Virgin Mobile

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Porter's Five Forces

•Supplier Power - Weak
oLots of cell phone providers, therefore companies like Kyocera lower prices to contract with service providers.

•Buyer Power – Strong
oCurrent cell phone service providers are numerous, which allows for many options for buyers.

•Barriers to Entry – Weak
oThere is nothing that will prevent Virgin from competing to an untapped market.

•Threat of Substitutes – Weak
oThere 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 Alternative like pagers are outdated & this target market cannot afford sophisticated PDA service.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
oCompetitors 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 company's 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, Virgin's 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...
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