Professional Documents
Culture Documents
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Entry Strategy
Is this an opportunity for building the Virgin brand? Can we add value?
Easy to promote.
Consumers are used to ‘buckets’ and
peak/off-peak distinctions.
Savings on advertising budget costs.
Simple packaging could save costs on high
commissioned salespeople.
•An entirely new pricing structure which could be significantly different from competitors
Going in for a shortened subscription contracts or eliminating the contracts
The cons being the churn rate shooting to 6% each month compared to standard 2%
The pros being an attractive deal from customer acquisition viewpoint.
Offering pre-paid plans
The cons being usually high costs because of prohibitive pricing, the stigma
associated with pre-paid, high churn out rates & non loyal customers.
Another constraint being some kind of mechanism to add on minutes like a web or
physical phone cards
The pros being an attractive deal to consumers with no credit card or with poor credit
checks & if acquisition costs are below $100 per new gross add
Lower subsidy costs to Virgin on handsets because of arrangement with Kyocera
Eliminating hidden fees and pointing to the total cost of the product offering
A new definition of off-peak hours as the target consumer falls into a different segment.
Price & Demand – Business Customer
• TWO DISTINCTIONS:
– Make calls during office hours
– Rarely worry about the cost of
calls (Finance Dept can deal
with it)
• PRICE INSENSITIVE!
• Demand is INELASTIC
• A percentage decrease in price
will have a smaller percentage
increase in Quantity Demanded
(Calls made)
Price & Demand – student Customer
•An entirely new pricing structure which could be significantly different from competitors
Going in for a shortened subscription contracts or eliminating the contracts
The cons being the churn rate shooting to 6% each month compared to standard 2%
The pros being an attractive deal from customer acquisition viewpoint.
Offering pre-paid plans
The cons being usually high costs because of prohibitive pricing, the stigma
associated with pre-paid, high churn out rates & non loyal customers.
Another constraint being some kind of mechanism to add on minutes like a web or
physical phone cards
The pros being an attractive deal to consumers with no credit card or with poor credit
checks & if acquisition costs are below $100 per new gross add
Lower subsidy costs to Virgin on handsets because of arrangement with Kyocera
Eliminating hidden fees and pointing to the total cost of the product offering
A new definition of off-peak hours as the target consumer falls into a different segment.
Calculating Lifetime Value (LTV)
M
LTV AC
1 r i
Average Monthly
Cash Cost per user Margin Acquisition Cost Lifetime
Revenue
= 45% of ARPU = ARPU - CCPU Value
per user