A SWOT and marketing analysis of Virgin Media

Services marketing are a form of marketing which focuses on selling services. Services can be tricky to sell and the marketing approach for them is much different than the approach for products. Some companies offer both products and services and must use a mixture of styles; for example, a store which sells phone also tends to offer services such as helping people select phone as contract and providing broadband service and phone repair. Such a store must market both its products and the supporting services it offers to appeal to customers.

When people market services, the goal is not to get customers to buy a product, but to get people to do business with a particular company, often in a specific location. For example, virgin media offers broadband and internet service: It provides phone, internet and TV service for the customers, both on-site and in to-go form in many cases. When the company markets itself, it must convince people that it is preferable to other broadband and that its facility is worth the trip.

Virgin Media is an innovative new media company that was formed as a result of a merger between NTL and Telewest and then a re-branding as Virgin Media. Its main strength lies in the branding and the innovation that the name Virgin offers. Internally, Virgin Media is the only company in the United Kingdom that offers all four of the main media services, i.e. digital television, broadband, fixed line telephone and mobile phone packages. The ability to offer these products all together in one bundle is the unique selling point of Virgin Media and clearly sets the company apart from its competitors.

Swot analysis

Swot analysis is the most important and first stage of planning. It is a feedback mechanism to make new strategies for any organisation. Strengths, Weaknesses, Opportunities and Threats are the four components of a swot analysis. Weaknesses and Strengths are correlated and examine the internal part of the business analysis whereas Opportunities and Threats deal with the external environment of business operation. Weaknesses and strengths refer to aspect of marketing, finance, manufacturing or organisational structure. Swot analysis helps clarifies the objectives of the organisation

Strengths

In offering these combined services, the company has substantial economies of scale as it is able to combine many of its generic roles such as administration and finance, thus allowing the company to price more competitively for the benefit of its customers. Due to its perceived leading brand name in the media, Virgin Media has managed to secure an ongoing contract with Sky, extending further still its inclusive offering to its customers. Technical ability and infrastructure are also two of the key internal strengths of the company, which have been exploited to produce a market leading position.

Weaknesses

Despite this, the company does have some internal weaknesses that need to be managed. The merger between NTL and Telewest is still relatively new and there are cultural clashes between the two styles and the emerging Virgin style. In recent years, there have been several redundancies and outsourcing of customer services, in an attempt to bring down costs. This has resulted in a degree of unsettled behaviour and lack of loyalty from staff. Due to the size and complexity of the growing organisation, there are likely to be ongoing conflicts which will need to be managed if this cultural shift is not to impact on the customer experience.

Opportunities and Threats

Externally, the opportunities and threats facing Virgin Media are ever changing. The media sector is developing an exceptionally fast pace, resulting in both opportunities and threats for companies such as Virgin Media. Opportunities are widely available for Virgin Media, predominantly in offering value added services such as online gaming or more reliable broadband connections. Bundling these media services together, as Virgin Media has already done offers yet further opportunities within the media sector, in terms of grasping greater market share. Consumers like simple, one-stop shopping when it comes to the media options available; this is something that Virgin Media can continue to exploit, particularly now that it has signed an agreement with Sky.

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Threats to Virgin Media come from other similar media companies such as Orange or BT who remain as large players in the market. In particular, Virgin Media is rumoured to have difficulties with its infrastructure reliability, which could potentially allow competitors such as BT to increase market share. The media sector as a whole is extremely fast moving; therefore, the main threat is that Virgin Media may fail to keep pace, thus losing its customer base to another more innovative company.

The flower of service

Facilitating elements(services)

Information: Customers often require information about how to obtain and use a product and services. They may also need remainders and documentation. Example,

Of virgin broadband information services are: Direction to service site and using instruction, warning and insurance, terms and condition of services.

Order taking: Many goods and services must be ordered or reserved in advance. Customer needs to know what available and may want to secure commitment to delivery

Billing:”How much do I owe you?” .Customers deserve clear, accurate and intelligible bills and statements.

Payment: Customer may pay faster and more cheerfully if Virgin makes transactions simple and convenient for them.

2) Enhancing services:

Consultation: Value can be added to goods and services by offering advice and consultation.

Safe keeping: Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site.

Exceptions: Customers appreciate some flexibility in a business when they make special request. They expect it when not everything goes according to plan.

