Friday, April 4, 2008

A shot in the foot or a flight to success?? – Virgin Mobile

I never get the accountants in before I start up a business. It's done on gut feeling, especially if I can see that they are taking the Mickey out of the consumer.
- Richard Branson

Sit up and take notice, “Virgin” has arrived and is making its presence felt already!!!

And on gut feeling the flamboyant and the daring entrepreneur has decided to test the waters in Indian Telecom, though not alone this time. Richard Branson owned Virgin mobile will now be available in India in collaboration with Tata Teleservices. Virgin Group is launching CDMA handsets in partnership with Tata Teleservices. Virgin Mobile is a brand used by several mobile phone service providers operating in the United Kingdom, India, Australia, Canada, South Africa, the United States and France.

Branson is targeting the 215 million youth in India in the age group 14 to 25. The offers, the buzz, the promotion and the website totally back’s that vision.

  • Get a credit @ 10 paisa per minute for each incoming call.

  • Outgoing calls @ 50 paisa per minute.

  • Exciting phone models.
  • Trendy website, with nothing official about it flavor.
  • No fuss, simple talk plans
  • Trendy TV commercials, I loved them …

Virgin has what makes the greatest impact with the youth – the X Factor. The brand if full of life and vibrancy and makes its intentions of targeting the youth clear at the first glance. Everything about the brand from its product feature offering, to its promotion is targeted at youth. The website talk in non ambiguous terms the pains that “Virgin” can relieve you from. Value added service, which is Virgin’s USP has a flavor for the young and trendy. The plans give you more freedom than the other present around and the brand name puts you in a clearly distinguished niche as a user.

The launch of the Virgin mobile India at the Hilton hotel in Mumbai and the subsequent live bollywood flick “Andaaz apna zara Hatke” made the target segment for the brand very clear.

Sir Richard Branson on making his debut in a live Bollywood flick, “Tonight’s LIVE airing of “Andaaz Apna Very Hatke” marked not only a world first for the Virgin Mobile brand but a Bollywood first for the whole of India! I’m not sure I was entirely convincing as a Bollywood hero and I don’t expect Karan Johar to be calling me anytime soon but in true Virgin Mobile tradition it was great fun. The young people from all over India who took part in tonight’s performance were fantastic and I hope as a result of India’s first live Bollywood flick they become stars of the future. After all as we like to say at Virgin Mobile India “Think Hatke”!

The youth in India are surely relating to the “Hatke” brand which comes as a nice cool breeze in the so far formal arena of CDMA mobile phones with Tata and Reliance as the only players on prowl. Armed with virgin brand, whether or not TTL comes in a position to even challenge reliance supremacy over the market is only ones guess, but reliance market with youth are sure to take a hit.

The JV – Tata and Branson

  • It’s a 50:50 joint venture between Tata’s and Branson.
  • Virgin will exclusively license the Virgin Mobile brand and technology expertise in the area of VAS and handsets to TTSL.
  • The Tata Indicomm brand will be positioned as the mass market brand while Virgin will be a more youthful brand as it is seen globally.
  • TTL will sell services under virgin brand and will pay a royalty to Branson’s Virgin Media for every customer.
  • TTSL and Virgin will also jointly explore opportunities to develop and promote newer products and VAS for TTSL subscribers.

The deal seems interesting and profitable to both with Virgin getting the network infrastructure, dealer & distributor network and regional knowledge through TTL and Tata’s in turn getting a chance to expand their customer base (majorly in youth segment) and the expertise of Virgin in areas of branding, marketing, customer care and store operations.

However it would be interesting to see the future of the alliance as Virgin is the world first and biggest MVNO and operates as an independent entity in the six other countries that it operates. It does not maintain its own network and is usually in partnership with another local company that provides the network infrastructure. But the agreement at all other places is on bandwidth reselling basis and does not allow the partner company to sell virgin as a brand in its present umbrella. In India however the situation is different as the MVNO are not allowed operation by TRAI and hence virgin had possible only this route to follow.

How the deal dynamics changes after MVNO become legal in country is for times to tell.

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