The aim of this research is to disclose the challenges and progress being made by Virgin and the marketing process and other crucial means leading to their progress. In order to complete this analysis, the adoption of strategic planning and marketing tool is crucial. Additional research for this report was completed through visiting Virgin’s online resources, which include historical archives, annual reports, strategies, operations etc.
The aforementioned sources or documents provide background information, which acts as the basis for Virgin’s current position and against strengths, weakness, opportunities and threats analysis (SWOT analysis).
Further analysis includes market segmentation, environmental analysis, target market and launching strategies.
The first phase of this marketing report is to conduct a situation analysis that reveals the present state of the organization and its opportunities in the market. However, disclosing the history of the organization in view is crucial. The focus of the report thus would be on virgin media groups especially the mobile or telephony sector alongside the HD-TV or (3d TV) and broadband connection in the United Kingdom.
Kotler and Kevin (2006) defined marketing as the science and art of selecting the right market, and then attracting and retaining customers making use of different techniques and making the customers happy. The marketing is not an easy concept of management. People believe it just as selling of goods, but it has the important role of satisfying the customers by giving them their needs and wants (Drysdale, 1999). This suggests that marketing is a tool, which involves the process of identifying the need of the product/ service in the market, and designing the product accordingly to fit into the market, using different strategies of sales and promotions. Successful marketing strategy is one, which makes increased returns from existing customers (Wilson et al., 2002).
It is the process of marketing that makes the success or failure of the business. For below figure describes important characteristics associated with the marketing. Virgin media focuses on characteristics such as social, technological, political, and demographic factors for its marketing and promotional activities. Virgin also targets customers based on products in an appreciable manner by introducing 3D TVs into the market. This might act as the USP for the organization.
Source: Kotler and Kevin (2006)
Figure: Important factors of marketing strategy
Company Background /Mission Statement
The history of Virgin dates back to 1970 when Sir Richard Branson, the founder of the Company started with a student magazine and then the company expanded to several sectors; ranging from music labels, travel, drinks, financial services, media, music, transportation, telephony, media and services and fitness (virgin.com). Virgin has developed more than 300 branded companies globally. Global branded revenues as of 2009 accrued to around £11.5 billion. A merger between Richard Branson’s Virgin Mobile in 1993, and cable operator NTL, which metamorphosed into Virgin Media Inc on February 6, 2007, established media.
External Marketing Audit
Macro environment -Virgin Media
Marketing is depicted by Brassington & Pettit (2003, p.8-9) and Brassington & Pettit (2007,p.2-3) as composed of conception, pricing, promotion and distribution of ideas , goods and services. Brassington & Pettit (2007, p.2-3; &Armstrong 2009,p.7-9) specifically submitted that marketing involves; identifying, planning, anticipating, and satisfying customer demands or specification with profit in mind. It thus involves exchanging or stimulating of ideas and the processing of such ideas.
It could also be depicted as the creation of awareness for products, which stems from designing products, conducting market research, launching strategies, ensuring availability and service. Marketing thus can be depicted as a demand management activity. The marketing scope however takes place in an environment which takes into consideration basic themes in marketing and customer relationship management (Brassington & Pettit 2003, p.9-11).
The macro environment audit examines ranges of issues that affect the organization from the environmental perspective. This is represented by PEST (Political, Economic, Social and Technological analysis (Drummond et al 1999, p.24).
Despite the global economic recession, the innovation and launch of products have remained constant. The particular segment of Virgin media; the television and telephony sector which provides distribution of television programming , broadband and fixed line telephone services to consumers on Virgin Media’s cable network accounted for over 84.5% of total revenue in the first half of 2010.
With the new development of TV 3D and the proposed increase of the network offering a downstream speed of 100Mbps and an upstream speed of probably 10Mbps by the end of 2010. The cable TV, telephony and broadband sector however of Virgin media is envisaging spending up to 30% of £40mthan last year as compared to £170m this year. Appendix 1 further explains the current position of Virgin Media.
The launching of 3D by Virgin media ahead of other major competitors like BSkyB which is available for domestic use demonstrates the innovative intent of the company. In this era of globalization, technologies become the particular part in our life. One of the significant parts of people daily-life is communication. That makes telecommunication infiltrate into customer lifestyle.
Virgin Media, despite the so many innovative and early market entry cases with its product remains a loss prone company. Competitors such as BBC, ITV, Channel 4,BT Group and Talk Talk through their collaboration which seeks to deliver internet access and video on demand programming accessible to the Freeview digital TV box.
The present position of Virgin Media in the market, as an innovative and early launcher of products .In 2010 , Virgin media has successfully completed a portfolio of voice, data and internet solutions to leading businesses alongside public organizations and service providers in the United Kingdom (Barnet 2010).
