Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit

8/3/2019 Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit

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Virgin Mobile

Presented By:

Bhuwan Pathak (2011-13)

Sunchit Grover (2011-13)


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Virgin Mobile

Strategy for entering the

Indian Handset market


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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.


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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.


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Agenda

Virgin Mobile - Company Brief

The Indian Opportunity

Competition and Positioning

The Indian Consumer

VMs Entry Strategy Review

Analysis and Recommendations


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Virgin Mobile

The Company


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Global Reach


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Think Hatke.

We are India's first national youth-focused mobile service, With presence

aCross 45,000 outlets reaching over 3,20,000 cities, towns and villages

across India.

Ranked as the No. 1 for customer satisfaction within the first year of its

launch with an overall score of over 95%, we continued to offer you best

service and value. We have Also been adjudged the 'Buzziest Brands of

2009' i.e. the most searched for brands by surfers, in a survey carried out

by a leading online portal in India.

Everything we do, we do a little 'hatke'. We plan different, whether it's

'paying for incoming' or great value deals and cool phones. All to make

you happy because that's what makes us happy. So, think different. think

hatke.


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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


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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 creating competitive 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 and reward?


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The Indian Opportunity

Market Size, Structure and Segments

for Handset Retail


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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


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The Demographics

50%


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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


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Organized Retail

There are 95000 retail outlets in all

Only 1% of these are organized retailers

By Sales, organized retail has a share of

7%


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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


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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.


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PESTPolitico-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.


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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.


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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


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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%.


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Porters Five Forces

New

Entrants

Competitive

Rivalry

Threat of

Substitution

Supplier

Power

Buyer Power

Th reat from New Entran ts:

High

Rising cost of retail real

estate makes nationwide

competition difficult, but

numerous national and

foreign players are interested

to enter

Su pplier Power: Mode rate

Supplier s have strong brands

and often have a presence in

retail themselves

Network Operators are able to

push cheaper brands (e.g.

Reliance Classic)

Buyer Power:Buyers Demanding greater variety

at lower prices

Threat of Substitution:

Second hand phone market and

unorganized retail is strong.

Most demand is from rural areas

where organized retailers dont

have a presence.

Competitive Rivalry:

Moderate

Margins are thin at mere 4%.

Pressure from Second hand

sales makes it worse.


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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


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Porters Five Forces

Competitive Rivalry: Moderate

Margins are thin at mere 4%. Pressure from Second

hand sales makes it worse.

Buyer Power: High

Buyers Demanding greater variety at lower prices


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Porters Five Forces

Supplier Power: Moderate

Suppliers have strong brands and often

have a presence in retail themselves

Network Operators are able to push

cheaper brands (e.g. Reliance Classic)


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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.


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Competitive

Landscape

Players, Positioning and Strength


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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


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Nokia

Around 50% market share in Indian mobile

market

Focus on Mother Brand than on AnotherBrand

Addressed all five needs REAPS of Indian

ConsumerStrong focus on distribution network

Reduced their prices to counter the grey

market


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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


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Positioning Map


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Consumer Need

Analysis

Segments, Buyer Behavior and Gaps


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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


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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


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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


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Indian Market Entry

Strategy

Target Segment, Positioning and

Objectives


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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


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Positioning - Seeking Youngistan

Mainstream Youth and Materialists

14-25 years

Young executives / students / Youthful Adults


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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


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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

youth talking

A lean, enthusiastic team supported by simple

processes


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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 Champcall-back

Champ empowerment: authorized to resolve issues

on the spot

Welcome calls: all customers are personally

welcomed to Virgin Mobile

A real returns policy


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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.


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Differentiation Strategy

Value for Money and Flexible Service Offerings


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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


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Virgin India Strategy -

Promotions

Think Hatke Campaign

10 paise every minutes on incoming


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Virgin India Strategy - Location

And Ownership

You have to be in front of the

right people.

Howard Handler

CMO, Virgin Mobile


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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.


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A Virgin Kiosk


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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.


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Virgin Mobile

Analysis and Recommendations


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Strategic Choices for Mobile Retailers

Price

Volume

Low High

High

Low CostStrategy-

Viable

Low CostStrategy-

Unviable

Notsustainable

PremiumPositioning-

Viable


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BRAND ENGAGEMENT CAN BE THE ONLY DIFFERENTIATOR

OFFER SIMILAR ACROSS RETAILERS

ASSORTMENT EXPECTED

CONSUMER MORE EVOLVED

PRICECOMPETIVENESS

SHORT LIVED

Positioning Virgin


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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 world


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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%.


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Capitalizing On Strengths

Into retailing + service provider

If the GoI allows MVNOs then after tying

up with GSM players, can beat RelianceGood brand recall

Structured pricing of airtime serves as a

loyalty incentive, encouraging active use


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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?


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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)


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Recommendations

Forge deal with a GSM player

Offer bundled plans - subsidize handset

costs with AirtimeOffer for both CDMA and GSM - greater

assortment

Offer plans for 2 years, with upgradeoptions


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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.


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Documents

Staretgy of Virgin Mobile Ppt_assignment_Bhuwan & Sunchit