Virgin Mobile is a successful company based in the U.K. The company is well known for its brand extension and was the first company to introduce the Mobile Virtual Network Operator (MVNO) in the U.K., where they leased network space form another firm instead of running a network in-house and as a result avoiding infrastructure and large fixed cost. The company was well known for its hip and trendy position in the U.K., and catered to the youth market. Although they have had a couple failures in the past including launching the MVNO in Singapore, the company decided to venture into the U.S. market because they believed that the market was underserved particularly in the 15 to 29 age group. Strategic issues and problems:
Develop a value proposition that will appeal to the youth market •
Maintain customer loyalty and Life time Value
Address the unmet needs of the target market
Make the venture a profitable one
Don’t want to trigger off competitive reaction
Analysis and Evaluation:
The Mobile communication industry in 2001 can be classified as an industry that was highly competitive, saturated, approaching maturity and overcrowded. The US industry when compared to Finland, UK, and Japan could be considered an industry that had room for growth. Finland had almost a 90% penetration rate especially in the ages 20 to 29 age group and Japan had almost an 80% penetration rate, In Finland and Japan the age group 20 to 29 was considered the highest user of mobile services and the age group 15 to 19 was the second highest with almost 80% in Finland and about 75% in Japan. In the USA however, penetration was about 50% in the 30-59 age group and as low as 15% in the 15 to 19 age group and in the 20 to 29 age group the penetration was about 40% indicating that there was a marketing niche for new entrants to make inroads in the industry if they offer the right marketing mix. The wireless phone industry in the USA had about 130 million subscribers and was led by industry giant Verizon Wireless, with 29.5 million subscribers; AT&T followed with 20.5 million subscribers; Cingular Wireless had 21.7 million subscribers; and Sprint PCS, Nextel, Alltel and VoiceStream Wireless, and a few other affiliates made up the rest.
Virgin Mobile’s Approach:
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 lot of minutes; The Company put an emphasis on usage of minutes, style, fashion, fun, honesty and great value for money. This segment represented a possible opportunities for market penetration. It identified two attitudinal and lifestyle markets in their chosen segment; those that had no credit and wanted a phone with no contracts but can indulge in text messaging, downloading information into the cell phone and they were more likely to use ringtones, faceplates and graphic and those that wanted a phone as a fashion statement. Even people with similar usage needs, often 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.
The qualitative analysis which focuses on matching the attractiveness of an opportunity with the potential for uncovering a market niche is dependent on competitive activity; buyer requirements; market demand and supplier sources; social, political, economic, and technological forces and organizational capabilities.
Offering-Market Matrix for Mobile Communication in the USA 2001...
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