Virgin Mobile

Attn: Top Management Team

Based on the current business climate in the American mobile market, Virgin Mobile sits in a unique position where they can leverage their adaptability can obtain a sizable portion of the growing industry.

5 Competitive Market Forces Affecting Current American Mobile Market Firms

• Competitive Rivalry: 6 firm oligopoly vying for power of business sector
• Supplier Power: Providers have a steady stream of phones from wholesalers
• Threat of New Entry: Virgin Mobile stands little chance in business sector, but can be frontrunner of emerging youth sector
• Threat of Substitution: Risk of customers shifting over to a less obscurely prices business model is offered.
• Buyer Power: Providers have complete control over clients (businessmen) after they sign contract

 Above represents a 5 forces analysis specific to current American mobile firms. By studying what affects their business environment, we can see what competitive advantages we hold over them and can act upon. These firms currently provider service via a very obscure and expensive pricing structure where customers constantly feel like they are constantly overpaying because of hidden fees and varying prices throughout the day. As such, only businessmen are willing to cover the costs of a phone, yet still suffer a 24% churn rate annually. Furthermore, doing so leaves the 15-29 year old sector underserviced. So, while Virgin Mobile certainly wouldn’t benefit from competing with the current six firms in the traditional sector, Virgin Mobile can charge low, more straightforward prices to appeal to the younger demographic.

SWOT Analysis of Virgin Mobile

• Strengths: New business still able to adapt new core competencies
• Weaknesses: Very little advertising money, no notoriety in USA, little chance to enter matured market sector of selling cellphones to businessmen.
• Opportunities: Able to tap into underserviced youth sector.
• Threats: Poor pricing structure would hinder Virgin Mobile from appealing to target audience or being profitable.

Based on the above SWOT analysis Virgin Mobile is unique to current American firms in that is still has an opportunity to decide not to rely on an obscure contract pricing structure. However, as a foreign and unknown business, Virgin Mobile needs to market itself well despite having very little advertising money. To do so, Virgin Mobile should secure high value contracts with media companies that serve the youth, such as Nickelodeon and MTV. Furthermore, the firm needs an approachable pricing structure that kids would be willing to pay, while bearing little risk to Virgin Mobile such that it doesn’t lose money on low value customers who either don’t pay their bills or use too few minutes that it doesn’t cover the firms fixed costs.