
End-to-end ownership of problems: same Champcall-back
Champ empowerment: authorized to resolve issues
on the spot
Welcome calls: all customers are personally
welcomed to Virgin Mobile
A real returns policy
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
42/61
Returns Policy
q. Lost my charger, battery fell off and someone threw
my phonegasp!
a. Tension nahin leneka. Whatever your problem you can
walk into any service center and get replacements for
faulty* items in your pack. Heres a list of our service
center .
*conditions apply. But dont get scared about it.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
43/61
Differentiation Strategy
Value for Money and Flexible Service Offerings
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
44/61
Differentiation Strategy - First
Time In India
Get paid to receive calls
50 paise to any local network
TGI the weekend Bolt-on
One Touch access to V-Bytes
Unlimited access to V-Bytes for a simple daily charge
100% colour, 100% FM handsets
Easy Handset upgrades
Personalised Care
Safe Secrets
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
45/61
Virgin India Strategy -
Promotions
Think Hatke Campaign
10 paise every minutes on incoming
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
46/61
Virgin India Strategy - Location
And Ownership
You have to be in front of the
right people.
Howard Handler
CMO, Virgin Mobile
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
47/61
Virgin India Strategy - Location
Shop in Shop and Kiosks
Non exclusive, extensive coverage, lower
costs
The one commonality all of the retailers
share is they are places where teens shop,
because that's Virgin's core market.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
48/61
A Virgin Kiosk
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
49/61
Virgin India Strategy -
Expansion Plans
To begin with, Virgin Mobile services were
launched in 50 cities with 15,000 handsets &
40,000 top-up outlets. Also, with 55 Virgin Mobile
kiosks & Shop-in-Shops.
Plan to expand to 1000 cities by 2008-end
Aims to acquire 50 lakh subscribers over the next 3
years, by when it would be profitable.
By the end of 2008, when the new GSM players
start rolling out their services, Virgin Mobile aims
to offer similar services on GSM as well.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
50/61
Virgin Mobile
Analysis and Recommendations
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
51/61
Strategic Choices for Mobile Retailers
Price
Volume
Low High
High
Low CostStrategy-
Viable
Low CostStrategy-
Unviable
Notsustainable
PremiumPositioning-
Viable
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
52/61
BRAND ENGAGEMENT CAN BE THE ONLY DIFFERENTIATOR
OFFER SIMILAR ACROSS RETAILERS
ASSORTMENT EXPECTED
CONSUMER MORE EVOLVED
PRICECOMPETIVENESS
SHORT LIVED
Positioning Virgin
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
53/61
200 companies worldwide, employing 48 500
people, an annual Virgin Group turnoverof 10.8bn/US$20.4bn
.one of the most exciting brands in the world
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
54/61
SWOT
Opportunities
India a growth story - 20-30%
CAGR, highest handset sales
volumes.
Organized Retail mere 7% by
revenue, 1% by outlets.
Most entrants are new, few
established competitors
Threats
Rising Retail Costs
Lack of number portability -
switching barriers
Unclear Government Policy on
MVNO
Falling Handset prices - lower
margins
Saturation - Mobile penetration
in excess of 40%.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
55/61
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
56/61
Capitalizing On Strengths
Into retailing + service provider
If the GoI allows MVNOs then after tying
up with GSM players, can beat RelianceGood brand recall
Structured pricing of airtime serves as a
loyalty incentive, encouraging active use
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
57/61
Making Weaknesses Irrelevant
People not familiar with the MVNO concept
Tata Teleservices does not have a good
brand image
Confusion in the minds of consumer about
the Virgin-Tata deal- a re-branding exercise
by Tata Teleservices?
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
58/61
Recommendations
Key advantage over other (non-operator)
retailers - presence in both retailing and
airtime
Key advantage over operators - not tied to
technology (as an MVNO)
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
59/61
Recommendations
Forge deal with a GSM player
Offer bundled plans - subsidize handset
costs with AirtimeOffer for both CDMA and GSM - greater
assortment
Offer plans for 2 years, with upgradeoptions
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
60/61
Recommendations
VM is moving in the right direction but time is still
not ripe for a big bang entry into handset retailing
Need to see the response to Airtime and expand in
other cities
Continue tie-ups with existing Mobile retailers like
Univercell, Hotspot, M Bazaar, M Port, Vishal, etc.
-
8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit
61/61