marketing strategy of virgin mobiles
TRANSCRIPT
-
8/8/2019 Marketing Strategy of Virgin Mobiles
1/66
Virgin Mobile
Retail strategy for entering
the Indian Handset market
-
8/8/2019 Marketing Strategy of Virgin Mobiles
2/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
3/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
4/66
Agenda
Virgin Mobile - Company Brief
The Indian Opportunity
Competition and Positioning
The Indian Consumer
VMs Entry Strategy Review
Analysis and Recommendations
-
8/8/2019 Marketing Strategy of Virgin Mobiles
5/66
Virgin Mobile
The Company
-
8/8/2019 Marketing Strategy of Virgin Mobiles
6/66
Global Reach
-
8/8/2019 Marketing Strategy of Virgin Mobiles
7/66
As a customer, theres
nothing more frustrating than
dealing with a faceless
bureaucracy or a member of
staff who tows the party
line. A little something
extra can really go a longway to improve a their
experience and their opinion
of Virgin. E.g. A Virgin
Trains manager took all the
placemats from First classand folded them into fans for
the passengers caught in an
unpleasantly hot carriage
when the air-conditioning
failed.
To add a
personal touch
to our customer
experience: the
little extras.
Virgin Mobile Charter
-
8/8/2019 Marketing Strategy of Virgin Mobiles
8/66
Speak from the heart, not a
script. Talk to people the
way they prefer to be talked
to with warmth and
humanity. When Virgin Money
sends people letters about
their financial services they
recognise its the customers
money, not theirs. They dont
write in jargon but as one
human being to another
To offer an
experience
thats 100%
human, treatingcustomers with
respect.
Virgin Mobile Charter
-
8/8/2019 Marketing Strategy of Virgin Mobiles
9/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
10/66
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 creatingcompetitive 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 andreward?
-
8/8/2019 Marketing Strategy of Virgin Mobiles
11/66
The Indian Opportunity
Market Size, Structure and Segments
for Handset Retail
-
8/8/2019 Marketing Strategy of Virgin Mobiles
12/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
13/66
The Demographics
50%
-
8/8/2019 Marketing Strategy of Virgin Mobiles
14/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
15/66
Organized Retail
There are 95000 retail outlets in all
Only 1% of these are organized retailers
By Sales, organized retail has a share of7%
-
8/8/2019 Marketing Strategy of Virgin Mobiles
16/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
17/66
The Future - Volumes
01 0 02 0 03 0 04 0 05 0 06 0 0
2 0 0 42 0 0 52 0 0 62 0 0 72 0 0 82 0 0 92 0 1 0Y e a r
R e t a i l S i z e (R s . C r o r e )S u b s c r i b e rH a n d s e t s
-
8/8/2019 Marketing Strategy of Virgin Mobiles
18/66
The Potential - Handset Retail
H a n d s e t R e t a i l G r o w t h
02 0 0 0 04 0 0 0 06 0 0 0 08 0 0 0 0
1 0 0 0 0 0
2 0 0 42 0 0 52 0 0 62 0 0 72 0 0 82 0 0 92 0 1 0Y e a r
R e t a i l S i z e (R s . C r o r e )O r g a n i z e dU n o r g a n i z e
-
8/8/2019 Marketing Strategy of Virgin Mobiles
19/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
20/66
PEST Politico-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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
21/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
22/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
23/66
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%.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
24/66
Porters Five Forces
New
Entrants
Competitive
Rivalry
Threat of
Substitution
Supplier
Power
Buyer Power
Threat from New En trants:
High
Rising cos t of retail realestate mak es nationwid ecomp etition difficult, butnumerous n ation al andforeign p layers ar e interestedto enter
Supp lier Pow er: Mo derate
Supplier s hav e strong brandsand ofte n hav e a prese nce inretail themselves
Network O perators are ab le topush chea per brand s (e. g.Reliance Classic)
Buy er Pow er:Buyers Demanding greater varietyat lowe r prices
Threat of Substitu tion:
Second hand phon e marke t andunorganized retail is strong.Most demand i s from rur al areas where orga nized retailers dont
have a presence.
Compe titive Rivalry:
Moderate
Margins ar e thin at me re 4%.Pressur e from Second handsales ma kes i t wors e.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
25/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
26/66
Porters Five Forces
Competitive Rivalry: Moderate
Margins are thin at mere 4%. Pressure from Secondhand sales makes it worse.
