Virgin Mobile Usa Analysis

new rambling USA Analysis pic August 08, 2009 tabularize of Contents T fitted of Contents2 inception3 Internal Factor Evaluation (IFE matrix)4 impertinent Factor Evaluation (EFE Matrix)5 porters beers pentad Forces6 Porters Generic Forces6 fiscal Analysis7 private-enterprise(a) Profile Matrix8 The merchandising Mix-The 5 Ps9 fundamental Issues10 Boston Consulting Group (BCG Matrix)11 GE / McKinsey Matrix12 Space Matrix14 Recommendations16 Introduction unadulterated erratic is a great conjunction that has been succeederful found in the U. K.The phoner is hygienic known for its mark extension and was the commencement company to introduce the energetic Virtual profits Operator (MVNO) in the U. K. , where they leased network space form an a nonher(prenominal) firm preferably of running a network in-house and as a result avoiding fundament and large stiff cost. The company was well known for its hip and stylish position in the U. K. , and catered to the youth mark et. Although they discombobulate had a couple failures in the past including launching the MVNO in Singapore, the company decided to venture into the U.S. new bustling positions itself to come up with an appealing offer and ensure a run rate of one million subscribers in the first course of study and three million by the fourth form. Keeping with the brand outline and philosophy of making a difference, it enters atomic number 18as, which ar not well served which in this case is the age group of 15-29 due to their low frequency of work and measly credit rating. While repointing this portion lifetime-style and psychographics factors atomic number 18 measurable as usage is inconsistent, and based on school and, vacation periods. virtuous customers are attracted to the products and services because of the flexible monthly harm, easy to understand set structures, stylish handsets offered at affordable prices and relevant restless data and pastime content. stark(a) offers products and services on a flat per-minute basis and on a monthly basis for specified quantities, or buckets, of minutes purchased in advance in each case, without requi rabble customers to enter into long-term contracts or commitments ( saturated erratic 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 environment which are critical to the future success of the Relative How well has the firm, 2. 50 = the firm and organization? Importance of thator its strategies, its strategies are not Does management view as control over them? (The fare should be yes) factor in the responded to the capitalizing on firms perseverance factor? opportunities or avoiding 0=Not Important 1 = distressing result threats. 1=Very Important 2 = average response 2. 0 = the firm, and/or or Critical 3 = supra average its strategies, is/are resp onse responding well to 4 = superior response threats and opportunities in its labor. STRENGTHS gross(a) brand name Globally recognized brand name 0. 25 4 1 war-ridden impairment of Phone Package 0. 03 2 0. 06 On-line Store 24/7 0. 2 2 0. 04 Ex mobile phoneent gross sales Promotions 0. 1 3 0. 3 Pro-active and quick to act 0. 12 3 0. 36 warm staff Good at understanding and meeting customer needfully 0. 04 3 0. 2 Targeting a narrow target market less denote be 0. 02 4 0. 08 50-50 joint venture with Sprint no worry for fixed costs or physical structure 0. 1 4 0. 4 An exclusive multi course content and selling agreement with MTV networks to deliver music, games and0. 05 4 0. other MTV-, VH1-, and Nickelodeon based content to Virgin fluid subscribers Unique restless features and extras 0. 02 3 0. 06 Channel strategy that is to a greater extent(prenominal) closely aligned to its target market selection. 0. 02 3 0. 06 Unique interpret youth orien ted other providers focus on note people. 0. 02 3 0. 06 Unique advertising strategy 0. 02 4 0. 08 WEAKNESSES particular(a) Low advertising budget 0. 3 4 0. 52 No contract option means that there is a hap of having higher drudge rates. 0. 01 3 0. 03 New Foreign Brand associated with medicament/ go bad 0. 01 2 0. 02 CBD Location is busy/inconvenient for Suburb Customers 0. 02 1 0. 2 diligent Coverage 0. 01 1 0. 01 Separate Billing/ line of merchandise relationship information (More Direct Mail) 0. 01 2 0. 02 entirety 1 3. 44 3. 4 2. 5 Virgin busy exhibited internal weaknesses and strengths at heart its environment rated in a higher place weighted score of 3. 44 on a scale of 1 to 4. This can be attributed to the good leadership that includes pally staff, the market turning point that is image youth oriented, unique advertising strategy, channel strategy on the other hand limited advertising budget, dominance higher churn rates and poor mobile cov erage expose Virgin Mobiles weaknesses that must be addressed. impertinent Factor Evaluation (EFE Matrix) External Factor Evaluation Matrix (EFE Matrix) CRITICAL SUCCESS FACTORS Weight send 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 answer 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 process rate among this 0. 12 4 0. 8 d emographic is projected to be robust in the next 5 years this segment hasnt been targeted yet Revenue for mobile entertainment projected to increase steadily over the next hardly a(prenominal) years. 0. 1 4 0. Open more Virgin Mobile Stores across Capital Cities/Regional Markets 0. 05 3 0. 15 Integrate into Music/Travel packages 0. 25 4 1 Wider Mobile Phone Coverage- subject area & 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 take account 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 quality 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. There are wide opportunities for Virgin Mobile to open more Virgin Mobile Stores across Capital Cities/Regional Markets.Make the offers more attractive 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 expounded. 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, therefore companies equal 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 postal code that will prevent Virgin from competing to an untapped market. The threat of substitutes (Weak) There are ver y few substitutes available that offer mobile and immediate communication. secondary like pagers are outdated & this target market cannot afford cultivate 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 part 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 exclu sive, 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 differentiated 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 find out the unmet needs and creating new ways or means for full-blooded 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 determine buyers needs by focusing on the age group 15 to 29 with specifically those with no credit and may not have usage or a lot of minutes The Company cast an emphasis on usage of minutes, style, excogitate, fun, honesty and great value for money . This segment represented a possible opportunities for market penetration.It identified two attitudinal and life style markets in their chosen segment those that had no credit and wanted a phone with no contracts but can indulge in text edition 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, often have differing lifestyles representing miscellaneous 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. constitute be for fiscal year death December, 2008 Sales $1,323. 5M One year suppuration 0. 8% Net income $7. 9M Income ontogeny 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 nerve-wracking 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. found 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 quality on their ability to keep their current market share and expand operations into new target markets. Competitive Profile Matrix Competitive Profile Analysis Competitive Profile Matrix Virgin Mobile AT & T Cingular Verizon Sprint Critical Success factors Weight order W.T. Score Overall Market Size 0. 20 5 1 Annual Market Growth Rate 0. 20 5 1 Sector Profitability 0. 12 4 0. 48 Competitive metier 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 technical Requirements 0. 5 1 0. 05 Entry Barriers 0. 02 1 0. 02 dispersion Structure 0. 06 5 0. 3 Total 1 3. 82 bank line Unit Strength Factors Factor Weighting Business Unit Rating Value Market deal 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 Management 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 hefty business attractiveness and that the business strength for Virgin Mobile is plumb low. The fact of the matter is that rival 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 lastingness -3 Technological know-how 2 Barriers to approach 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 pressure 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 Mobil e 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 price were developed by the company. They can either clone live prices, price below 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 still be copying the competitors strategy, but equitable offering a lower price. Their only differentiating factor would be that they were cheaper. I recommend a different strategy. Creating the new plan would bring nearly 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 ultimately 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 gestate consumers will see the added value in the product as distant