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Project study of Virgin Mobile in detail.

Project study of Virgin Mobile in detail.

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    Virgin mobile Virgin mobile Document Transcript

    • About Virgin MobileVirgin Mobile is a brand used by many mobile phone service providers based inthe United Kingdom, and operating in India, Australia, Canada, South Africa, theUnited States and France; the brand survived only briefly in Singapore. Theinternational Virgin Mobile businesses each act as independent entities, usually in apartnership between Sir Richard Bransons Virgin Group and an existing phonecompany. Virgin Group provides the brand, and the phone company operates thenetwork infrastructure.Virgin Mobile was the worlds first Mobile Virtual Network Operator when it launchedin the United Kingdom in 1999. It does not maintain its own network but insteadcontracts to use the existing network(s) of other providers.“Virgin Mobile” brand is India’s ‘first’ national youth-focused mobile service. “VirginMobile” branded services are being offered to the Indian consumers by TataTeleservices through a brand franchise with Virgin Mobile. Virgin Mobile India willprovide Tata Teleservices with experience and expertise in designing, marketingand servicing of “Virgin Mobile” branded products for the youth segment.The Virgin Mobile Revolution EvolutionVirgin Mobile, a leading branded venture capital organization, is one of the worldsmost recognized and respected brands. Conceived in 1970 by Sir Richard Branson,the Virgin Mobile Group has gone on to grow very successful businesses in sectorsranging from mobile telephony, to transportation, travel, financial services, leisure,music, holidays, publishing and retailing. Virgin Mobile has created more than 200branded companies worldwide, employing approximately 50,000 people, in 29countries. Its revenues around the world in 2006 exceeded £10 billion (approx.US$20 billion).About Tata TeleservicesTata Teleservices is one of Indias leading private telecom service providers. Thecompany offers integrated telecom solutions to its customers under the Tata
    • Indicom brand, and uses the latest CDMA 3G1X technology for its wireless network.Tata Teleservices along with Tata Teleservices (Maharashtra) Limited operates inmore than 4500 towns across 20 circles i.e. Andhra Pradesh, Chennai, Gujarat,Karnataka, New Delhi, Maharashtra, Mumbai, Tamil Nadu, Orissa, Bihar, Rajasthan,Punjab, Haryana, Himachal Pradesh, Uttar Pradesh (E), Uttar Pradesh (W), Kolkata,Kerala, Madhya Pradesh and West Bengal. Tata Indicom brand has a customer baseof over 23 million.Launching in IndiaBranson also performed a sky-walk stunt, on an elevator that plunged �down 20 floors along the fa�ade of The Hilton in South Mumbai.Branson on Sunday launched the Virgin Mobile brand in India through a franchisearrangement with Tata Teleservices.TTSL, which is the second largest CDMA operator with 22 million customers, will sellthe youth-based mobile service under the brand name of Virgin Mobile.TTSL would be paying Virgin what would be in the nature of a royalty fee.Virgin will not be entering India as a Mobile Virtual Network Operator (MVNO), asfeared by some of the existing telecom operatorsAn MVNO is an operator that does not own infrastructure, network or spectrum butleases these to offer services. Virgin operates as an MVNO in all its global markets.This is Virgin’s seventh launch globally and its largest investment to date in India,The Virgin group and TTSL have also jointly established a company ‘Virgin MobileIndia Ltd’ to develop the new branded service.The Virgin youth service aims to acquire 5 million subscribers over the next threeyears, during which period it will become profitable too,
    • “The estimated population in India of people between 15 and 30 years is 400million, almost six times the whole of the UK population; and these numberspromise to be a lot of fun.there were 215 million Indians aged 14-25 and over the next three years therewould be 50 million additionally. In all, revenues from this segment then would beover Rs 35,000 crore,To begin with, Virgin Mobile will be launched in 50 cities, and in a year’s time inover 1,000 cities. Specially designed handsets in the Rs 2,000-5,000 range wouldbe offered by TTSL, but customers are free to buy CDMA handsets separately, sinceVirgin would be offering a SIM-card based CDMA service, the first such offer inIndia, said Mr Heywood.The CDMA major will launch the services initially across 50 cities (in 17 circles) andwill cover over 1,000 cities by the end of the year.The launch has already created 250 jobs that would increase depending on thegrowth of the company in India.Virgin Mobile Brings India its First National Mobile Service for YoungPeopleVirgin a global mobile communications brand, recently entered the Indian marketwith Virgin Mobile India, said to be the countrys first national mobile servicefocused on teenagers and young users.Since Virgin Mobile doesnt have a network of its own and operates worldwide bycollaborating with other operators, in India the company works together with TataTeleservices.With a "Think Hatke" philosophy and a wide range of new offers, Virgin Mobile Indiaplans to quickly attract several million customers. The company comes withattractive phones plus offers that India didnt have until now. For example, Virginusers will get extra credit for every incoming minute received from any other