The focus of this report however would be on the 3D revolution. With the new converged TV and broadband set -top box gaining more demand, Virgin Media would launch TiVo at the end of the year. From this perspective, Virgin media submits that in the first three months of the year and recorded around 200 views million views of video- on -demand content. TV channels have benefitted from this video-on- demand strategy, for instance, Channel 4’s 4oD realized up to 19 million views through Virgin Media (Guardian.co.uk).
The BBC iPlayer however stands as another medium through which more than 50 million views of content in the first quarter. The competitive advantage of BSkyB cannot be ignored. The battle for the 3D market is on, as Virgin Media has beaten BSkyB to launch the first commercial 3D Television service to the United Kingdom customers and further to other European companies starting from 1st October, 2010 (Virgin Media press release, 2010).
The latest of strategies employed by BSkyB is the unveiling of the service known as 3D Movies on Demand, which allows customers access to 3D versions of films with a loop of preview programming. The positive of all this submission is that over 1.2 million households that have a V plus or V HD receiver and 3D glasses would be able to benefit from the 3D rental services.
The number of subscribers in the United Kingdom is increasing continually especially with the introduction of internet, broadband and lately 3D TV video on demand.
Cable Products and Services
Virgin media offers cable broadband internet, television and fixed line telephone services to residential customers in the United Kingdom. Virgin media offers its customers several packages and multiple services (Virgin media annual report 2009).
Virgin media has over 3.8 million subscribers, with several upgrades made to the network in the first half of 2010. As the first provider to offer download speeds of up to 50Mbps to over 12 million homes across the United Kingdom, with the current upgrade of up to 100 Mbps, Virgin media ranks one of the first companies in the United Kingdom to provide a further download speeds up to 200 Mbps (Halliday 2010). The broadband internet service has been credited as one of the successful sectors of Virgin Media with intense marketing and customer relationship management services (Virgin media annual report 2009).
Virgin media operates in different aspects from the TV; Cable Television, Free TV service, Virgin TV on Demand (VOD) , High Definition Television, and Digital Video Recorders. The new 3D TV revolution leads to the examination of the internal market and the position of the media sector of the company.
Internal Marketing Audit
Virgin media has held a solid presence in the market with a combination of different sectors as disclosed above. From the perspective of Gilligan & Wilson, (2009, p. 73-75) is concerned with strengths and weaknesses , organizational performance and structure, operations and resources , marketing objectives ,marketing strategy, information systems , control systems, functional efficiency, inter functional efficiency, cost effectiveness analysis.
Fig 1 : The place of the marketing auditing in the overall management auditing
Source: Gilligan & Wilson, 2009, p. 79
Internal auditing assesses the extent to which an organization, its structure, and resources interact with the environment and they have the means of operating efficiently within certain constraints that the environment presents Gilligan & Wilson, (2009, p.80). Five stages of auditing as disclosed by Gilligan & Wilson, (2009, p.82) involves; defining the market, determining the performance, determining differences in competitive programmes, profile the strategies of the competitors and determining the strategic planning structure.
Strategic Issue Analysis
Investing in a particular business, demands a marketing research or audit. Following the corporation’s aim, which is to be the leader in entertainment communication, according to Virgin Media website, it provides a wide range of products to serve consumers’ wants and needs by focusing on entertainment and 3D technology with design and suitable for customers’ lifestyle.
There are main three category of product, which is divided by usage and customer’s lifestyle as following: Daily life tool, Communication Entertainment, and Style Statement.
Firstly, daily life tool is the mobile phone which is produced for customers who want just only basis of communication which could be linked with the mobile – telephony business.
The strategic concern here is the launch of the 3D TV, which is supposed to boost the Virgin Media Inc. Considering the modernity, and new customer or coverage of this new product. Certain things need to be taken into consideration; segmentation process which covers the consumer behaviour, social influences, personal influences and psychological influences (Drummond et al, 1999, p.51-59).
Wide-range of products
Early launcher or early market entry
Wide range of Media products without any specialization
Weak Brand identity
Limited expansion of coverage
Christmas and New Year/Seasonal period sales
Expanding of signal, broadband coverage with the TV.
Increasing in On-line purchase
Technology flood trend
More entrants into the market
Negative media reports
Marketing / Strategic Objective
With the new 3D TV on demand in place, the entire marketing objective of Virgin Media is to consolidate its profit in the market through innovation and launching of new products (Virgin Media).
