Analysis of the Services of Virgin Media Plc. to Launch Their Business in China - Case Study Example

International Marketing Communications Plan 03064 Introduction The report is based on the context analysis of the services of Virgin Media Plc. to launch their business in different parts of China. Context analysis is the first stage of the market communication planning procedure of any organisation to launch their products and services in a new market (Doole and Lowe, 2012; Yeshin, 2012). This analysis is generally used by businesses to determine the different communication drivers which may affect their marketing strategies in new market locations (Payne and Frow, 2014; Lings, 1999). The further discussion of the report will illustrate different internal and external issues that can affect the business of Virgin Media Plc. to expand their operation in the China market. These issues can be analysed through four different context such as business context, internal context, customer context and external context. Company Background and Overview Virgin Media Plc. can be considered as one of the leading telecommunication service providers of the United Kingdom. The organisation was established in 2006 and it is headquartered in Hampshire, London. Virgin Media is the only organisation in the United Kingdom that offers the four major media services such as digital TV networks, Landline connection, mobile services and broadband packages. Their ability to provide these four services under one package assists them to secure a competitive position in their local market (Accenture, 2014). Business Context Analysis The business context analysis of Virgin Media involves the discussion of their current mission and business planning. This will assist the management to analyse the suitability of current values and strategies of the organisation for their business operation in the China market. This analysis will further evaluate the brand strategies of the organisation to determine the suitability of their products in the specified market (Accenture, 2014). Corporate mission The mission of Virgin Media is to utilize all the advanced technologies to provide the best facilities to their consumers in terms of their wireless and broadband usage. The organisation is concentrated to provide digital solution to a wide range of consumers across the globe. The management of Virgin Media is targeted to use technologies to improve the lives of their consumers. One of the main objectives of the organisation is to provide diversified services to the different customer segments across the globe (Virgin Media, 2014). Marketing strategy According to the analysis of the strategic planning tools of Ansoff’s Matrix, the management of Virgin Media is following the market development and product development strategies. The market development strategy of the organisation concentrated towards pushing traditional product range to their new consumers. On the other hand, product development strategy influences them to introduce new technologies to the existing consumers (Accenture, 2014). These growth strategies assist them to penetrate new market while maintaining the existing market. These strategies influence the organisation to expand their business to the new market segments. (Source: Accenture, 2014) The analysis of Porter Generic strategies will also describe the competitive advantages of the chosen strategies in their current market scope. The management of Virgin Media is following the overall cost leadership strategy. This strategy is assisting them to cover a broad marketplace with standardized price structure. This strategy also assists them to attract huge customer traffic towards their brand within their selected marketplace. (Source: Accenture, 2014) Brand Analysis Brand analysis allows any organisation to determine their position in the internal and external business environment. It also enables the management to analyse the brand value in the international market (Wilson and Gilligan, 2012). The organisation has accrued a strong position in the market by re-branding all their offerings under the name of Virgin media. This initiative has assisted the organisation to increase their brand value in the global market (Virgin Media, 2014). Competitor Analysis Before designing the marketing communication to expand their business in China, the organisation needs to analyse the strength of the competitors in the Chinese market. The threats of the entry of new organisations in the Chinese telecom industry are significantly high due to limited availability of competitors. The entire telecom market of the country is dominated by only five major companies such as China Satcom, China Netcom, China Unicom, China Telecom and China TieTong. Few parts of the China market are only handled by two telecommunication companies. This oligopolistic structure encourages new businesses to accrue the unexplored market of China (Huang, Xue and Liang, 2014). The rivalry within competitors in the China telecom market is moderately low. The competition within the rivals in a certain market is generally influenced by the pricing policies of the organisations. The telecom regulators in China have a strong hold on the pricing policies of these organisations. This regulation restricts the organisations to impose their own pricing strategies (Huang, Xue and Liang, 2014). The bargaining power of the consumers in the China market is very low. The fixed price range by telecom regulators has provided very small windows to the market players to introduce competitive pricing. The attractive and diversified pricing strategies of Virgin Media will assist them to secure a competitive advantage in the China market (Han and Wang, 2014). The equipment