    • network, they will be able to call more for less and also to easily upgrade theirphones."Virgin Mobile’s strategy is different. We want to deliver a more tailored, morerelevant offering for a single, distinct segment. We are not pursuing scale forscale’s sake."With about 225 million subscribers, India is one of the most important mobilemarkets in the world, currently having no less than 10 mobile operators with over 1million subscribers. Among them, Airtel, Reliance, Vodafone, BSNL, Tata and IdeaCellular all have more than 10 million customers. Only time will tell if Virgin Mobilecan integrate into this market.The deal is aimed at just bringing value-added brand services to Indias youth andnothing beyond this, Tata Teleservices managing director Anil Sardana said atSundays launch. We are not going to sell spectrum to Virgin. It is not a MVNOservice.Virgin would be launching its services with six colour mobile handsets with pricesranging from 2,000 to 3,000 rupees (about 50-75 dollars). Virgin Mobile productsand services would initially be available in 50 cities and, by 2008, in over 1,000cities and towns, Virgin Mobile India deputy chief executive officer Jamie Heywoodsaid.Virgin for the niche youth market. The Virgin-based service would offer the extrazing that young users want, such as music, games and downloads.The new mobile operator is the “first nation-wide youth focused mobile service” andthe “first CDMA service where all customers will be on RUIM (SIM)-based phones.”Now the weird part. Even though Virgin Mobile doesn’t own the infrastructure theydon’t call the new service an MVNO. Apparently, virtual operators are not permittedin the “world’s fastest growing mobile phone market,” hence Richard Branson refersto the joint venture as “a brand extension” plan. The difference is that both
    • companies — Virgin Mobile India and Tata Teleservices — have the freedom to workwith other partners and enter into similar agreements with other players.While other players offer services from networks that they own and operate, theVirgin Mobile network is owned by Tata Teleservices , which has a brand franchiseagreement with Virgin.The result: unlike, say, Bharti Airtel or Reliance , Virgin does not require significantcapital investments to set up networks.At the launch, Virgin Mobile executives were at pains to clarify that thearrangement with Tata Teleservices is not a Mobile Virtual Network Operator(MVNO) -- which is not allowed in India -- but rather, a simple brand franchiseemodel.Virgin Mobile’s Strategy- Seeking YoungistanFor Virgin Mobile, the crowded but high-growth market is a mixed blessing. The badnews first. Mobile penetration in urban India may be in excess of 40 per cent(according to management consultancy The Boston Consulting Group), but theheavy-use customers are already tied to one network or the other.And given the lack of number portability -- retaining your mobile number even ifyou change the service provider -- Virgins chances of persuading these highspenders to switch service providers are pretty slim.Our strategy is to deliver a more tailored, more relevant offering for a single,distinct segment," • That segment is the Indian youth. There are 215 million Indians aged between 14 and 25 years, of whom 70 million own mobile phones. Over the next three years, Virgin executives expect this segment to add another 50 million new mobile phone subscribers.
    • • The youth are also significant users of SMS and are potentially large customers for other value added services (VAS). The VAS market was in excess of Rs 4,800 crore (Rs 48 billion) in 2007, with SMS making up 40 per cent of revenues, followed closely by ringtones. • Younger customers also have a shorter handset upgradation cycle -- under 12 months, compared to two years for those over 25 years. • To begin with, they make more and longer out-bound voice calls, which means huge billing potential for service providers. Then, they have large circles of friends for both making and receiving calls -- which offers a revenue opportunity not just from the entire group switching to a common service provider but also from customised services like closed user groups and so on.The Opportunity- Consumer insideWith its target customer clearly defined, Frequent handset changes fits in betterwith GSM technology. In CDMA technology (which Tata Teleservices and, therefore,Virgin offers), the SIM card is usually embedded in the phone. Which means ahandset upgrade involves an entirely new connection, complete with new number.Virgin Mobile worked around it by introducing CDMA phones with RUIM (removableuser identity module) technology, similar to GSM phones, offering users theconvenience of upgrading their phones without having to change their number orre-entering their address book.Then, it was important to be pocket-friendly -- young customers arent likely tohave huge disposable incomes, although they will demand cutting-edge technologyand style.Tata Indicomm has already established itself in the mass market categoryThough wireless subscribers in India have already crossed the 100-million mark,making India one of the top five markets in the world, still more than 50% of thepopulation is to be covered by mobile services.
