Marketing Plan for Virgin Media

Marketing Plan of Virgin Media 1. Terms of reference This report describes the marketing plan for Virgin Media a major player in the Digital television market in UK. Virgin Media (formerly NTL Incorporated) is an UK-based entertainment and communications company. In February 2007, the company’s name was changed from NTL Incorporated to Virgin Media. It provides television, broadband, fixed line telephone and mobile telephone services in the UK. VirginMedia uses cable technology for their network and a set top box (STB) is used by the customer. Their new product called Video On Demand (VOD) is the only platform that can access BBC iPlayer.

The digital recorders that they supply is called Digital Video Recorders (DVR) with which the customer can record programmes in 2 channels, while viewing the third. 2. Executive Summary The marketing plan of Virgin Media is designed to examine the position of the company in the digital television market. According to latest reports from Ofcom the digital television industry is expanding and the number of customers are expected to rise every year. Virgin Media offers the customer with a wide array of choice like interactive TV, Video On Demand and superior technology.

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The objective of this plan is to describe the major findings and provide recommendations. In order to analyze the current position of the company an external and internal audit was conducted. The internal audit exposes the strengths and weaknesses of the company and the external audit depicts the opportunities and threats that the organization face. Some of the key findings of the external audit and internal audit are mentioned below 1. Through the PEST analysis, it was found that Virgin Media has a major market share in the Digital TV industry and is also growing.

The company faces stiff competition from the market leaders BSKYB 2. Virgin Media is financially under loss owing to high debt and also operating loss due to goodwill and intangible assets impairment of ? 417 million. 3. In the perceptual map it was found that Virgin Media offers channels are lesser price when compared to their competitors BSkyB. This can be taken as an opportunity and a strength to capture more market share 4. The company has great potential to develop its market share in untapped areas like the Asian community and student community. They should offer more price discounts to penetrate further 5.

In the BCG matrix, the product Video On Demand (VOD) is a profitable product and can be termed as a star since resources should be invested to maintain or increase the leadership position. The product V+ HD is termed a cash cow. Marketing models like Ansoff Matrix, BCG matrix, SWOT analysis, Perceptual maps etc are used to analyse the position of the company. Strategic recommendations to successfully implement the action plan are also suggested. 3. Business Mission “Virgin Media as a company wants to give excitement to the customer and make their digital space the brilliant place it should be” Virgin Media are a leading U.

K. entertainment and communications business providing a ‘‘quad-play’’ offering of broadband, television, mobile telephone and fixed line telephone services. As of December 31, 2008, they were the U. K. ’s largest residential broadband provider and mobile virtual network operator, and the second largest provider of pay television and fixed line telephone services by number of customers. They owned and operated cable networks that passed approximately 12. 6 million homes in the U. K. and provided service to approximately 4. 8 million cable customers on our network. 4.

External Market Audit 4. 1. Macro environment Macro environment are external factors that can affect a company or its product development and which influence the organization’s decision making that are outside the company’s control. The various factors are namely Political/Legal, Economic, Social and Technological factors and can be best called as PEST analysis. 4. 1. 1. Political/Legal Factors BBC (2009) reports that the UK government announced on 16th June 2009 a proposal called Digital Britain, through which it can sustain its position as a leading digital economy and society.

The report made a number of recommendations with regards to broadband access, internet usage and Public service broadcasting. This would present Virgin media to further strengthen its position in the broadband and television market in which it already has a major market share. Source : Business Insights Fig 1. 1. Digital penetration in Europe The UK government’s decision to bring strict laws to prevent users from illegal file share in peer-peer networks could work in favour for companies in the television and entertainment industry. This law restricts users from illegal download of films or music.

This would meaincreased demand for services of Virgin Media like their Video On Demand Service. 4. 1. 2. Economic factors The global economic crisis has had an effect on the disposable income of the consumers. Although this has not had an effect on the broadcast industry, the economic uncertainty would mean that the consumers would compromise on other expenses. The revenue of Virgin Media depends a lot on subscriber fees and advertising revenues. There has been a steady decrease in the advertising revenue owing to the recent global economic crisis.

This could have a negative effect on the revenue and cash flow. 4. 1. 3. Social factors The taste and preferences of the consumers have changed over time owing to the social changes that they go through. Television has always been a main source of entertainment. UK has a lot of foreign expatriates and to stay in the competition Virgin Media has to offer what the customers require. 4. 1. 4. Technological factors Virgin TV brands its High-definition Television (HDTV) and Digital Video Recorder (DVR) service as V+.

