Recommendation and Rationale

Based on the Qualitative and Quantitative analysis and requirements of the focused group Virgin

Mobile should adopt following policy,

1. Price/min should be around 20 cents depending on the desired profit margin as the

Industry price range of consumer usage of 100 – 300 min is 10 – 25 cents. (also, from the

sensitivity analysis in the appendix minimum price to break even should be 7 cents)

2. It should differentiate its services by “Fewer Hidden Cost”, More Value Added Services

like Music, Text messages, Real Time billing and Games.

3. It should be transparent as the brand goes by honesty.

4. No contract and Better off peak hours considering the young generation.

5. LTV should be positive and more than the general average industry LTV value.

Considering all of the above requirements and based Qualitative and Quantitative analysis,

we recommend that Virgin should opt pricing Option 1 as,

1. It has similar plans to what market is offering but more value added services.

2. It is more transparent and cost to customer is relatively lower i.e 41 cents < 52 cents

Industry price also that variable cost is lower so increasing the margin by around 5%.

3. LTV is also competitive ($ 821.93) as compared to Option 2 ( $ 918.85) but it allows

Virgin to follow its Brand Value policy and it would not require any significant changes

in the market so parents which are the main bill payers won’t have to waste time

analyzing new plans and may worry a lot about hidden cost and it is positive which is

more important.

Although going for Option 3 is not a bad option as we can still maintain a positive, but lower,

LTV with the price value of 15 – 25 cents per minute and this would also give us an opportunity

to explore pre-paid market which is pretty less (8%) as compared to post – paid but we also

know that post - paid market is also majorly utilized by or penetrated for older adults. Pre – Paid

would also give us flexibility of different plans at different prices along with discounts scheme.

But as per the information available we would recommend Option 1 is the most viable plan at

first and once they capture the market they can explore Option 3.