Virgin Mobile Usa Analysis

double-dyed(a) supple ground forces abstract pic August 08, 2009 Table of Contents Table of Contents2 Introduction3 Internal constituent military rank (IFE hyaloplasm)4 External Factor rating (EFE Matrix)5 Porters Five Forces6 Porters Generic Forces6 Financial analysis7 agonistic indite Matrix8 The Marketing Mix-The 5 Ps9 constitute Issues10 Boston Consulting Group (BCG Matrix)11 GE / McKinsey Matrix12 Space Matrix14 Recommendations16 Introduction double-dyed(a) rambling is a great caller that has been successful base in the U. K.The family is thoroughly known for its brand extension and was the first conjunction to introduce the lively Virtual Network Operator (MVNO) in the U. K. , where they leased network space frame another unshakable instead of running a network in-house and as a result avoiding cornerstone and large fixed cost. The company was well known for its hip and trendy position in the U. K. , and catered to the callowness market. Although they a ssume had a couple failures in the past including launching the MVNO in Singapore, the company decided to endanger into the U.S. complete(a) expeditious positions itself to come up with an appealing offer and ensure a run outrank of one million subscribers in the first grade and three million by the fourth family. holding with the brand strategy and philosophy of making a difference, it enters aras, which are not well served which in this elusion is the age group of 15-29 due to their low frequency of usage and poor credit rating. While targeting this atom lifestyle and psychographics factors are important as usage is inconsistent, and based on school and, vacation periods.Virgin customers are attracted to the products and serve wells because of the flexible monthly terms, easy to understand pricing structures, stylish distributesets offered at low-cost prices and relevant mobile selective information and entertainment content. Virgin offers products and services on a fl at per-minute al-Qaida and on a monthly basis for specified quantities, or buckets, of minutes purchased in advance in each case, without requiring customers to enter into long-term contracts or commitments (Virgin nimble USA). Internal Factor Evaluation (IFE Matrix) Internal Factor Evaluation Matrix (IFE Matrix) CRITICAL SUCCESS FACTORS Weight rate Weighted Score What are those factors in the internal purlieu which are critical to the future success of the Relative How well has the secure, 2. 50 = the firm and organization? Importance of thator its strategies, its strategies are not Does management have control over them? (The execute should be yes) factor in the responded to the capitalizing on firms industry factor? opportunities or avoiding 0=Not important 1 = poor reaction holy terrors. 1=Very Important 2 = average response 2. 0 = the firm, and/or or Critical 3 = above average its strategies, is/are response responding well to 4 = superior respons e threats and opportunities in its industry. STRENGTHS Virgin brand name Globally recognized brand name 0. 25 4 1 Competitive Price of Phone Package 0. 03 2 0. 06 On-line Store 24/7 0. 2 2 0. 04 Excellent Sales Promotions 0. 1 3 0. 3 Pro-active and quick to act 0. 12 3 0. 36 Friendly staff Good at understanding and meeting customer postulate 0. 04 3 0. 2 Targeting a narrow target market less ad costs 0. 02 4 0. 08 50-50 joint profess with Sprint no worry for fixed costs or physical structure 0. 1 4 0. 4 An exclusive multiyear content and marketing concordance with MTV networks to deliver music, games and0. 05 4 0. other MTV-, VH1-, and Nickelodeon based content to Virgin Mobile subscribers Unique mobile features and extras 0. 02 3 0. 06 Channel strategy that is more than closely aligned to its target market selection. 0. 02 3 0. 06 Unique cast youth oriented other providers focus on on barter people. 0. 02 3 0. 06 Unique advertising strategy 0. 02 4 0. 08 WEAKNESSES confine Low advertising budget 0. 3 4 0. 52 No contract option means that there is a panorama of having higher churn rates. 0. 01 3 0. 03 New Foreign cross associated with Music/Travel 0. 01 2 0. 02 CBD localization of function is busy/inconvenient for Suburb Customers 0. 02 1 0. 2 Mobile Coverage 0. 01 1 0. 01 Separate burster/Account information (More Direct Mail) 0. 01 2 0. 02 number 1 3. 44 3. 4 2. 5 Virgin Mobile exhibited internal weaknesses and strengths within its environment rated above weighted fall guy of 3. 44 on a scale of 1 to 4. This can be attributed to the good leadership that includes friendly staff, the market niche that is image youth oriented, unique advertising strategy, channel strategy on the other hand limited advertising budget, potential higher churn rates and poor mobile coverage expose Virgin Mobiles weaknesses that must(prenominal) be addressed. External Factor Evaluation (EFE Matrix) External Factor Evaluation Matrix (EFE Matrix) CRITICAL SUCCESS FACTORS Weight Rating Weighted Score What are those factors in the internal environment which are critical to the future success ofRelative Importance ofHow well has the firm, or 2. 