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Entering of Virgin Mobile to the US market: Differentiating Growth Strategies “We built the entire service around the notion that the youth market was highly underpenetrated and highly underserved from the mainstream wireless carriers.”1 – Howard Handler, Chief Marketing Officer, Virgin Mobile “This segment has a distinctive set of needs that have not been adequately addressed by operators.”2 – Daniel Schulman, Chief Executive Officer, Virgin Mobile Virgin Group, the British conglomerate with $8.1 billion3 in annual revenues, started Virgin Mobile USA(Virgin) in July 2002. Virgin targeted the US youth market (15 years to 30 years), which had been traditionally neglected by the incumbent service providers because of low creditworthiness of the Group. By the end of 2003, only 47% of the populace between 12 years to 24 years of age possessed cell phones compared to 80% in the Western European countries. The big players like AT&T Wireless and Cingular4 had customers in that age group, “but Virgin was the first to expressly target this group.”5 The company offered pay-as-you-go prepaid package,6 which did not require any prior contract to be signed by the customer and the services were tailormade to compliment the lifestyle of the young Americans. Virgin entered into tie-ups with brands like MTV, and other music channels, which had a strong youth following to associate itself with the American youth. By November 2003, Virgin had enrolled its one-millionth customer. “It reached that milestone just five quarters after the youth-oriented service debuted—as fast as any other wireless provider in history. That rapid growth struck many analysts as a testament to the power of the youth market.” 7 VIRGIN CREATING FLUTTERS IN THE US MOBILE MARKE

What are the market entry strategies of the Virgin Group, a British conglomerate,

to establish its network in the US market? How Virgin Mobile created a niche

market for itself?

What strategy did the company choose to differentiate itself from the other players

in the market? To which segment of customers did Virgin choose to sell its

products, and what were the benefits it derived from choosing such a segment?

Can the strategy prove to be successful for Virgin Mobile in the long-term?

Explain.