Read every part of the case study, break it down by taking notes and then proceed with analysis and calculations.
Describe the competitive market for mobile phone carriers. Here are some things to keep in mind:
Who are the key players in their mobile ‘universe’?
Bear in mind competitors, partners, suppliers.
What are the general customer segments and what are their expectations from a service?
Where are carriers succeeding and where are they falling short?
What are the aspects of current mobile phone plans that make all customers unhappy?
Do you agree with Virgin Mobile’s target market (14 to 24 year olds) selection?
Complete Lifetime Value (LTV) Calculations for the following:
Calculate LTV with contract
Also calculate LTV (with contract) and without hidden fees
Calculate LTV without contract
Also calculate LTV (without contract) and without hidden fees
Calculate a breakeven
Forecast Virgin Mobile’s LTV
Use the following formula for LTV:
You are both welcome (and encouraged) to use Excel for your calculations. Please clarify the following numbers (write them out and label them, do not just give the final LTV – show you work to receive partial credit):
Average Revenue per User (ARPU)
Rate = 5%
(please use this at all times for rate. Rates may vary firm to firm, 5% is a common default and you can consider this ‘given by the instructor’)
Annualize some of your numbers for your LTV calculations.
For the LTV calculation, you may need to do some research.
Explore competitive advantages
Describe all the advantages Virgin Mobile has versus the competition in entering the mobile market
Layout possible disadvantages Virgin Mobile faces versus it’s competitors.
Given the above target segment, how should Virgin Mobile structure its pricing.
Calculate an LTV for Virgin Mobile based on the pricing you have recommended
Remember to consider any advantages Virgin Mobile possesses in making your calculations
Based on your answers to all the questions above, make a final recommendation to Virgin Mobile’s senior leadership as to whether Virgin Mobile should or should not launch in US.
If you recommend not to launch, then take the perspective that senior leadership at VM has highly anticipated this opportunity and thus committed to myriad planning and partnerships. Thus, answer the following:
Detail to management all the reasons why the US market is not viable.
Include in your arguments all the financial calculations and the reason the advantages you outlined will not be beneficial enough to launch and why the impact of disadvantages is substantial enough to also negate a launch.
How should Virgin Mobile communicate to its partners the reasons it will not pursue a US launch.
If yes, describe how Virgin Mobile should go-to-market:
Why do you believe VM will have a successful launch in the US?
How will VM’s advantages be of benefit and how does these advantages offset potential disadvantages?
Outline what the offering should be to consumers
Be sure to outline the role of subsidies detailing why (or why not) VM should offer them.
What are longer term considerations such as opportunities and risks that VM should consider post-launch?