Hospitality: Customers who invest time and effort in visiting a business and using its services deserve to be treated as welcome guests.

User Preparation

When implementing new system, it is important that personnel, employees, managers and others in the organization are prepared for it. This process is also called process of readying the decision makers, managers, employees, and stakeholders for a new system. In this regard, user training becomes very essential, because without it the success of the system cannot be guaranteed. This process of user preparation is planned and executed properly and involved a lot of arrangement, and consideration (Stair & Reynolds, 2008).

Virgin Media, the UK’s leading fibre-optic broadband provider currently has almost 60,000 SME and public sector broadband clients, but has announced that it is looking to grow this significantly.

Virgin Media has unveiled plans to target the small and medium business customers of its rival broadband giant BT.

The move comes soon after BT’s commitment to undercut Virgin Media’s residential super-fast broadband prices, with its new fibre-optic broadband service which BT is rolling out this year.

There is a very big market up for grabs, as small and medium-sized enterprises (SMEs) spend about £18bn a year on IT and telecoms.

Virgin Media currently have revenues of about £600m pa from business broadband customers and this is forecast to rise to about £1bn pa in three to five years.

Virgin Media chief operating officer Andrew Barron said: “This is another step forwards. We’ve been working in the business division for 18 months on getting the business processes to the right level. We’ve improved it dramatically. We can use the fibre-optic network to differentiate ourselves.”

Marketing communication Mix:

The marketing mix is the set of controllable tacticle marketing tools that the firm blends to produce the

Response it wants in the target market (Melewar. T.C., & Saunders.J, 2000)

Marketing communications are the means by which firms attempt to inform, persuade, and remind

consumers directly or indirectly about the products and brands that they sell. A company s total

marketing communication mix also called promotion mix (Kotler, 2005) consists of specific blending of

advertising, personal selling, sales promotion, public relations, and direct marketing tools that are used

by company to pursue its advertising and marketing objectives.

The marketing communication activities which contribute to the

marketing of any new or existing product: by creating awareness of the brand; linking the right

associations to the product’s image in the consumer’s memory, facilitating stronger consumer-product

connection etc.

Current extended marketing mix marketing mix.

People – People is one of the elements of service marketing mix. People define a service.. In case of service marketing, people can make or break an organization. Thus virgin media nowadays are involved into specially getting their staff trained in interpersonal skills and customer service with a focus towards customer satisfaction. In fact many companies have to undergo accreditation to show that their staffs are better than the rest. Definitely a USP in case of services.

Process – Service process is the way in which a service is delivered to the end customer. The process of a service company such as virgin media in delivering its product is of utmost importance. It is also a critical component in the service blueprint, wherein before establishing the service, the company defines exactly what should be the process of the service product reaching the end customer.

Physical Evidence – The last element in the service marketing mix is a very important element. As said before, services are intangible in nature. However, to create a better customer experience tangible elements are also delivered with the service. Physical evidence is used as a differentiator in service marketing.

This is the service marketing mix (7p) which is also known as the extended marketing mix

Position

Positioning in different areas is not always easy (I can say it is too difficult). Virgin Group was aware of the difficulties so they had to think about the Virgin brand name. They have never entered in a business before doing solid researches and analysis. They have reviewed the industry and tried to look from customers’ eyes. They were aware of the trade-offs they had to think before entering a new business venture and they have never underestimated the risks behind new entrance.

Advertising

Virgin Media launched to much fanfare in February 2007, with a public relations event and an expensive advertising campaign which covered major UK television channels, newspapers and billboards. In an effort to increase awareness of the group and its services, Virgin Media’s campaign used bright red colours to portray its brand image. Recent[update] television advertising featured actress Uma Thurman and comedienne Ruby Wax, and currently[update] features actor Samuel L Jackson, whilst the print advertising features bold typography. Virgin Media also sponsored the Channel 4 reality TV show Big Brother until the end of the ninth series.

Virgin Media Business/

On Thursday 11 February 2010, Virgin Media announced that its business division would be rebranded as Virgin Media Business with immediate effect. The company, which had been operating as ntl:Telewest Business, is now the largest B2B brand in the Virgin Group. This marked the end of the NTL and Telewest being used by the company.