Virgin media was the first broadcaster to offer HDTV even months before its nearest competitor Sky Digital. With its advanced technology in DVR systems V+ can record 2 channels while they view a third channel compared to the DVR systems of Sky digital which supports only two tuners. Also Virgin media is the largest provider of video on demand through which viewers can watch programmes through online streaming through servers at the customer’s head end. Fig 1. 2 HD TV Households in Western Europe Source: Business Insights 4. 2. Micro environment The Microenvironment consists of factors close to the social marketing program that can affect campaign resources, service quality and our ability to influence and respond to target audience” (Kotler et al 2002) 4. 2. 1. Market A report by Ofcom in 2006 stated that UK has the highest digital television penetration rate in the world. The new report suggests that a survey conducted in the second quarter of 2009, three months to the end of June, show that the take up of digital televisions in the UK has increased to 89. 8%, an increase of 0. % in comparison to the first quarter results and also an increase of 1. 9% year on year (Ofcom, 2009). So there is a great chance for Virgin Media to grab the opportunity to increase their market share in the digital tv sector. http://www. ofcom. org. uk/research/tv/reports/dtv/dtu_2009_02/ 4. 2. 2. Customers The customers are people who primarily prefer digital quality transmission, and a variety of entertainment channels. The advanced features of technology are another aspect the customers would be looking at while choosing a digital TV.

Features like Digital video recording, interactive services like games and entertainment for kids would be the preference for a majority of the people. 4. 2. 3. Competition The main competitors of Virgin Media are BSkyB, BBC , and ITV. BSkyB is the only pay satellite television platform in the UK market and has the largest market share in the DTV sector. They are also the primary supplier of television content for Virgin Media. The free-to-air DTT service is called Freeview. This service is provided by operators like BBC but offers only limited channels for customers to choose from.

Virgin Media’s Video on Demand is the the only tv platform that can access BBC iplayer The competition from BBC is negligible because the channels they offer are limited compared to others. 5. Internal Marketing Audit This section evaluates Virgin Media’s internal activities and performances with the view of external marketing environment 5. 1. Operating Results Virgin annual report 2008 shows that Virgin Media is currently under loss but however the signs are positive because Virgin Media is doing considerably good in the content segment of their business. For the year ended December 31, 2008, revenue decreased by 1. 4% to ? 4,015. million from ? 4,073. 7 million for the same period in 2007. This decrease was primarily due to lower revenue in the Cable segment, driven by declining telephony usage and increased discounting due to increased competition, and lower Mobile segment revenue, mainly due to lower prepay revenue as a result of fewer customers. This reduction was partially offset by an increase in revenue in our Content segment. Source : Virgin Media Annual reports 2008 5. 2. Strategic Issue Analysis 5. 2. 1. Marketing Objectives Virgin Media’s aim is to position itself as the market leader in the entertainment and communications segment by 2010.

The strategic objectives for 2009 include continuing to exploit the capabilities of the cable network to lead in next generation broadband and on-demand television, and to expand the contract mobile customer base through cross-selling to the cable customers. (Virgin Annual Report 2009) 5. 2. 2. Market segmentation Market segmentation is the process of identifying different users within the market who could possibly be targeted with separate products (Croft 1994) Virgin Media has tailored their packages to cater to various strata of people. They use differentiated marketing by offering different packages according to customer needs.

The customers can choose basic packages based on the number of channels offered at different prices. The add-on packages include Sky Sports, Sky Movies, Asian, Kids and Adult entertainment channels. This is called differentiated marketing. SKY MOVIES & SKY SPORTS ASIAN ENTERTAINMENT KIDS ENTERTAINMENT 5. 2. 3. Competitive advantage Virgin Media has redefined the mid market in the TV segment with the video on demand service. Also they are the only TV platform to carry BBC iPlayer and along with other services from other providers has helped them in increasing the number of customers.

The depth of their product offerings is also reflected in our triple-play penetration which reached 56% as customers take an increasing number of products from Virgin. 5. 2. 4. Core competence One of the core competences of Virgin Media is the brand name of “Virgin” and also the trust its customers have on its product. Apart from the brand name, its reputation combined with moderate pricing helps them to gain customer loyalty. 5. 2. 5. Product Position Virgin Media offers almost the same number of channels as BSkyB but are moderately or low priced.

