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Marketing strategies of Virgin Mobile in India

2350 words (9 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Marketing management is an integral part of Organizational Resource Management and is the key to successful foray into a new business area. Virgin’s Richard Branson has long been considered an entrepreneurial genius. Here’s a guy who’s hammered together an empire across retailing, records, entertainment, soft drinks and alcoholic beverages, travel, resorts, online car sales, airlines, health care, mobile phones, trains, limousines, movie theaters, financial services, Internet service, radio stations, utilities, publishing, wines, mortgages and bridal stores. Branson’s single-minded, persistent search of infinitely expanding his Virgin brands is admirable. After starting Virgin as a student magazine and a small mail-order record company, Branson has built a giant and various set of brands. It is ranked No. 1 customer satisfaction Company within the first year of its launch with an overall score of over 95% and promised to continue to offer the best service and value to the customers. Whatever they do, they do a little “hatke”(something different or unusual) They plan differently whether it’s “paying for incoming” or great value deals and cool phones.

In this assignment I have covered the marketing strategy of Virgin Mobile. Also how this company communicates to the customers to promote its brand and it SWOT Analysis. I have covered the marketing strategy that how this company attracts the customers and retain them in this high competitive market. With the apt uses of the resources Virgin has come up with a tight marketing strategy to capture the customer.

Contents

Index Page No.

Introduction

Virgin mobile India Limited is a cellular phone service source company which is a firm between Tata Teleservices and Richard Branson’s Virgin Group. Virgin Mobile India will supply Tata Teleservices with experience and expertise in designing, marketing and servicing of “Virgin Mobile” branded products for the youth segment. It is one of the most recognized and respected brands. Conceived in 1970 by Sir Richard Branson, the Virgin Mobile Group has gone on to raise very unbeaten businesses in sectors ranging from mobile telephony, to transportation, travel, financial services, leisure, music, holidays, publishing and trading. This company is India’s first national youth-focused mobile service with presence diagonally 45,000 outlets reaching above 320000 cities, towns and villages diagonally India. 

Why Virgin Mobile?

Based on its business model and strategy Virgin mobile is a single player in Indian mobile market. Its branding and marketing strategy is totally penetrating the market and uses Tata Teleservices spectrum however it is the only service provider which does not hold any bandwidth and mobile setup infrastructure. The key success factor for Virgin mobile across the globe is creating a niche brand and promoting it to specific customer segment with proper marketing. So, from marketing and customer point of view, this is a very unique company to study.

Strategic Issue: Virgin’s Business Model

Virgin has kept the Indian youth as its customer target segment and it has promoted itself as the brand for young India. In Virgin’s business model, an idea behind targeting this segment can be found. There are some salient features of Virgin’s business model from customer perspective:

With the increasing competition and decreasing voice tariffs, the profit margins for voice service are decreasing day by day. So, through data services the future profit strategy is maximizing profit margins and it is youth segment which offers maximum data service revenues.

Enlarged use of data services in future due to technical advancements.

So, keeping Virgin’s long term goal in mind, it is targeting on specific segment with the tailor made plans as in mobile sector where all other players are attempting to offer similar service to different customer segments.

Communicating the Virgin Brand

Through various communication channels, Virgin mobile has communicated itself as the youth sloping trademark of India. They are:

Advertisement campaign for targeting youth “Think Hat Ke”.

Red and vibrant website look with youth focused language. (Fig1)

For youth segment- tailor made plans

A source of recharge option for youth: Getting paid for incoming calls

Fig1: Virgin Mobile website depicting youth flavor

Target Market

This brand targets Indian youth aged between 14 and 26 years. In this age group there are 215 million people. Out of this, 70 million have a mobile phone and this segment is expected to add another 50 million new subscribers in the next three years. Although the young generation does not contribute much in mobile subscription, only 30% out of total mobile subscribers constitute, they contribute more than 50% of the revenues of telecom industry. This group is expected to contribute 60-70% of total revenues by 2010. Virgin enjoys a huge advantage because of the distinct mobile phone usage habits of the young users.

When we look globally this brand is very strong. This company is also not tied to a particular technology. These can be the Strengths of Virgin Mobile India.

There are many usages which provides a high opportunity to be tapped such as the usage of SMS, data services in the form of mobile internet, mobile shopping and other value added services like ring tones, caller tunes, wallpapers, etc. Moreover young users have a short handset up gradation cycle-under 12 months as compared to two years for people above 25 years of age. In Virgin mobile most entrants are new however few are established competitors. India has a growth story of 20-30% compound annual growth rate and has a highest handset sales volume. Therefore this can be treated as Opportunities for this company to sale it handsets in India.

Marketing

Marketing is the process that creates interest among customers in goods or services. It generates the strategy that underlies sales techniques, business communication and business developments. It is a process by which companies build strong customer relations and create questionable value for their customers and for themselves. (Kotler & Keller, 2009) 

Marketing is basically used to make out the customer, to convince the customer, and to keep the customer. The marketing concept id to achieve organizational goals depends upon knowing the needs and satisfying the customer needs and also delivering the desired satisfactions.

Marketing strategy means to allow an organization to focus on its related resources on the greatest opportunities to increase sales and achieve a sustainable competitive benefit. The strategy is centered on the key concept that the main goal is customer satisfaction.

Marketing Mix Strategy- Applied by Virgin Mobile

Marketing Mix is the grouping of marketing actions that an organization in so as to best meet the desires of its targeted market.

Product: Virgin Mobile provides six RUIM enabled handsets with color screen, contain one touch access for Vbytes-Virgin Mobile’s VAS portal and FM Radio.

