Virgin Media Case Study
Key Reasons for Virgin Media’s Success:
- One of the main reasons for Virgin Media’s success came from the merging of two of the main influences in the media sector, NTL and Telewest. By merging these two companies, Virgin Media ensured that it had the dominance, in terms of infrastructure, technical experience and sheer size.
- Virgin Media spotted that consumers are keen to have one-stop services. This led Virgin Media to market the only four piece media offering, comprising digital television, broadband, landline and mobile phones. Recognising the desire of consumers to have one package that covers every media requirement has allowed Virgin Media to gain first mover advantage, in terms of combined bundles.
- By re-branding as Virgin Media, NTL and Telewest were able to shake off any prior poor reputation with consumers and piggy back on to the brand name Virgin that is known for being a premium brand offering excellence in customer service.
- Virgin Media has managed to ensure that it has formed strategic alliances with the likes of Sky and Setanta. This has been important as part of its all inclusive services to customers.
- Virgin Media, despite the turmoil of restructuring, has ensured that it retains its brand reputation for offering excellence of customer service and an enviable corporate reputation, something which its one major competitor, BT, has recently failed to achieve.
- Virgin Media also has the infrastructure laid down previously by NTL. This means that they do not have to rely on BT phone lines to provide their services. This is important as it offers a much wider choice to consumers and more control over pricing to Virgin Media.
Threats and Problems Virgin Media May Face in the Future:
- Virgin Media operates in a very transient and fast moving sector. Any market share that Virgin Media has established through its unique market positioning could easily be lost if a competitor decided to offer similar bundles of products.
- As Virgin Media relies on the infrastructure laid down by NTL, there are limits to the geographical area which the company can cover, automatically limiting the volume of customers that can be attracted to join the company, as market penetration becomes greater.
- Pricing of all media packages is becoming increasingly competitive. Companies such as BT and Orange are continuously developing new products and cutting costs in order to become more cost effective and to drive down prices in the market, as a whole. This continuous driving down of prices requires Virgin Media to work on cost saving approaches such as outsourcing customer service teams.
- This decision to outsource the customer service element of the business is a necessary cost saving exercise, but it also produces a potential future problem. Customers are particularly concerned about gaining access to locally based assistance from media companies. Therefore, the decision to outsource may result in alienating some of the current customer base, unless a conscious effort is made to retain these relationships.
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