So if a perceptual map is made, Virgin Media would fall in the category of low price high variety type. Virgin Media offers three digital TV packages offering 45, 100 and 160 channels – all of which that can be bundled with its other services. It also offers an addition service called Video On Demand which is the tv platform through which BBC iPlayer ,Channel 4 and ITV as well as a selection of popular HD TV channels. Though BSkyB’s SkyPlayer offers more channels in comparison to the VoD service of Virgin, the DVR system of VOD can record 2 channels while watching a third one, unlike the Sky Player. . 3. Marketing Mix Effectiveness 5. 3. 1. Product Virgin offers a range of DTV and ATV television services. The DTV servives include around 150 TV channels, advanced interactive services and other features. The ATV services offer up to 60 tv channels including premium services. In addition to offering premium pay channels, Virgin also offers their most comprehensive product of Video On Demand (VOD) called Virgin TV On Demand. They also offer interactive services like games, television email and access to news, entertainment and information services from an on-screen menu. 5. 3. 2. Promotion

According to a study by Nielsen Media Research/Marketing (2009) Virgin Media is placed 28th among the top advertisers in UK for 2009. Their immediate competitor BSkyB is placed at 5th spot in the table. It is also seen that the amount spent on advertising has gone down in 2009 owing to reduction in the advertising revenue because of the global economic crisis. They advertise through newspapers, UK television channels and billboards. Their recent advertising campaigns included top Hollywood actors like Samuel L Jackson and Uma Thurman. They also sponsored the Channel 4 Reality show Big Brother until the end of the ninth series. . 3. 3. Price One of the key elements in a marketing mix is the pricing. Virgin offers three packages of channels namely M,L, XL depending on the number of channels in each bundle. They are moderately priced and lower than their immediate competitors BSkyB. 6. SWOT Analysis The SWOT analysis is a structured approach to evaluating the strategic position of a business by identifying its strengths, weaknesses, opportunities and threat (Jobber 2007). The strengths and weakness are derived from the external audit and the opportunities and threats are derived from the internal audit. 7. Marketing objectives 7. 1.

Strategic thrust Digital television’s sales have gone up and this is one market that Virgin Media can make maximum use of. There is a lot of untapped market that they need to explore. The expatriate population, mainly Asians have increased over the last few years. They can offer more channels which suit this community. This can be explained by the Ansoff matrix. Ansoff Matrix Thus, the two main objectives of the Strategic thrust for Virgin Media is: Market Penetration: Maintaining the existing customer and targeting new customers. Market Development: There is a huge untapped market among the Asian community.

Recommended strategies : Virgin TV on Demand is a new product through which the customers can access BBC iPlayer. But currently there are only a few channels that can be viewed in comparison to the Sky Player by BSkyB. Virgin has to add more channels to their VOD in order to attract more customers. Virgin TV On Demand is a significant enhancement to the standard DTV service, offering viewers choice over and above scheduled programming without any requirement for new equipment, installation or additional subscription fees. Currently this service is made available to the customers of the “XL package” at no additional costs. . 2. Strategic Objectives Strategic objectives is defined as the process of starting the planning at the product level (Jobber 2007) 1. Virgin Media has to build shares and market share in the Digital TV industry 2. They have to invest more the Video On Demand service to add more channels. This is explained in the BCG matrix 8. Core Strategy 8. 1. Target Markets There has been a significant increase in the Asian and student community in UK over the years. Currently they offer Asian channels as an add on package. They should include this in the basic package.

Video on Demand is one service of Virgin that has a competitive edge over its competitors BSkyB. They are the only platform through which BBC iPlayer can be accessed. But currently they offer very limited channel options as compared to BSkyB’s SkyPlayer. They should offer more channels and this could help them to capture the IPTV market. 8. 2. Competitor Targets To increase market share, the company must view weak competitors as easy prey and channel resources to gain their target customers. The VOD service by Virgin Media is a currently having more popularity than the Sky Player.

They could use this as their strength and target students or the younger people where they could use it as an IPTV which would enable them to increase their market share. 8. 3. Competitor advantage The strategies that Virgin should adopt to have an edge over its competitors are: 1. Price discounts 2. Marketing Mix 3. Referral scheme 4. Include more channels in VOD 5. Good customer Service 9. Marketing Mix Effectiveness 9. 1. Product Virgin now offers the Asian channels as an add on package. They also offer Sports channel as a separate add on. They should include this in the basic package because this would help them attract more customers. . 2. Promotion The report by Nielsen Media Research/Marketing (2009) says that Virgin stands 28th among the list of top advertisers in UK for 2009. They currently advertise through newspapers, billboards and UK television channels. They should market more aggressively to be in line with competitors such as BSkyB. Some of the strategies they can adopt is 1. Sponsorship in sports events such as the Olympics which will be held in London 2. Offer customer discounts 3. Online advertising and also promoting through brochures and flyers 4. Sponsorship on shows in tv channels 9. 3. Price

