Essay on Case Study

Submitted By litost
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Pages: 5
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Q1：Virgin Mobile targets the 14 to 24-year-olds market. The case lays out three pricing options.
Which option would you choose and why?
Answer 1:
I choose option 3 “A Whole New Plan”.
Because I think it is the most radical. I think the pricing plan should start from scratch and come up with an entirely new pricing structure, which should be significant different from its competitors. According to the characters of the Virgin Mobile targets the 14 to 24-year-olds market.
(1) They think actively and pursuit fashion, they are full of hope for the future. (2) They just started economic independence, (3) Their hearts are long suppressed desire to buy get broke out during the transient process.They are in a transition period of social role, they gradually understand life, they began to understand the world, they have a strong sense of curiosity, desire, and will pursue boldly, trying to pursuit of novelty and fashion, at the same time, tries to stand in the forefront of the times, leading the new trend of consumption. (4) Most of them don't have a family, they have almost no burden of the family, and they even have a strong family background for their consumption. Therefore, they pursuit of individuality, self performance. They have the very strong sense of self, they hope to demonstrate their value, in their consumption process, they also highlight personality characteristics to consistent with their age class. (5) They are over the juvenile to adult, their ideological tendency, interests and so on are not completely stable, their dominant behaviors are more vulnerable to emotional, they often appear to choose goods directly, and they often compulsively buy because of styles, colors, shapes or price factors.
Therefore, in the pricing option for 14 to 24-year-olds market, The term of the subscription in the contracts should be shortened, but I think there should be the contracts, because contracts can provide carriers with a hedge against churn and a guaranteed annuity stream; with the contracts, cellular providers struggled with an industry churn rate that averaged 2% per month. The risk for shortening such contracts would be that its churn rate would skyrocket.
Q2：The USA cellular industry is notorious for high customer dissatisfaction: despite service contracts, the big carriers churn roughly 24% of their customers each year. Clearly there is very little loyalty in this market.
What are the sources of all of this dissatisfaction?
Answer
The sources of all of this dissatisfaction are from that the vast majority (92%) of current cell phone subscribers in the U.S. had post-paid plans, which meant that they were billed monthly on the basis of their contract. Carriers were extremely wary of prepaying consumers because of their high churn rates;prepaying consumers tended to exhibit no loyalty to a provider once they had used up all of their prepaid minutes.
How have the various pricing variables (ex contracts, pricing buckets, hidden fees, off-peak hours) affected the consumer experience?
Answer
Contracts provide carriers with a hedge against churn and a guaranteed annuity stream; cellular providers struggled with an industry churn rate that averaged 2% per month yet even with the contracts,the risk would be that its churn rate would skyrocket shortening or eliminating such contracts.
Customers will be penalized with extremely high rates for the overage. If they used fewer than the fixed time, they will still be charged the fixed monthly fee, which then drove up their price per minute.

Hidden fees include taxes, universal service charges, everything, they would mean rolling all of those hidden costs into pricing structure, which will increase the consumers’ burden.
In off-peak hours, there maybe message delay phenomenon, which may affect the normal usage of consumers.
Why haven’t the big carriers responded more aggressively to customer dissatisfaction?
Answer
Becasue the average cost to acquire a customer in the
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