suppliers of the telecom industry have a strong hold on the telecom service providers in China. Therefore, the bargaining power of these suppliers can restrict the business growth of Virgin Media in China (Huang, Xue and Liang, 2014). The substitution threat in China market is quite high for Virgin Media. Due to the technological advancement the competitors in the China market are providing a wide range of innovative products and services to their consumers (Han and Wang, 2014). Internal Context Analysis The analysis of the internal strength and weaknesses will enable the organisation to gauge their performances in the China market. This analysis will assist the management to design their market communication strategies in the China market. The strength of the organisation can be defined by the organisation identity and marketing expertise. The management of the organisation has created a single brand name for all the diversified product lines of their organisation. This rebranding strategy has created a unique business identity for the organisation. This singular identity of all the product lines of Virgin Media will assist the organisation to increase the awareness about their offerings in the foreign market (Virgin Media, 2014). The Virgin TV service of the organisation offers more than 300 multilingual TV and radio channels to their consumers. The organisation has the licensed right to display a number of famous foreign channels through their Virgin TV service (Virgin Media, 2014). The organisation operates all the domestic and international market through their fibre-optic cable networks. This facility allows them to provide smooth and disturbance free network services by minimizing various network problems (Virgin Media, 2014). Apart from these strengths, the organisation has a number of weaknesses that can hinder their performance in the international level. The weaknesses of the organisation can be explained by their communication audit and financial constraints. Communication restriction within the consumers and investors within the China market will be the main weakness of the organisation (Accenture, 2014). Due to the language and cultural barrier, the organisation may face a number of obstacles in terms of their market venture with the stakeholders of the China market. Customer Context Analysis The organisation mainly follows mass marketing strategy in terms of consumer accusation procedure. This marketing procedure allows them to cover the entire market with their similar products and services. The level of involvement and types of decision making of the local consumers differ due to various social and cultural norms (Newkirk and Lederer, 2006). Individual decision making method plays a vital role in China. The different segments of consumers in the country prefer personalized products and services as per their unique requirements. Therefore, the mass marketing technique of Virgin Media will not be sufficient to attract wide ranges of consumers in the China market. Before designing the market expansion plan and marketing strategy for China market, the organisation needs to thoroughly analyse their demographical characteristics. With the rapid changes in demographics and rising incomes, the consumer spending is also increasing within the market. The increase in their disposable income is allowing them to spend more money towards the innovative product offerings (Yang, Liu and Zhou, 2012). The improvement in the economical condition of the country is also witnessing a rapid growth in the number of professionals. This situation is further influencing the usage of mobile phone services and internet services. The young population and professionals of the country are getting more attracted towards different smartphone application services. These demographic changes are influencing various foreign companies to expand their businesses to different parts of China (Yang, Liu and Zhou, 2012). This situation can be beneficial for the market expansion plan of Virgin Media. The management of the organisation can attract a huge number of consumers with their innovative service range and competitive pricing policy. Perception and awareness towards any brand play a prime role in structuring the purchasing behaviour of global customers. The cultural mismatch and restriction can affect the consumer preferences and buying attitude. In this context, it is very essential for any organisation to raise the awareness of the consumers. Creating consumer perception is also very important for non-Chinese organisations. According to different organisational surveys, almost 40% of the foreign companies are targeted towards creating awareness about their brand within the local population of the China. These surveys have also conveyed that more than 35% of the non-Chinese organisations are devoting great focus on enhancing the positive brand perception of the local population. 