    • Virgin Mobile hopes to capture at least 10 percent of the incremental market (thatis, five million subscribers) within three years.According to Virgins homework, nearly 95 per cent of young users are pre-paidsubscribers, who typically run out of both talktime and recharging money by themonth-end.Virgins handsets are therefore named and priced to appeal to its target audience --vKewl retails at Rs 3,999, while vBling sells for Rs 2,500, which is about half theprice at which competitors will sell similar handsets. "We looked at a combination oflooks, features and more affordable handsets as the youth need style but alsovalue," confirmsThen, it was important to be pocket-friendly -- young customers arent likely tohave huge disposable incomes, although they will demand cutting-edge technologyand style.Virgin Mobile worked around it by introducing CDMA phones with RUIM (removableuser identity module) technology, similar to GSM phones, offering users theconvenience of upgrading their phones without having to change their number orre-entering their address book.Get paid to receive calls: Virgin offers its customers a 10-paise credit for everyminute of incoming call, regardless of the originating network. Competitors dismissthe plan, saying it has limited potential,Service ReachVirgin Mobile branded services will be available across 20 telecom circles thataccount for 99 percent of the country’s mobile subscriber base. These includeAndhra Pradesh, Chennai, Gujarat, Karnataka, Delhi, Maharashtra, Mumbai, TamilNadu, Orissa, Bihar, Rajasthan, Punjab, Haryana, Himachal
    • Pradesh, Uttar Pradesh (E), Uttar Pradesh (W), Kerala, Kolkata, Madhya Pradeshand West Bengal (excluding Andaman and Nocobar).Distribution ReachAt launch, customers will be able to access Virgin Mobile branded products andservices in 50 cities across 17 circles.Virgin Mobile branded products and services will also be available across a host ofmodern retail outlets including The Mobile Store, Hotspot, RPG Cellucom, Univercell,Croma, Convergem and Mobile NXT as well as other leading mobile outlets.By the end of 2008, Virgin Mobile branded products and services will be availablefor sale in over 1000 cities nationwide. Through this footprint Virgin Mobile willcover approximately 60% of the urban youth market by end of the year.HandsetsVirgin Mobile has relationships with all leading handset manufacturers. It currentlyoffers a range of six handsets with a blend of style, features and affordability. Thehandset prices start as low as Rs. 1,800 and go upto Rs. 5500.CDMA vs. GSM?CDMA is quickly catching up with GSM; and the subscriber base (for CDMA) in Indiahas already surpassed 50 million fixed and mobile device users. • 50 million subscriber growth reached this milestone only four years after the technology’s introduction to the market, while it it took GSM more than ten years to reach the same number. • CDMA growth rate exceeds than that of GSM on a monthly basis (5% vs. 4,1%).
    • • With up to 2.01 million net subscriber additions in June 2007, CDMA2000’s 5 percent growth rate exceeded that of GSM, at 4.1 percent,. • Reliance Communications and Tata Teleservices, are among the top 20 fastest-growing operators in the world. • CDMA2000 is quickly becoming the technology of choice for emerging markets. • Reliance has embarked on one of the largest CDMA2000 network expansions on the planet—with plans to reach more than 20,000 towns and 300,000 villages. • You can spend this call balance whenever you want since there is no expiry. Its a win-win situation for both Virgin Mobile and the customer.Key reasons behind this growth are:
    • • Availability of very low-end (VLE) handsets - There are currently 45 VLE CDMA2000 devices from 14 suppliers available below US$50 in wholesale price.• Rapid expansion of the CDMA2000 networks into the rural areas of India to deliver state-of-the-art telephone and broadband Internet access• Price gap between 2G GSM low-end handsets and 3G CDMA2000 handsets has narrowed to only $4 USD