Buyer Power: High
Buyers Demanding greater variety at lower prices
-
8/8/2019 Marketing Strategy of Virgin Mobiles
27/66
Porters Five Forces
Supplier Power: Moderate
Suppliers have strong brands and often have apresence in retail themselves
Network Operators are able to push cheaper
brands (e.g. Reliance Classic)
-
8/8/2019 Marketing Strategy of Virgin Mobiles
28/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
29/66
Competitive
Landscape
Players, Positioning and Strength
-
8/8/2019 Marketing Strategy of Virgin Mobiles
30/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
31/66
Nokia
Around 50% market share in Indian mobile market
Focus on Mother Brand than on Another Brand
Addressed all five needs REAPS of Indian Consumer
Strong focus on distribution network
Reduced their prices to counter the grey market
-
8/8/2019 Marketing Strategy of Virgin Mobiles
32/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
33/66
Positioning Map
-
8/8/2019 Marketing Strategy of Virgin Mobiles
34/66
Consumer Need
Analysis
Segments, Buyer Behavior and Gaps
-
8/8/2019 Marketing Strategy of Virgin Mobiles
35/66
Consumer Segments
I want everythingfrom my mobileand I want it now
My phone means
I belong amongstmy peers
My life is a jugglingact my mobile
keeps
me connected
I want a phone thatmakes me look good- even when I cant
afford it
To stay ahead of thegame you need the
best tools
New experiences,
new possessions,new technologies thats what I want
Ill adopt newtechnologies if youshow me a good
reason
Ill carry a mobileif I need to
PioneerYouth
Mainstream
Youth
In-touchOrganizers
MainstreamMaterialists
Careerist
Experiencers
FamilyPhoners
BasicPhoners
-
8/8/2019 Marketing Strategy of Virgin Mobiles
36/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
37/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
38/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
39/66
Indian Market Entry
Strategy
Target Segment, Positioning and
Objectives
-
8/8/2019 Marketing Strategy of Virgin Mobiles
40/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
41/66
Positioning - Seeking Youngistan
Mainstream Youth and Materialists
14-25 years
Young executives / students / Youthful Adults
-
8/8/2019 Marketing Strategy of Virgin Mobiles
42/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
43/66
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 youthtalking
A lean, enthusiastic team supported by simple processes
-
8/8/2019 Marketing Strategy of Virgin Mobiles
44/66
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 Champ call-back
Champ empowerment: authorized to resolve issues on the spot
Welcome calls: all customers are personally welcomed to Virgin
Mobile
A real returns policy
-
8/8/2019 Marketing Strategy of Virgin Mobiles
45/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
46/66
Differentiation Strategy
Value for Money and Flexible Service Offerings
-
8/8/2019 Marketing Strategy of Virgin Mobiles
47/66
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
-
8/8/2019 Marketing Strategy of Virgin Mobiles
48/66
Virgin India Strategy -
Promotions
Think Hatke Campaign
10 paise every minutes on incoming
-
8/8/2019 Marketing Strategy of Virgin Mobiles
49/66
Virgin India Strategy - Location
And Ownership
You have to be in front of the
right people.
Howard Handler
CMO, Virgin Mobile
-
8/8/2019 Marketing Strategy of Virgin Mobiles
50/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
51/66
A Virgin Kiosk
-
8/8/2019 Marketing Strategy of Virgin Mobiles
52/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
53/66
Virgin Mobile
Analysis and Recommendations
-
8/8/2019 Marketing Strategy of Virgin Mobiles
54/66
South African Experience
Virgin entered as a 50-50 partnership with Cell C,
H1, 2006
Classified itself as an ESP, since MVNOs are illegal
in SA
Premium Pricing, supported by a strong brand,
superior customer service and pricing plan
simplicity
-
8/8/2019 Marketing Strategy of Virgin Mobiles
55/66
Singapore Experience
Entered through a tie-up with SingTel
Exited the market - citing premium pricing
and crowded market
Customers placed more premium on Price
SingTel tariffs too high - texting too
expensive
-
8/8/2019 Marketing Strategy of Virgin Mobiles
56/66
Strategic Choices for Mobile Retailers
Price
Vo
lume
Low High
High
Low CostStrategy-
Viable
Low CostStrategy-
Unviable
Notsustainable
PremiumPositioning-
Viable
-
8/8/2019 Marketing Strategy of Virgin Mobiles
57/66
BRAND ENGAGEMENT CAN BE THE ONLY DIFFERENTIATOR
OFFER SIMILAR ACROSS RETAILERS
ASSORTMENT EXPECTED
CONSUMER MORE EVOLVED
PRICECOMPETIVENESS
SHORT LIVED
Positioning Virgin
-
8/8/2019 Marketing Strategy of Virgin Mobiles
58/66
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 w
-
8/8/2019 Marketing Strategy of Virgin Mobiles
59/66
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%.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
60/66
SWOT
Strengths
StrongGlobal Brand
Limited overlap with Tatas
existing customers
Very low fixed costs as it
leases Network Time
Not tied to a particular
Technology
Weaknesses
Dependent on Partners for
pricing, capacity
Non serious image may not go
well with conservative Indian
consumer.
Limited understanding of India
Market
-
8/8/2019 Marketing Strategy of Virgin Mobiles
61/66
Capitalizing On Strengths
Into retailing + service provider
If the GoI allows MVNOs then after tying
up with GSM players, can beat Reliance
Good brand recall
Structured pricing of airtime serves as a
loyalty incentive, encouraging active use
-
8/8/2019 Marketing Strategy of Virgin Mobiles
62/66
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?
-
8/8/2019 Marketing Strategy of Virgin Mobiles
63/66
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)
-
8/8/2019 Marketing Strategy of Virgin Mobiles
64/66
Recommendations
Forge deal with a GSM player
Offer bundled plans - subsidize handset
costs with Airtime
Offer for both CDMA and GSM - greater
assortment
Offer plans for 2 years, with upgrade
options
-
8/8/2019 Marketing Strategy of Virgin Mobiles
65/66
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.
-
8/8/2019 Marketing Strategy of Virgin Mobiles
66/66
Thank You !!