26% of the multinational companies are indulging in extensive researches about the Chinese cultures and consumer behaviour (Yang, Liu and Zhou, 2012). This involvement of the multinational companies to secure a competitive position in the China market is certainly increasing the competition of Virgin Media (Yang, Liu and Zhou, 2012). Therefore, it is very essential for the organisation to focus on building strong brand awareness within the consumers of the China. External Context Analysis External context analysis is mainly dependent on the PESTEL analysis of the external environment of the organisation. The external analysis will enable the organisation to properly understand political, economical, social, technological, environmental and legal structure of China. This will assist the organisation to formulate their business decisions and marketing communication procedure (Madhavaram, Badrinarayanan and McDonald, 2005). Political and legal Factors The government regulations in China have a strong hold on the telecom services and their pricing policies. This condition has forced the organisations to impose high tariff charge on their services. This situation has restricted the competition within the telecommunication companies of the China market (Yau, 1988). The government regulation also restricts the entrance of the foreign marketers in the telecommunication market of China. The management of Virgin Media will need to undertake the pricing policies and business process restrictions to execute their operations in Chinese market (Yang, Liu and Zhou, 2012). Economical factors The GDP of China has demonstrated an extraordinary growth of 9.5%. The unemployment rate of China has also decreased to 4.8% over last few years. These economical changes have also increased the disposable income of the population in China. Therefore, it has encouraged the population to shift their interests towards highly advanced global products and services (Yang, Liu and Zhou, 2012). Socio-cultural factors The socio-cultural analysis of China has demonstrated that the young generation has covered almost 70% of the population of the country. According to the recent records of China, over 92.8% of the population can be considered as literate. This social structure of the country is influencing the consumption pattern of the population (Niu, Dong and Chen, 2012). The young population is more inclined towards the latest technologies and services in terms of mobile applications and internet connections (Yang, Liu and Zhou, 2012). Environmental factors Various natural disasters of China, such as flood and earthquake, can hamper the business expansion of Virgin Media across different regions of China. The increasing awareness about the effects of electromagnetic rays on human health is also hindering the usage of wireless connections within the population of China (Yang, Liu and Zhou, 2012). Technological factors Usage of new and advance technologies is increasing within the population of China. The demand of Wi-Fi services in work location is also demonstrating a sharp growth. The consumers are getting more inclined towards the usage of 4G network. These developments in the technological consumption of Chinese population will enable the organisation to structure their international expansion strategies (Yang, Liu and Zhou, 2012). Summary and overview of context analysis with identification The analysis of different context of the organisation has evaluated a number of key issues and driving factors which as essential for the further market communication planning procedure. In the last few years the population in China has witnessed prompt developments in science and technologies. This development has influenced the demands of advanced products in all the medium of communications. The market development and cost leadership strategy will allow the management of Virgin Media to impose a positive impact on the business communication planning of the organisation while expanding their services to China market (Accenture, 2014). The corporate missions and objectives of the organisation assist them to get indulged in the continuous innovation of different technologically advanced services and products which will encourage them to penetrate in the new market segment (Virgin Media, 2014). Similarly, the re-branding strategy has assisted the organisation to create a global brand reputation that has awarded them a strong position and recognition in the global market (Virgin Media, 2014). This brand position also can influence the organisation to successfully establish their business in the developing countries of the world. This branding strategy will further assist the organisation to structure a strong marketing communication plan for the different segment of China market. Apart from the analysis of the corporate mission and strategies, the understanding of competitors and local market of China will award the organisation a competitive advantage while expanding their business in the market. According to the competitor analysis it can be said that the pressure of rivalry is very low in the China market. This situation will allow the organisation to design a competitive market communication plan to acquire a price leadership within the China market. On the other hand, during the market communication planning the marketers needs to consider the threats of new entrants and the emerging substitutes to secure a strong position within different segment of China market. They also need to restructure their pricing strategies according to the common practices and government regulations of China telecom industry. The internal context analysis of the organisation has highlighted various weaknesses of the organisation which can hinder their growth in the new market. These issues include language barrier and financial constraint. To design an effective communication plan for the stakeholders of China market, the organisation needs to convert all their service languages into the local languages of China. This procedure can incur huge expenses of the organisation. Integrating back office IT services and different corporate culture of China will also generate various expenses of the organisation (Accenture, 2014). Therefore, the organisation needs to consider these constraints while structuring the communication plan. They also need to use their organisational strengths of product diversification and technological advancement in terms of their marketing communication plan to generate a strong brand reputation. Their marketing expertise will assist the organisation