Virgin Mobile: Porter's Five Forces Model

Virgin mobile is planning to bring a cellphone service to the 14- 24 year market, which are overlooked by the big carriers. The young market is overlooked by carriers because they lack good credit or any credit history at all. In addition, the customer dissatisfaction in the industry is high so Virgin plans to improve customer experience for young users. The goal for Virgin is creating brand loyalty.
It is would make the most sense to analyze the landscape of the whole industry using the Porter’s Five Forces Model. There is intense competition between these service providers because they hold a similar market share. The US wireless services in
Q4 of 2001 has a minimum of nine wireless providers (Statista). As of Q3 2017, there four dominant
With several weaknesses in the strategy, there are also opportunities. Virgin could make another revenue stream for their mobile division by creating phone accessories from cases to charms. These customizable features would also be a great marketing tool that isn’t expensive as an ad. For examples, students could be able to customize their phones exactly to their preference. If Virgin mobile can capture the younger market, the value of Virgin might penetrate through different target segments. Eventually, Virgin model will be able to remove their hidden fees and have a direct, guaranteed price. This transparent pricing structure could also appeal to adults. This could be a possibility because Virgin already offers real-time billing. Virgin mobile could have long revenue stream if they can build customer loyalty when the customer is young and establish a sustainable competitive advantage. One major threat is extensive niches in the young culture, which is a threat.
Virgin must do extensive research on their young audiences and create a message that captures most of the young market. For example, MTV might be geared toward a young but not all the content of MTV appeal to the whole 14-24 age
Instead of penalizing heavily for overage. Virgin could set a text if the minutes or text message limits gets low. In addition, Virgin mobile could make recommendation on what usage is needed to “fill the bucket”. Option three offers a sustainable competitive advantage, cause Virgin mobile is targeting low-cost focus strategy to a new market segments and design a pricing structure to benefit their potential young customers. Option one wouldn’t work because it still has hidden fees and the young wouldn’t be mindful of knowing what peak hours are and how it affects them. The young potential customers might get a higher bill than expected and just never return. Option 2 would not work since the telecom industry is capital intensive and wouldn’t be able to support growth or expansion to provide a quality service.
There are several causes of dissatisfaction in the industry. The pricing structure that penalizes overages and limited plan offerings that has fixed buckets that don’t make sense based off of usage patterns. Big carriers know customers don’t have a lot of choice between carriers and their pricing structure is profitable for them to pay