50 = the firm and its the organization? that factor in the its strategies, respondedstrategies are not Does management have control over them? The dissolvent should be no) firms industry to the factor? capitalizing on 0=Not Important 1 = poor response opportunities or avoiding 1=Very Important or 2 = average response threats. Critical 3 = above average 2. 0 = the firm, and/or response its strategies, is/are 4 = superior response responding well to threats and opportunities in its industry. OPPORTUNITIES Penetration among consumers 15-29 is significantly lower and the growth rate among this 0. 12 4 0. 8 demographic is projected to be robust in the next 5 years this fraction hasnt been targeted yet tax revenue fo r mobile entertainment projected to increase steadily over the next few years. 0. 1 4 0. Open more Virgin Mobile Stores across Capital Cities/Regional Markets 0. 05 3 0. 15 comprise into Music/Travel packages 0. 25 4 1 Wider Mobile Phone Coverage- internal & International 0. 1 3 0. THREATS Market seems to have reached maturity 0. 14 3 0. 42 Market is overcrowded 0. 15 2 0. 3 Customers ages 15-29 are low value subscribers dont use their cell phone regularly 0. 3 2 0. 06 Limited National Coverage 0. 01 2 0. 02 The age group targeted tends to have poor credit fiber 0. 03 3 0. 09 Competition from A T & T, T-Mobile USA, Cellco and Verizon etc 0. 02 2 0. 4 Total 1 3. 26 3. 26 2. 5 Virgin Mobiles response to external opportunities and threats within its environment is rated above weighted score of 3. 26 on a scale of 1 to 4. in that respect are wide opportunities for Virgin Mobile to open more Virgin Mobile Stores across Capital Cities/Regional Markets.Make the o ffers more engaging by Integrating Music/Travel packages. Provide wider Mobile Phone coverage-National & International. On the other hand there are threats that are looming due to the market that seems to have reached maturity and overcrowded. There is limited National coverage which needs to be expanded. There is also Competition from A T & T, T-Mobile USA, Cellco and Verizon etc. These threats must be countered effectively. Porters Five Forces Supplier power (Weak) Lots of cell phone providers, wherefore companies alike 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 insertion (Weak) There is nothing that give prevent Virgin from competing to an untapped market. The threat of substitutes (Weak) There are very few substitutes available that offer mobile and immediate communication. Alternative like pagers are outdated & this target market ca nnot afford sophisticated PDA service. Degree of Rivalry (Strong) Competitors have brand recognition in the US and have the majority of the market share. Porters Generic Forces Virgin Mobile applies the three generic strategies.Cost leadership strategy that seeks to minimize costs and maximize profits. For example the company had entered into distribution agreements with Target and Best Buy, both of which charged lower commissions than traditional industry channels $30 per phone, versus an industry average of $100. 6. They also sought to hire talented staff that is friendly and good at understanding and meeting customer needs. In terms of differentiation, the team decided that a key wear of the Virgin Mobile service would involve the delivery of content, features, and entertainment, which they called VirginXtras. To this end, the company signed an exclusive, multiyear content and marketing agreement with MTV networks to deliver music, games, and other MTV-, VH1-, and Nickelodeon based content to Virgin Mobile subscribers. Therefore Virgin Mobile focuses on unique image that is youth oriented while other providers focus on business people. Virgin Mobile also signalised its service by good customer care. There are advantages and risks exhibited with each strategic option. Virgin Mobiles opportunities in this market were based on determining the unmet needs and creating new ways or means for satisfying these unmet needs.And it had to be based on buyer types, buyers needs and the technological means of satisfying those needs. Virgin Mobile used a more concentrated approached they identified buyers needs by focusing on the age group 15 to 29 with specifically those with no credit and may not have usage or a potbelly of minutes The Company put an emphasis on usage of minutes, style, fashion, fun, honesty and great value for money. This instalment represented a possible opportunities for market penetration.It identified two attitudinal and lifestyle markets in their chosen segment those that had no credit and treasured a phone with no contracts but can indulge in text messaging, downloading information into the cell phone and they were more likely to use ring tones, faceplates and graphic and those that wanted a phone as a fashion statement. Even people with similar usage needs, practically have differing lifestyles representing various value sets. For example some people have an active lifestyle in which sports and fitness play an important role, while for others, art, fashion and trends may be very important. Financial AnalysisVirgin Mobile USA, Inc. get wind numbers for fiscal year ending December, 2008 Sales $1,323. 