Assignment A2
Virgin has decided to launch their wireless phone services in the USA. This extension, Virgin Mobile, attempts to provide the right service to the youth market by analyzing its competitive forces and challenging environments. Virgin Mobile needs to select a pricing strategy that will both attract and sustain the youth market. This will then increase the company’s attractiveness and competitive qualities.
Porter’s five forces analysis is a useful tool to determine the attractiveness of the cellular industry for Virgin Mobile. The threat of new entrants is relatively low in this market as the barriers to entry are significant. The current companies such as AT&T and Verizon have already established their position in the USA market. …show more content…
The supplier, Sprint, depends heavily on Virgin since the contract involves a venture. The bargaining power for customers is quite low because of the locking contract available for them. All carriers design their packages and plans in accordance with the customer’s needs, however subsidizing or building your own network can be costly.
Virgin Mobile strengths and opportunities derive from the vast experience of the parent company in the UK market. The joint venture with Sprint provides Virgin with a setup MVNO model. This model has low fixed costs with low operation and maintenance requirements. Virgin Xtras is an opportunity to add proposition that would appeal to many young customers. The strategic agreement with MTV to deliver entertainment function and the cooperation with Target, Sam Goody music stores, and Best Buy, will help Virgin mobile in marketing their …show more content…
Cloning industry prices and pricing below competition are not good options. By cloning industry prices, you are trying to steal market share from competitors in an already crowded market simply by having marketing tools focused on a younger demographic. This does not seem like a good way to differentiate and likely would not lead to a successful business. Additionally, by lowering prices, you would be starting price wars with providers that have much more resources than Virgin. As a new entrant, price wars with established competition very rarely work, as it does not create sustainable competitive advantage. This plan is the best option to target a younger population while ensuring they have a competitive advantage. The value proposition to this group would be a pay based on use model with no credit checks or contracts. Virgin Mobile can move into this space and avoid competitors who will not have an interest in this niche
Virgin has decided to launch their wireless phone services in the USA. This extension, Virgin Mobile, attempts to provide the right service to the youth market by analyzing its competitive forces and challenging environments. Virgin Mobile needs to select a pricing strategy that will both attract and sustain the youth market. This will then increase the company’s attractiveness and competitive qualities.
Porter’s five forces analysis is a useful tool to determine the attractiveness of the cellular industry for Virgin Mobile. The threat of new entrants is relatively low in this market as the barriers to entry are significant. The current companies such as AT&T and Verizon have already established their position in the USA market. …show more content…
The supplier, Sprint, depends heavily on Virgin since the contract involves a venture. The bargaining power for customers is quite low because of the locking contract available for them. All carriers design their packages and plans in accordance with the customer’s needs, however subsidizing or building your own network can be costly.
Virgin Mobile strengths and opportunities derive from the vast experience of the parent company in the UK market. The joint venture with Sprint provides Virgin with a setup MVNO model. This model has low fixed costs with low operation and maintenance requirements. Virgin Xtras is an opportunity to add proposition that would appeal to many young customers. The strategic agreement with MTV to deliver entertainment function and the cooperation with Target, Sam Goody music stores, and Best Buy, will help Virgin mobile in marketing their …show more content…
Cloning industry prices and pricing below competition are not good options. By cloning industry prices, you are trying to steal market share from competitors in an already crowded market simply by having marketing tools focused on a younger demographic. This does not seem like a good way to differentiate and likely would not lead to a successful business. Additionally, by lowering prices, you would be starting price wars with providers that have much more resources than Virgin. As a new entrant, price wars with established competition very rarely work, as it does not create sustainable competitive advantage. This plan is the best option to target a younger population while ensuring they have a competitive advantage. The value proposition to this group would be a pay based on use model with no credit checks or contracts. Virgin Mobile can move into this space and avoid competitors who will not have an interest in this niche