Price: The call rates are very minimal which is 50p per call both local and STD subject to terms and conditions. The handsets are between Rs2000-5000 ranges. Also the retail costs are rising. Falling handset prices and rising retail costs may result to lower margins for the company and can be treated as Threats of SWOT Analysis.

Place: The focus of Virgin Mobile has so far been in the top 60 cities of India on customer acquisition and is set to expand to more cities. The product is presented across a host of recent retail outlets The Mobile Store, Hotspot, RPG Cellucom, Croma etc.

Promotion: In Indian market the Virgin mobile entered in grand style. To relate itself with the targeted market, Virgin mobile has used very vibrant color. To attract the targeted audience, apart from traditional media, internet and outdoor youth centric advertising has been used wisely.

Customer Acquisition and Retention Strategy

The company is aware that they are entering into a very established and competitive market to position themselves. They understand that they cannot start making profit from the day one neither they have any plans for it: According to the patron, Sir Richard “We want to offer a more customized and significant offering for a single segment.” Only 10% of the above mentioned segment company targets and have plans to attain and hold them by various innovative propositions, some of them are:

Providing services which were not offered so far

Paid incoming calls

All calls 50 paisa across the country

A brand which is reflected at each and every point which is truly meant for young India

Vbytes offered in extensive data service

Outstanding value added plans

Online facilities such as purchasing phone, recharging, enquiry and everything

From every Virgin mobile one touch VAS (Value-Added Services) access

Offering services which others are not offering meticulously

Providing at very reasonable prices changing handsets from a wide range of handsets which are easy to change.

Telling you are in queue which are boring customer care services

One customer care officer dedicated for all queries of one customer leading to transparency.

No bad or jammed network coverage

Modified made customized plans without any buried charges

No monthly bills

Distribution Channel

Virgin mobile offers its products to the customer by both retail stores and online distribution.

Selective Distribution

Virgin mobile has chosen some retail outlets for distributing its products. Intensive and exclusive distribution strategy is not followed by this company. Company may gain optimum market coverage with the help of selective strategy and more control however at a minor cost than intensive distribution.

On 7 July 2008 Virgin mobile launched a new mobile handset vBling. It is available across 15000 outlets nationally and more than 1000 modern retail outlets including The Mobile Store, Vijay Sales and Sangeetha, Vishal Mega Mart, Croma, Convergem, Univercell and Big C to name a few. This handset will also be offered in 34 kiosks in high traffic malls all over the country.

Online Distribution

Virgin Mobile India has announced that consumers can now buy Virgin mobile goods and services online. By filling an online form they just need to select the handset, plan and number of their choice. Within 24 – 48 hours handsets will be delivered after posting the payment transaction and mandatory documents for evidence of identity will be collected in person. The customers can also get a chance to enjoy additional talk time, extra messages as well as other freebies in online shopping.

Virgin mobile has tied up with Blue Dart for the delivery of ordered products.

Competition

Airtel, Vodafone and Reliance are the dominant players in the very competitive industry where Virgin mobile has entered. With Reliance CDMA phones Virgin mobile faces stiff competition. Virgin mobile has launched its brand in youth segment and have taken a ‘hatke'(something unusual or different) route. As the network quality of Tata Teleservices was ranked first by DOT so the tie up with Tata Teleservices enables it to fight competition effectively. It would be exciting to watch out what Virgin Mobile plans to present as the company is paying huge chunks of money to sponsor their VAS services. Tata Teleservices is languishing in the sixth spot, unusual for a Tata company. More than the others, it needs a marketing push, which Virgin can provide but it has limited understanding of India market and dependent on partners for pricing, capacity. This can be marked as a Weakness in SWOT Analysis of Virgin Mobile India. Virgin expects urban youth mobile services revenue to cross Rs 35,000 crore by 2010.

If it is successful in its aim to capture 10% of this market, the impact on its balance sheet would be significant.

Fig 2 Most Cost Effective brand: Fig 3 Virgin’s Competitors Market Share:

http://business.outlookindia.com/dailyimages/050408/tata.gif

Source: http://www.google.com/images?um=1&hl=en&biw=1366&bih=667&tbs=isch%3A1&sa=1&q=virgin+mobile+graph+india&aq=f&aqi=&aql=&oq=

Recommendations

Virgin mobile should advertise its latest plans like 50 paisa STD calls to promote this scheme. Should make customer aware about the latest pricing and it will increase its market share in terms of cost effectiveness. Virgin should aim to tap 14% of customer base who want to change to virgin but not able

to change as the existence of non-compatible handset. Substantial increase in consumer base for Virgin mobile can only be achieved if it tries to solve the existing non-compatible handset problem and enhanced communication to inform hottest pricing strategies. In order to increase customer satisfaction, time gap between services wanted and delivery should be minimized.

Conclusion

Virgin mobiles cannot go with the old generation business as from the above data it can be resulted that this company only focuses on youth segment as now it is the time of youth. Therefore they should try to increase an image that is cool and relations with youth but not offending to other segments. Virgin can result in projecting a serious and responsible image with getting involved in social activities. Finally, to keep up in the highly competitive market, innovation and exciting new offers will help in devising a differentiation strategy. The brand addition of Virgin group has led to its fast growth and also improved its revenue. The final goal of Virgin is to launch it as a major globe name. From the Appendix we can say that Virgin mobile with Genesys works well for its present customer service and operational needs, and that will also hold its future expansion in terms of developing functionality and a continually increasing number of customers. Another conclusion that can be seen increase in calls, without being routed to an agent, there is a significant increase in the calls that are handled or terminate in the IVR.

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