A Word file is attached with discussion questions for the Virgin Mobile USA case. Please come prepared for the case discussion in class; this includes doing some calculations as outlined. This is a pricing case and some financial analysis is necessary.
1. SWOT analysis (30%)
2. Financial calculations, including Acquisition Cost breakdown, Break-even period (months), and LTV analysis under different assumptions –
(i) exactly as the industry prices currently, with and without contracts;
(ii) with lower prices (no hidden fees) and lower acquisition costs, but the same basic pricing model as per industry competitors;
(iii) with a different approach altogether, such as a prepaid plan, without contracts, but assuming lower acquisition costs. Calculate optimal price per minute.
In other words, play around with the numbers in the LTV formula, and see whether you can justify a completely different pricing model than the current
industry pricing model. (40%)
3. Recommendations – mainly on a pricing plan for Virgin Mobile USA based on calculations in section (2). You can also include some details on the recommended features of the new mobile phone service, and the marketing activities to promote and distribute the service. (30%)