to create a demand of their services in the China market. Simultaneously, their innovative fibre-optic technology will assist the management of Virgin Media to create a unique marketing communication plan to create a strong position in the competitive market of China. It will also help them to reduce the cost of appointing new international supplier for fibre-optic cables (Accenture, 2014). The demand of personalized product and scarcity of awareness are the major issues to generate a strong market communication planning of Virgin Media within the China market. The organisation needs to change their mass marketing technique to grab a handsome market share in China. They also need to shift their focus on customizing different services as per the needs and demands of various segments of consumers. The organisation also needs to provide sufficient amount of time and finances to create positive brand image within the consumer mind. This will assist them to eliminate the threats of brand rejection by the local population. Various external factors such as the political regulations and environmental hazards of China can create a difficult situation during the market communication planning and its implementation for business expansion. On the other hand, the organisation can utilize the technological and economical advancement of local market of China to evaluate different population segment of the country. The rising disposable income and demand for technologically improved products within the young and professional population of China will assist the organisation to generate a strong marketing communication within the consumer of China market. Conclusion The analysis of internal and external context of Virgin Media had described a number of positive and negative drivers to expand their business operations in the market of China. The internal context of the organisation has conveyed a number of strength of the organisation that can assist the management to undertake a new project of market expansion. On the contrary, their current mass marketing strategies can provide a negative effect on their business expansion plan due to the individual decision making tendency of the Chinese market. The strict government and legal regulations and environmental awareness of China can also hamper the business communication plan of Virgin Media. Therefore, the organisation needs to consider all the possible issues before designing the market communication plan for the China market. Reference List Accenture, 2014. Virgin Media: Achieving High Performance for Customers through Flexible Business Process Outsourcing. [pdf] Accenture. Available at: [Accessed 10 March 2015]. Cornelissen, J., 2014. Corporate communication: A guide to theory and practice. California: Sage. Doole, I. and Lowe, R., 2012. International marketing strategy. Connecticut: Cengage Learning. Han, S. and Wang, W., 2014. WTO accession, impediments to FDI, and the market opening of basic telecom services in China. China Economic Review, 29, pp. 68-81. Huang, X., Xue, J. and Liang, X., 2014. A comparative analysis of China ICT regulation effectiveness based on an IEP framework. Communications, China, 11(2), pp. 138-147. Lings, I. N., 1999. Balancing internal and external market orientations. Journal of Marketing Management, 15(4), pp. 239-263. Madhavaram, S., Badrinarayanan, V. and McDonald, R. E., 2005. Integrated marketing communication (IMC) and brand identity as critical components of brand equity strategy: A conceptual framework and research propositions. Journal of Advertising, 34(4), pp. 69-80. Newkirk, H. E. and Lederer, A. L., 2006. The effectiveness of strategic information systems planning under environmental uncertainty. Information & Management, 43(4), pp. 481-501. Niu, Y., Dong, L. C. and Chen, R., 2012. Market entry barriers in China. Journal of Business Research, 65(1), pp. 68-76. Payne, A. and Frow, P., 2014. Developing superior value propositions: a strategic marketing imperative. Journal of Service Management, 25(2), pp. 213-227. Virgin Media, 2014. Virgin Media For All. [pdf] Virgin Media. Available at: [Accessed 10 March 2015]. Wilson, R. M. and Gilligan, C., 2012. Strategic marketing management. London: Routledge. Yang, H., Liu, H. and Zhou, L., 2012. Predicting young Chinese consumers mobile viral attitudes, intents and behavior. Asia Pacific Journal of Marketing and Logistics, 24(1), pp. 59-77. Yau, O. H., 1988. Chinese cultural values: Their dimensions and marketing implications. European journal of Marketing, 22(5), pp. 44-57. Yeshin, T., 2012. Integrated marketing communications. London: Routledge. Bibliography Agarwal, N., Sebia, S. and Yadav, S., 2014. The importance of environment analysis for business organization. ACADEMICIA: An International Multidisciplinary Research Journal, 4(3), pp. 77-81. Bowhill, B., 2008. Business Planning and Control: Integrating Accounting, Strategy, and People. New Jersey: John Wiley & Sons. Brooks, I., Weatherston, J. and Wilkinson, G., 2010. The International Business Environment: Challenges and Changes. New Jersey: Prentice Hall. Copley, P., 2007. Marketing Communications Management. London: Routledge. Daft, R., 2012. Organization theory and design. Connecticut: Cengage learning. Ferrell, O. C. and Hartline, M., 2010. Marketing Strategy. Connecticut: Cengage Learning. Fill, C. and Hughes, G., 2005. Marketing Communications 2007-2008. London: Routledge. Hollensen, S., 2015. Marketing management: A relationship approach. New Delhi: Pearson Education. Nandi, S., 2010. International Business Environment. New Delhi: Tata McGraw-Hill Education. Stuart, B. E. and Stuart, L., 2007. Integrated Business Communication: In A Global Marketplace. New Jersey: John Wiley & Sons. Read More