5M One year growth 0. 8% Net income $7. 9M Income growth 88. 4% AT Mobility Key numbers for fiscal year ending December, 2008 Sales $124,028. 0M One year growth 4. 3% Net income $12,867. 0M Income growth 7. 7% Cellco Key numbers for fiscal year ending December, 2007 Sales $43,900. 0M One year growth 15. 5% T-Mobile USA Key numbers for fiscal year ending December, 2008 Sales $1,323. 5M One year growth 0. 8% Net income $7. 9M Income growth 88. 4% Verizon Key numbers for fiscal year ending December, 2008 Sales $97,354. M One year growth 4. 2% Net income $6,428. 0M Income growth 13. 7% Reference http//www. hoovers. com/virgin-mobile-usa/ID__156760/free-co-competitors. xhtml The main competitors are AT&T, Cello, T-Mobile USA and Verizon. Initially, Virgin may have no great profits since they are exhausting 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 Mobile is able to compete effectively with their major competitors as far as sales are concerned. 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. Competitive P rofile Matrix Competitive Profile Analysis Competitive Profile Matrix Virgin Mobile AT & T Cingular Verizon Sprint Critical Success factors Weight Rating W.T. Score Overall Market Size 0. 20 5 1 Annual Market yield Rate 0. 20 5 1 Sector Profitability 0. 12 4 0. 48 Competitive Intensity 0. 14 1 0. 4 Global Opportunities 0. 12 4 0. 48 Regulatory regime 0. 05 3 0. 15 Opportunity to Differentiate 0. 04 5 0. 2 proficient Requirements 0. 5 1 0. 05 Entry Barriers 0. 02 1 0. 02 Distribution Structure 0. 06 5 0. 3 Total 1 3. 82 Business unit of measurement Strength Factors Factor Weighting Business Unit Rating Value Market Share 0. 2 1 0. 2 Share Growth 0. 2 4 0. Product Quality 0. 05 2 0. 1 Brand Reputation 0. 1 1 0. 1 Distribution Network 0. 31 5 1. 55 Promotional Effectiveness 0. 05 5 0. 25 Production Capacity 0. 2 4 0. 08 Cost forethought 0. 01 5 0. 05 R Performance 0. 02 5 0. 1 Management 0. 04 4 0. 16 Total 1 3. 39 picMcKinsey model above shows us hygienic business attractiveness and that the business strength for Virgin Mobile is fairly low. The fact of the matter is that 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 is concerned, but no company has differentiated themselves to benefit the consumers pocket. Virgin Mobile must strive to excel. Space Matrix Strategic Position & Action Evaluation pic Internal Strategic Position External Strategic Position Competitive Advantage Industry attractiveness Ratings Ratings (-6 worst, -1 Best) (+1 worst, +6 Best) -5 Market share 5 Market Growth potential -4 Product quality 2 Profit potential -3 Product life cycle 4 Financial stability -5 Brand & Image 5 Resource utilization -3 Customer loyalty 2 Capital intensity -3 scientific know-how 2 Barriers to entry Total -23 Total 20 Avg AVG 3. 33 -3. 83 Total axis X score -0. 0 Financial Strength Environmental Stability Ratings Ratings (+1 worst, +6 Best) (-6 worst, -1 Best) 4 ROI -3 Technological changes 2 Leverage -5 Demand Elasticity 3 Liquidity -3 Price range of competition 3 Capital required/available -6 Barriers to entry 3 Ease of market exit -6 Competitive hug 2 Risk involved in business -5 Price elasticity Total 16 Total -28 Avg Avg 2. 67 -4. 67 Total axis Y score -2. 00 With the given the Space Matrix data we realize that the company should pursue a defensive strategy. The implication is that the firm is operating within a market that is experiencing negative to stable growth and that Virgin Mobile is experiencing severe financial constraints.Virgin Mobile knows that the market is saturated and very competitive they went ahead and positioned themselves to pursue their niche in the market share. I recommend applying a combination of retrenchment, divestiture, liquidation and concentric diversification. Recommendations Virgin Mobile wants to compete within a new market and not have the competition beat them in this game. Several options as far as pricing were developed by the company. They can either clone existing prices, price infra the competition, or create their own unique pricing strategy. Cloning the industry, will not allow them to differentiate themselves in order to stand out from the competition, although, it would be easy to promote.Pricing below the competition would compose be copying the competitors strategy, but just offering a lower price. Their solitary(prenominal) differentiating factor would be that they were cheaper. I recommend a different strategy. Creating the new plan would bring most the changes that consumers want such as eliminating contracts, offering pre-paid services, lower priced phones, and eliminating hidden fees. Although this strategy could be risky, they will at last do what they set out do which was to gain the market share of the under-30 crowd. With the options that MTV, VH1 and Nickelodeon networks will offer, I believe consumers will see the added value in the product as opposed