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.
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.
Agenda
Virgin Mobile - Company Brief The Indian Opportunity Competition and Positioning The Indian Consumer VMs Entry Strategy Review
Virgin Mobile
The Company
Global Reach
Organizational Mission
Keep it simple
Keep on checking
Airtime
Accessories
Handset
7,50,00,00,00,000
The Demographics
50%
Organized Retail
There are 95000 retail outlets in all
7%
According to Gartner figures for Sep 07, India recorded the fastest growth in mobile handset sales
Subscribers Handsets
20
20
20
20
20
Year
20
Organized Unorganized
20
20
20
20
20
20
Year
20
Rural India will drive growth, accounting for 3538% of total handset market.
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.
The countrys mobile market stands at Rs. 35,000 crores and is growing at an annual rate of 60%.
New Entrants
Supplier Power
Competitive Rivalry
Buyer Power
Supplier 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)
Threat of Substitution
Th re at of Substitu tion: Second hand phone market and unorganized retail is strong. Most demand is from rural areas where organized retailers don t have a presence.
Rising cost of retail real estate makes nationwide competition difficult, but numerous national and foreign players are interested to enter
Margins are thin at mere 4%. Pressure from Second hand sales makes it worse.
Network
Operators
are
able
to
push
Second
hand
phone
market
and
Most demand is from rural areas where organized retailers dont have a presence.
Competitive Landscape
Players, Positioning and Strength
Existing Players
Nokia
Around 50% market share in Indian mobile market Focus on Mother Brand than on Another
Brand
Addressed all five needs REAPS of Indian Consumer
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
Positioning Map
Consumer Segments
Pioneer Youth
I want everything from my mobile and I want it now To stay ahead of the game you need the best tools
Careerist
Mainstream Youth
Experiencers
In-touch Organizers
Family Phoners
Mainstream Materialists
I want a phone that makes me look good - even when I cant afford it Ill carry a mobile if I need to
Basic Phoners
The Opportunity
Urban youth: Distinct mobile needs
More and longer out-bound voice calls Large calling circles for both making and receiving calls
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.
Mainstream Youth and Materialists 14-25 years Young executives / students / Youthful Adults
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
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
Differentiation Strategy
Value for Money and Flexible Service Offerings
You have to be in front of the right people. Howard Handler CMO, Virgin Mobile
A Virgin Kiosk
Virgin Mobile
Analysis and Recommendations
simplicity
Singapore Experience
Entered through a tie-up with SingTel Exited the market - citing premium pricing and crowded market
expensive
Volume
Not sustainable
Premium PositioningViable
Low
Price
High
Positioning Virgin
OFFER SIMILAR ACROSS RETAILERS EXPECTED
ASSORTMENT
CONSUMER
PRICE COMPETIVENESS
MORE EVOLVED
SHORT LIVED
SWOT
Opportunities
India a growth story - 20-30% CAGR, volumes. highest handset sales
Threats
Rising Retail Costs Unclear Government Policy on MVNO
established competitors
SWOT
Strengths
Strong Global Brand Limited overlap with Tatas existing customers Very low fixed costs as it leases Network Time Not tied to a particular
Weaknesses
Dependent on Partners for pricing, capacity Non serious image may not go
Technology
Capitalizing On Strengths
Into retailing + service provider If the GoI allows MVNOs then after tying up with GSM players, can beat Reliance
People not familiar with the MVNO concept Tata Teleservices does not have a good brand image
Recommendations
Key advantage over other (non-operator) retailers - presence in both retailing and airtime
Recommendations
Forge deal with a GSM player Offer bundled plans - subsidize handset costs with Airtime
Recommendations
VM is moving in the right direction but time is still not ripe for a big bang entry into handset retailing
Continue tie-ups with existing Mobile retailers like Univercell, Hotspot, M Bazaar, M Port, Vishal, etc.
Thank You !!