Virgin Media Business is the UK’s only telco with a national fibre optic Next Generation Network. Organisations working with Virgin Media Business include London City Airport, Arqiva, Hampshire and Isle of Wight Partnership and South West Water.

Consumer behaviours

“Understanding how consumer behaviour is changing will be an important requirement of Virgin Media’s upcoming music offering and, should they become law, the Government’s legislative proposals will also require measurement of the level of copyright infringement on ISPs’ networks. Detica’s CViewâ„¢ technology potentially offers a non-intrusive solution which enhances our understanding of aggregate customer behaviour without identifying or storing individual customers’ data.”

Consumer Segment

We face intense competition from a variety of entertainment and communications service

providers, which offer comparable broadband internet, television, fixed line telephony and mobile

telephony services. In addition, technological advances and product innovations have increased, and will

likely continue to increase, the number of alternatives available to our customers from other providers

and intensify the competitive environment. See ”Risk Factors-We operate in highly competitive

markets.” However, we believe that we have a competitive advantage in the U.K. residential market

due to the superior technical capabilities of our cable network over the network of the incumbent BT,

which many of our competitors rely on to provide their services. We also face intense competition in

the mobile telephony market, primarily driven by increased pricing pressure from both established and

new service providers, evolving customer needs and technological developments.

We offer most of our products on a stand-alone basis or as part of bundled packages designed to

encourage customers to subscribe to multiple services. We offer broadband internet, fixed line

telephony and mobile telephony and data services throughout the U.K., and currently offer television

services exclusively in areas served by our cable network

Segmentation, Targeting, Positioning (STP)

Before start think about marketing (4P), you must understand what is STP. Terms of STP include : market strategy; target markets; positioning; market segmentation and target markets; market segmentation and demographics

Segmentation

Segmentation : Identifying all segments for the product/service. Many of the resources listed in module 3 will be helpful to you when you develop segments. To be useful, segments should be:

Measurable

Accessible (can you reach them)

Profitable

Distinct from one another

the objective of segmentation is to find attractive markets. Strategies include

Break market into components

Regroup into market segments

Select which segment to target

Targeting

Virgin Media is currently number two in the home broadband market in the UK, but it obviously doesn’t want to be left behind when it comes to broadband on the move. The company has its own-brand mobile phone service, so it’s wasn’t that much of a leap for it to add mobile broadband into the mix.

Virgin is offering mobile broadband via a number of different deals. For example, if you’re already a Virgin customer using it’s XL (20Mb) or L (10Mb) cable broadband packages or its ADSL Bundle 1 offering, you can get mobile broadband with a 1GB usage allowance for an additional fiver a month. If you’re on one of the lower-end home broadband deals you can get the same package for a tenner a month.

However, for this review we’re looking at the standard retail pack which targets people who don’t already have a Virgin service. This deal costs £15 a month on an 18-month contract for a 3GB monthly download allowance and a free USB modem

Positioning.

Positioning is an essential component and skill in good marketing. Perceptual maps are used to determine the position of a product, firm, person, service or idea. Positioning maps or perceptual maps can be simple, yet very effective marketing tools. One definition of Positioning Theory is: the science of perceptual strategy. It is based on a theory that strategy can only be planned in the mind of the consumer, not the marketplace*.

It is important to understand the levels of competition because positioning applies at all levels of competition. For example:

Product Level

Corporate Level

Industry Level

The STP Process

The growing use of the STP process has occurred as a direct result of the prevalence

of mature markets, the greater diversity in customer needs, and the ability to

reach specialized or niche segments. As such marketers are increasingly segmenting

markets and identifying attractive segments (i.e. who to focus on and why?),

in order to identify new product opportunities, develop suitable positioning and

communications strategies (i.e. what message to communicate), and effectively

allocate resources to key marketing activities (i.e. how much should we spend

and where?). Organizations will often commission segmentation research when

they want to re-scope their marketing strategy, investigate a declining brand,

launch a new product, or restructure their pricing policy. Organizations operating

in highly dynamic environments seek to conduct segmentation research at

regular intervals, to keep in touch with changes in the marketplace.

STP refers to the three activities segmentation, targeting, and positioning

SOURCES

1. Virgin Media, fourth quarter 2007 results presentation, February 2008.

2. Carphone Warehouse Plc fourth quarter trading update, April 2008.

3. “Domestic Competitive Market Review”, 2004, Ofgem.