Virgin Mobiles: A Case Study

Marketing is an extremely important aspect of business and without effective marketing even the best of products or services may remain hidden from the customer. Marketing is necessary to sell a product, but is it sufficient to bring about brand loyalty? Let’s take a peep into the telecom sector and analyze the case of Virgin Mobiles which entered the Indian market in the year 2007.

MARKETING STRATEGIES

In an extremely competitive Indian telecom market involving a large number of players, to create your own share you need to be innovative and have a good market strategy. There's little doubt that Virgin was strategic to the core. The segment they focused on was the Indian youth. Aged between 15 and 30 years is a population of about 400 million Indians who are an enormous pool of prospective customers. They contributed over 50 per cent of the telecom industry's Rs 50,000 crore (Rs 500 billion) revenues in 2007-08. Youth make more and longer out-bound voice calls, which means huge billing potential for service providers. They have large circles of friends for both making and receiving calls .This offers a revenue opportunity not just from the entire group switching to a common service provider but also from customized services like closed user groups and so on. 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. Virgin studied their market opportunities well and they positioned themselves as youth centric. Virgin came up with service plans catering to the demands of their target market. They pioneered the 1p/sec and 50p/sec call rates which were not only popular but also revolutionized the call rate war. The other major players like Vodafone and Airtel have also stuck with the same rates. The concept of being paid for incoming calls had an appeal. The youth doesn’t have much pocket money. Such call rates and plans are always a boon to them. Grouped user plans too helped their cause. The catchy advertisements were seemingly popular and dealt with the daily life and problems of the youth. The use of the slogan ‘think hatke’(think differently)  told the Virgin story of innovation. It caught the attention of the youth who would rather watch a Virgin mobile advertisement than switch the television channel during a commercial break. Their advertisements highlighted how a friends’ network could use a group plan. It would also promote their services. Invariably, the content and the witty presentation would always catch the attention of their prospective customers.

                                       

Another aspect of Virgin Mobiles was the use of the cdma devices. Virgin realised that the youth are more tech-savvy, can adopt to a new device quickly, may have longer calls, would use sms services extensively and are in the habit of upgrading their devices regularly (in about 12 months). Virgin came up with Personalised Care and easy upgrade facilities. They even had a secret SMS folder in their handsets. Besides the cheap (1p/sec) call rates, the concept of literally getting paid for receiving calls were set to make Virgin popular.

Virgin’s cutting-edge marketing strategies included offering more airtime to customers by participating in online advertisements and social media. They also had an insider program which involved an individual who is not an end-user but would evaluate and give feedback on the products before being launched on the market. They even came up with the idea of kiosks and personal selling.

WHAT WENT WRONG

Despite all this, Virgin did not create the impact it could have. Today in 2011, unfortunately they have a rather obscure market share and are on the brinks of being sold out. Why did they encounter such a debacle? Analysis would crop up several questions.

First of all, they entered a market dominated by powerful competitors like Vodafone and Airtel which already had huge customer bases and had earned customer loyalty. As soon as the new call rates were introduced by Virgin, these players picked up the idea and implemented it. A bigger, older brand is often trusted more in the market even when the innovation is brought up by a smaller brand.
                                  

The greater reasons for their disappointments included major issues like network coverage. Often, mobile phone operators fail to realise that the ultimate motive of the telecom industry is to ensure that the user is able to communicate well over the network. Unless the network coverage is satisfactory, users will not join the operator. It’s not just about the cheap call rates.  
                         

Another important issue was the limitation of  the cdma devices. If a customer once bought a Virgin phone, it meant he could not use the network service of another operator on his device. In case after a few months he was not satisfied with the service of Virgin, he did not have the option of switching over to another operator. So, a thinking customer may not be too sure of buying a Virgin phone as in the long run he may have to give up his handset. Virgin introduced their GSM plans much later and by then the battle was almost over.

A major aspect of marketing is ‘After Sales’. Successful marketing is not limited to selling your product  once, it’s also about making your customer hold on to you. So, the customer care facilities need to be of the highest satisfaction level.  This is again a place where Virgin did not live up to user expectations. Users often had to wait long for executives to speak to them. Ironically, the following popular television commercial of Virgin sums up their own story:

 

Virgin’s customers quit once their customer care executives failed to attend them when they really needed help. It was time to break up!

                                                                                                           

A LESSON TO LEARN

There is not much about their marketing plan for which Virgin can be criticised. Their strategies were good, they brought about several innovations and their advertisements were immensely popular. Yet today Virgin is on the brink of being sold away. The reason being that marketing alone cannot fill up all the voids in an end product. Marketing includes all the activities that take the product from the seller’s place to the buyer’s. But if the product has to survive in the market, it has to be good in quality and must satisfy the exact needs of the user. It must serve the priorities of the customer. In telecom, good network coverage and helpful customer care services are of the highest importance to the customer. Cheap call rates and plans come after that. Advertisement and promotional activities can lure the customer into buying the product once, but it won’t fetch brand loyalty. At the end of the day, the youth would stay glued to watch a Virgin Mobile Advertisement on television but would hesitate to take Virgin's connection. Virgin’s failure sums up why identifying actual customer needs is of a much higher priority than merely promoting a product well.