Virgin Mobile SA (VMSA) will set its sights on building its brand and enhancing the customer experience within a particular set of demographics, rather than chasing mass market share and trying to compete in SA's duopolistic mobile operator space.
This is according to Jonathan Marchbank, the mobile virtual network operator's (MVNO's) CEO, who took the helm at the South African operation earlier this month, following a shareholder dilution of Sir Richard Branson's mobile venture in June.
Marchbank says his job now is to refocus VMSA's go-to-market strategy and the Virgin Mobile brand in SA - a market he says is acute in terms of understanding what the Virgin brand, as a whole, entails. “We are not going to simply throw spaghetti at the wall and see what sticks - SA is not a mass market and it needs to be approached with the segmented population in mind. It is a two-tier market with a high- and low-end element that is indicative of the population.”
He says VMSA has “lost its way” over the past 12 months, because the operator has been trying to drive a mass market proposition, when the market is patently segmented. “If you walked into one of our stores six months ago, we were trying to be Vodacom. We are just not Vodacom and I don't think that is going to be a successful strategy. We are an MVNO and no MVNO can compete with incumbent network operators.”
What Virgin Mobile is, says Marchbank, is a “slightly funked-up” brand that is steeped in the customer experience. “We need to place more focus on the segment we want to target and create a service that is going to surprise customers rather than be just another utility that they have to put up with. They don't need to be spending a lot, but they need to want to stay with us.”
Different strokes
“As with any MVNO, you can't make good money or a return on your investment with less than a million customers. Less than a million and you don't have enough scale to be sustainable and more than a million presents opportunities to make money.”
Marchbank says that, while “everyone is competing” at the end of the day, he does not see VMSA competing with what he refers to as SA's “big three” - Vodacom, MTN and Cell C. Whereas the incumbents are competing on tariff and handsets, he says, VMSA is targeting brand affinity and customer engagement.
“The big three are competing on either handset price or tariff price and it is all a little equation of complexity that everyone has to work out and quite often they can't work it out themselves.”
Tortuous tariffs
He says the milieu VMSA finds itself in is one in which Virgin tends to work well - “when you have two or three incumbent players who, in this case, have 85% to 90% of the market”.
Marchbank concedes that, across the board in SA, the buying environment in the telecoms space is tortuous. “Consumers have no choice - they can basically choose between being confused in one place, or being confused in another. If you look at our own matrix on [the Virgin Mobile SA] Web site, it is just too complicated - you need a degree to read the tariffs.”
He says, in light of this, VMSA's new strategy, currently under way, involves replacing all its “legacy” systems with the shareholder company's, Friendi Group, systems - which are “low-cost and very efficient”. According to Marchbank, the new systems, set to be installed to completion next year, are designed around customers using the Web front-end and their device to set themselves up.
Marchbank says he will spend the remainder of this year leading the planning and execution of VMSA's go-to-market strategy, which will “re-energise the Virgin Mobile business and brand in SA with a view to strongly accelerating growth over the next few years”.
Virgin Mobile SA is SA's first and only MVNO and currently has around 400 000 active subscribers, with a ratio of about 80% to 20% prepaid to postpaid customers.
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