Virgin Mobile
Essay Preview: Virgin Mobile
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Porters Five Forces
Supplier Power – Weak
Lots of cell phone providers, therefore companies like Kyocera lower prices to contract with service providers.
Buyer Power – Strong
Current cell phone service providers are numerous, which allows for many options for buyers.
Barriers to Entry – Weak
There is nothing that will prevent Virgin from competing to an untapped market.
Threat of Substitutes – Weak
There are very few substitutes available that offer mobile and immediate communication. Alternative like pagers are outdated & this target market cannot afford sophisticated PDA service.
Degree of Rivalry – Strong
Competitors have brand recognition in the US and have the majority of the market share.
Financial Analysis:
Initially, Virgin may have no great profits since they are trying to be the low cost provider. Although they were profitable in the UK, they have no brand recognition in the US to fall back on. Based data, Virgin is able to compete effectively with their major competitors as far as sales. They are also able to do this will less employees, meaning low operating cost. The companys ability to compete effectively gives a good indication on their ability to keep their current market share and expand operations into new target markets.
Based on the CPM data, Virgins main focus should be primarily price, operating expenses, and brand recognition. The company should spend their money in these areas because it will yield the most return. Advertising and Multimedia functions have already been addressed. Each company will have to compete for market share. Price is an essential component of their marketing strategy, since they are dealing with a younger crowd.
Boston Consulting Group
Virgin mobile is considered a question mark because they have high growth, but no market share in the US. Because they have low market share, they may not generate much cash upfront. They have the potential to become a star if they gain enough market share.
Marketing Mix – 4 Ps
Market
Competition in the cellular phone business is strong with many competitors. Currently the top providers operate to benefit themselves and not the consumer with high prices and limited features for the money. Consumers have various choices as far as provider, but no company has differentiated themselves to benefit the consumers pocket.
Product
Virgin Mobile USA, Inc. provides wireless communication using leased network space. They provide pre-paid services, pay-as-you-go plans, and no commitment payment options. In addition to wireless service, they provide data features like text messaging, games, graphics, text groups, and entertainment applications.
Price
Pricing for Virgin Mobile is focused on being the low cost provider of cell phone service. Pricing low will enable them to meet he demands of the younger consumers who have limited income streams.
Place
Virgin Mobile will sell directly to consumers through retail companies such as Wal-Mart, Target, Sam Goody, Circuit City Media Play, Best Buy, and Virgin Mega stores. The idea is to remain accessible to youth and be in the areas where they shop the most.
Promotion
Virgin Mobiles target market is young adults from the ages of 14-34. Capitalizing on