Jumping into the US mobile phone market is without a doubt, a daunting yet rewarding plan. A thorough analysis of the industry its self and of Virgin Mobile’s strengths and weaknesses is necessary for not only establishing a presence in the market but ultimately necessary for creating a sustainable advantage. In order to choose an effective pricing strategy, the mobile phone market must be scrutinized using Porter’s 5-Forces Model while Virgin Mobile must be analyzed with a SWOT analysis. Porter’s 5-Forces Model will provide valuable insight into the US mobile phone industries characteristics and competitive landscape. First, the threat of substitutes in the mobile phone industry is relatively low. On one hand, a customer has a number of
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Virgin Mobile’s largest strength with respect to their competitors in the market is their ability to address and fix the issues with the current cookie-cutter well established big players like Verizon or AT&T. The most prominent is Virgin Mobile’s superior customer service. Cell phone users are fed up with hidden fees and complex pricing models. Virgin mobile is capable of being a breath of fresh air for the market. A broader advantage is Virgin Mobiles diversified revenue streams. If they were to fail in the US mobile phone market, they would be able to continue operating. This allows them to take riskier business models as their risk is hedged through other business operations. Virgin Mobile’s largest weakness is lack of brand equity. In addition to their lack of infrastructure, they are not well established as a cell phone service provider so they will need to target a niche market, the youth, which brings us to their opportunities. The largest opportunity for Virgin Mobile is their ability to target the youth. This younger group of consumers has not been targeted yet and generally does not have well established credit. By partnering with MTV to focus on the desires and entertainment of the youth, Virgin Mobile has an opportunity to establish a brand name in a market where they have not previous operated. Finally, …show more content…
Their anti-incumbency advantage allows them to address the current issue with establish competitors, lack of customer service, complicated pricing, and hidden fees. Following pricing option 1 and 2 may alleviate these issue to a certain degree but will not set them apart from the competition. If Virgin Mobile wants to make waves in this industry they need to establish brand equity and a company cannot distinguish themselves from the competition if they do not operate differently. There is clearly potential for profit with this untapped youthful customer segment. Their cynical attitudes and weariness of the current establishment must be met with a fresh and new pricing model. By eliminating contracts, Virgin Mobile does face potentially high churn, but at the same time will attract customers who are young and do not have established credit. By implementing a prepaid pricing model, they would eliminate obnoxious overages and draw consumer interest with something the market hasn’t seen on a large scale yet. The simplicity and clarity behind pricing would build customer trust and
Virgin Mobile’s largest strength with respect to their competitors in the market is their ability to address and fix the issues with the current cookie-cutter well established big players like Verizon or AT&T. The most prominent is Virgin Mobile’s superior customer service. Cell phone users are fed up with hidden fees and complex pricing models. Virgin mobile is capable of being a breath of fresh air for the market. A broader advantage is Virgin Mobiles diversified revenue streams. If they were to fail in the US mobile phone market, they would be able to continue operating. This allows them to take riskier business models as their risk is hedged through other business operations. Virgin Mobile’s largest weakness is lack of brand equity. In addition to their lack of infrastructure, they are not well established as a cell phone service provider so they will need to target a niche market, the youth, which brings us to their opportunities. The largest opportunity for Virgin Mobile is their ability to target the youth. This younger group of consumers has not been targeted yet and generally does not have well established credit. By partnering with MTV to focus on the desires and entertainment of the youth, Virgin Mobile has an opportunity to establish a brand name in a market where they have not previous operated. Finally, …show more content…
Their anti-incumbency advantage allows them to address the current issue with establish competitors, lack of customer service, complicated pricing, and hidden fees. Following pricing option 1 and 2 may alleviate these issue to a certain degree but will not set them apart from the competition. If Virgin Mobile wants to make waves in this industry they need to establish brand equity and a company cannot distinguish themselves from the competition if they do not operate differently. There is clearly potential for profit with this untapped youthful customer segment. Their cynical attitudes and weariness of the current establishment must be met with a fresh and new pricing model. By eliminating contracts, Virgin Mobile does face potentially high churn, but at the same time will attract customers who are young and do not have established credit. By implementing a prepaid pricing model, they would eliminate obnoxious overages and draw consumer interest with something the market hasn’t seen on a large scale yet. The simplicity and clarity behind pricing would build customer trust and