Sprint Nextel (NYSE: S) unveiled its long-awaited, multi-brand prepaid wireless strategy with the goal of segmenting the market and establishing distinct brands. The multi-pronged approach, which will formally launch next week, is the culmination of the work Sprint has undertaken since completing its $483 million acquisition of Virgin Mobile USA in November.
The approach includes a full relaunch of the Virgin Mobile brand, with new phones and service plans, as well as the forthcoming launch of another, as-yet-unnamed brand aimed at the pay-per-minute prepaid market. Sprint, which has relied on prepaid for growth as it continues to struggle with postpaid subscriber defections, is also continuing to push its Boost Mobile brand as well as the Assurance Wireless brand, which is aimed at low-income customers.
In an interview with FierceWireless, Dan Schulman, the president of Sprint's prepaid business and the former CEO of Virgin Mobile, said the company conducted detailed interviews with 2,000 customers this past winter to gauge their expectations for what a wireless company should be and how they used their phones. By the end, Sprint was able to match different prepaid market segments to a variety of demographic characteristics, down to what potential customers ate and drank and what kind of media they consumed. The different segments led Sprint to conclude that it needed to mount a multi-front prepaid strategy, Schulman said.
"We needed to move from being a traditional telecom company to being more of a consumer products marketing company," he said. "It would be very difficult to extend a single brand across these multiple segments without creating a large degree of dissonance amongst the different segments." The multi-brand strategy also allows Sprint to take on multiple competitors--Boost targets Leap Wireless' (NASDAQ: LEAP) Cricket brand and MetroPCS (NASDAQ: PCS), whereas the pay-per-minute campaign will target services such as TracFone and Net10. Schulman acknowledged there likely will be some overlap between the Boost brand the Virgin Mobile brand, but noted they are targeted at different market demographics.
The centerpiece of the strategy is the relaunch of Virgin Mobile, which will be focused on young, savvy customers who want the latest phones and are heavy social networking users, Schulman said. The new, all-inclusive plans, called "Beyond Talk" and available beginning May 12, break down as follows:
- $25 for unlimited messaging, email, data and Web access with 300 minutes of voice per month
- $40 for unlimited messaging, email, data and Web access with 1,200 minutes of voice per month
- $60 for unlimited messaging, email, data and Web access with unlimited voice
For an additional $10 per month, customers can also add a BlackBerry data plan. The company is offering the BlackBerry Curve 8530 for $300, alongside several other phones, including the LG Rumor Touch for $150, the LG Rumor 2 for $90 and the Kyocera Loft for $70. Schulman said Sprint will continue to provide a range of smartphones for the Virgin brand, but he declined to elaborate on what kinds of smartphones will be available and when customers will get them.
Interestingly, Schulman said Sprint is actively exploring the possibility of launching prepaid mobile WiMAX service under the Virgin brand, using Clearwire's network. "It's not a matter of if, it's just a matter of when," he said.
In addition to the Virgin relaunch, Sprint plans to launch its pay-per-minute brand next week. Schulman said he could not go into details about the brand's plans, pricing or markets, but said the new brand will be aimed at voice-centric customers who eschew data plans and "think smartphones are dumb phones."
"People will be more satisfied with the service," Schulman said of the multi-brand approach. "Being more satisfied more with the service should lead to more positive metrics."
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