Porter's Five Forces Analysis Of Virgin

Introduction: Virgin has decided to take on a challenging new venture in the United States. The telecommunications market in the United States is overcrowded and dishonest with customers. With the growing market of mobile phones this provides a huge opportunity. But to be able to capitalize on this opportunity we must understand where the opportunities in the market are and how we can use our strengths to target them. We have been presented with three options for pricing plans, Cloning the Industry Prices, Price Below the Competition, and A Whole New Plan. We will use our analysis to decide on which plan will be the most effective in this market.
Porter’s Five Forces Analysis: The telecommunications market is heavily saturated and competition

One of the main strengths that sets Virgin apart is the clarity in their plans. By taking a new approach to cellular plans with no hidden fees or taxes just a simple flat rate the carrier becomes very attractive in a market that has not been straight forward with its customers. Because of CEO Dan Schulman Virgin is also not afraid to take risks and is well diversified in many markets. By forming a 50-50 joint venture with sprint fixed costs are heavily reduced. This allows Virgin the ability to have lower prices and still generate a profit while still presenting themselves as a better value than the competition. Weaknesses: Virgin has many strengths, but all new ventures have potential to fail. They have already failed with the exact same idea in Singapore. Trying to enter a already heavily saturated market can be incredibly challenging. The firm has an exceptionally small advertising budget of only $60 million annually compared to other firms in the industry who spend over $600 million annually. Although the Company has been incredibly successful in many different markets they are not a huge name in the United States. This makes having a smaller Advertising budget incredibly

By using this plan, we believe that the target market will be most receptive to this option because this segment is open to new ideas. The no contract plans will be best for this range of people because they may not always be consistent in their usage. This option also allows Virgin USA to compete at lower prices than the Major providers. There is a stigma that you can’t target younger people to make money, but we believe otherwise. This industry is expected to grow exponentially over the next five years and this can lead to huge profits. This plan will also set Virgin USA apart from the other providers by being able to be upfront and honest with its pricing plans. If we were to choose options 1 or 2 we do not believe Virgin would be able to distinguish itself as well. This would not make Virgin appear to be a better value than it’s