At the beginning of this strategy, the strategic objective is to stimulate existing customers and potential customers to purchase the product (3D TV on demand). This plan takes issues such as services, after service, customer relations management and promotion, quality products and service delivery are crucial. However, it is crucial to drive total sales unit by attracting customer with a great deal. This can be achieved by applying Ansoff’s Growth Strategies (Wood, 2007), to decide which area might be suitable for this plan, the decision is made by choosing market penetration. This penetration strategy of Virgin may help it in the long-term. The company will be able to penetrate well into the market segments left untouched. This will lead the organization towards a better position in the market. The company uses its different segment of products to penetrate simultaneously into the different market segments. Virgin strictly follows the marketing concept to sell its products all across. Their focus is on branding the products for increased sales. Furthermore, customer relationship management has become an important factor for Virgin, as the performance outcomes are categorized as customer loyalty, profitability, customer satisfaction and the market share (George A. Day & Robin Wensley, 1988).
Virgin should make use of segmentation strategy of market, based on the 4Ps of marketing (Kotler, 2006). They should select their two products 3D TVs for entertainment and the TV for transfer of information etc. Firstly, the 3D TV shall be sold to users who want just the comfort of the 3D entertainment. While the second type of TVs are for those looking for different applications on their TV for the transfer of information or use of the internet (Style Statement).
Those who make purchase just for entertainment include children and homemakers, shall be targeted for the first type of product. Some people, who are professional by nature, and are more involved in the information transfer, shall be targeted for second type of product. The product chosen for discussion in the below sections is TV.
Virgin Media produces a variety of products to serve any market segmentation with wide-range of prices depending on what features fit in customers’ needs. The customers have many choices to purchase other HD TV’s or TV’s with multimedia benefits, which are suitable for their lifestyle. According to the Product/segment analysis grid, Wood (2007), there are three categories for Virgin media TV. Their product (TV) is aimed to wide range of market segment. Thus, the company can achieve economies of scale by selling its products all across. Considering the products by using Product Life-Cycle Marketing Strategies, Kotler et al (2009), it has some products extinct from the market but it has also the products which resurrection to the market as well.
The impact of the economy crisis, slow down the purchasing power and customer spending behaviour, during gift-giving holiday as Christmas and New Year are the special occasions for European. However, the pricing of their TVs is fit to the market today. The products range from HD TVs to the simple TVs for wide range of genera. Thus, the company here focuses on earning revenues from low involvement TVs by achieving economies of scale, while good margin on high involvement TVs.
The information from Mintel mention that the average amount spent on gift for family and friends this Christmas was 370 pounds (Mintel 2007). This simply implies that for a product such as the 3D TV videos on demand, the price would be much affordable for subscribers and it would focus on a particular class of the society at first, which are the high earners and early technology adopters. (See Appendix 2).
One of the marketing mix elements that would be the key success factor for any business is distribution channel. The channel, which could approach to the customer directly, should be the suitable way to increase profit in short term. Virgin thus makes use of the retailers distributed worldwide, to sell its products. From this fact, it leads the marketing department to choose direct marketing in term of e-marketing to be the channel and also using the existing channel that distribute product to retailer and the retailer sells to customers which means the company is using dual distribution for this marketing plan and selective distribution. The competitive advantage of online marketing is lower costs and prices. According to the accumulated deficit of the company, the department desire to lighten the load of company’s expenditure by developing the website to sell the product.
Just like the place, there should be multiple ways of communicating the benefits and awareness of the new product. Promotion could be through the following ways; Internet marketing, magazine, television to mention but a few (Appendix 3). The company uses promotion strategy as advertisements and various promotional plans randomly for selling its TVs.
Virgin gains competitive advantage against its competitors due to its wide range of quality products. Continuous research and development by the company helps it to introduce new products into the market. These products, with big brand attached to it, sells in the market to gain revenues. Additionally, the long lasting existence of the company shows its expertise and experience in the industry. The company thus has linked with large number of retailers indirectly, to distribute the products directly to its end consumers.
The company does not stand up with high pricing. Their pricing strategy is worth the brand value they have achieved. They stand well in the market with strong base. Thus, it suggests their pricing fit for upper-middle class of people.
Marketing- An approach to success
Marketing in itself is not an easy phenomenon. It varies from one geographic location to the other. For Virgin, the company analyses well the different approaches for selling its products at different places. For example, for selling its products in US, the products should be trendy and luxurious. The products shall be sold showing their fade. However, for countries such as India, China and Malaysia, the company shall use promotional strategies using the local cultural approach. The company offers huge discounts during cultural timings in these countries. This raises the sales of their products. Company also uses traditional means of representing their products as cost effective and as value to price.
For this, Virgin promotes its products to grab the attention of both, end consumers and organizations. Selling to end consumer focuses on the benefits attached with the product for home use. However, for organizations, benefits on bulk purchase, benefits on using various range of products etc. is laid. This increases the probability of Virgin’s products acceptable all across.
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