The packages offered by Virgin Media are moderately priced. Virgin offers triple play strategy where the customer gets a bundle package of broadband, fixed telephone and digital tv. Also reducing the price of Video on Demand service would attract more customers. 9. 4. Place Virgin Media has a proper distribution system in place. The installation and service normally takes a very short time after a call is made to the customer service executive. Virgin Media would be possible to suggest the customers about the services available in their location if they call the customer service. 9. 5. People

The sales of the company depends on the people handling customer service and franchises that sell the product. The customer service staff should be well trained in the product and should be able to handle the customers in the right manner. They should be given periodic training at the time of a new product launch so that they have the right product knowledge. The customer service team should also be motivated well through benefits and incentives. 10. Budget The budget allocation in the company should be set in accordance with the objectives of the plan and should also be executed to ensure maximum returns from the investment made.

Virgin Media as per reports was way below its competitors in promotions. Hence it needs to allocate budget to allow promotions to increase revenue 11. Organization and Implementation The marketing department of the organization should work in groups and should collectively contribute to the success of the company. The department should be divided into sub departments. A department should take care of the R&D of the product, another department to create brand awareness, a department to train the staff of new products and technology and a department to handle advertising and promotional campaigns.

Since the digital tv industry is a fast growing one, Virgin Media should make sure it does the maximum in order to achieve its market objectives and strategies 12. Control The company has to undertake certain steps to ensure that it achieves it objectives and strategies. There should be regular review meetings to check the development of the action plan which should be conducted by the Marketing Manager. Also regular feedbacks from customers should also be taken by the customer service team in order to ensure maximum efficiency. They should make sure complaints are handled in time and also that the customer is kept satisfied.

The company should be prepared to face any situation and a contingency plan should be kept in place. Reflexive Account Marketing has always been a subject of key interest to me. Predominantly coming from a non marketing background I was always intrigued by the subject. This assignment has helped me understand the concepts and theories in marketing and has also helped me in analyzing marketing as an important aspect of business. The lectures at the university and the tutorials have provided me with more insight and have helped me understand marketing on a broader perspective.

The live case studies in the tutorial sessions and the discussions held with my colleagues helped shed more light into the concepts. A collective effort is always required to bring out the most efficient results and this was achieved in the discussions. Also the wide amount of research material in the university database and also resources that I collected over internet have made me understand the value of in depth research. I chose a company in the broadcast industry because of the expanding scope and penetration of the digital market.

Virgin Media is a relatively new player in the market but it has achieved considerable success over the years and has been able to grab a sizeable market share through well structured and defined market plan. My research for this assignment has led me to believe that marketing is not mere selling, but it is one of the core area around which a product or a service revolves. An indepth analysis on the company’s financial position made me get a clearer understanding of the company’s current position and suggest remedies if required.

The use of marketing tools like PEST analysis, Ansoff Matrix, SWOT, BCG matrix etc has supported me in bringing about an effective action plan, suggesting recommendations and in providing strategy to working towards the achievement. It also made me understand how a product can achieve success, what its values are and where it lacks and how to satisfy a customer. This, I feel would be of great value not only in an academic perspective, but also in my future ventures on successful completion of my MBA. This is my first attempt at developing a marketing plan and the experience I have gained out of this was immense.

This was a thought provoking experience and I wish to carry forward this learning experience which will enable to converting the time and money to a large and successful business. References Jobber, D. (2007), ‘ Principles of Marketing’, Fifth Edition, McGraw Hill. Kotler, P. , Roberto, N. , Lee , N. (2002), ‘ Social Marketing Resources’, Sage, pp 99. Virgin Media (2009), www. virginmedia. com [Accessed on 07. 12. 2009] Marketing Magazine (2009), http://www. marketingmagazine. co. uk/news/wide/893106/ (Accessed 08. 12. 2009) BBC (2008), http://news. bbc. co. uk/1/hi/technology/8103351. tssssssssm (Accessed 28. 11. 2009) Ofcom (2009), http://www. ofcom. org. uk/research/tv/reports/dtv/dtu_2009_02/ (Accessed 07. 12. 2009) Sky Digital (2009), www. sky. com (Accessed 07. 12. 2009) VirginorSky (2009), www. virginorsky (Accessed 06. 12. 2009) Athens (2009), http://www. bi-interactive. com/index. aspx? Lang=en&MainPage=render Content&StoryID=660478&ReportID=917&Highlight=virgin%20media#a660478 (Accessed 08. 12. 2009) Athens (2009), http://www. marketlineinfo. com/library/DisplayContent. aspx? R=D1FE4737-F9DF-49A6-8D02-1C94685F6F92&N=4294835188 (Accessed 08. 12. 2009)

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