Strategic environmental analysis on: Virgin Group Australia

Virgin Group is one of the most prominent groups operating within Australia. It has now stepped into credit card industry of the country with its low rate credit cards. The credit card industry of the country is one of the most lucrative and attractive business industries. The industry has registered some intensive growth in recent past five years. In recent period of time, due to robust economic conditions of the country, the credit industry of the country has attained some intensive growth. During the year 2006-2007, total value of transactions through credit cards was enhanced by 10%. In existing period of time also, about $30 million have been accumulated in debt raised through credit cards. The macro environment for the product in existing period of time is quite positive, which is making the industry quite attractive for new players. The policies of government and apex bank of the country is also quite positive and encouraging players for operating within the country. Reserve Bank of Australia provides various exemptions to a new player to get established in industry. As per the recent press release of NAB, Spending habits of Australians are supporting the development of credit card industry of the country. As per the report, about 45% of people of the country prefer to use credits cards while retail shopping, paying bills and dining out. Along with credit cards, the usage of debits cards is quite popular within the country (Spending habits of Australians 2012). From the perspective of economic conditions also, the existing position of the country is quite positive. However, recent global economic downturn has affected the norms of the business of financial industry of the country. The credit card industry has also got suffered during the period. However, after that period of time, the economy of the country has made some crucial recovery.

            In this way, from the perspective of macro economics conditions, the credit card industry of the country possesses some of the positives sign for growth and success.

Answer (b) Competitive position of Virgin’s low rate credit cards:

            The attractiveness of the credit card industry and lower entry barriers in the industry are prompting different other companies to company enter into the market. In competitiveness of the industry is quite higher as there are a number of different domestic and international players operating within the industry. Prime competitors of Virgin money’s credit cards in Australia are Big Four (i.e. four largest banks in the industry that have catered about 85% of total financial industry of the country). These four banks are National Australia Bank, Commonwealth Bank, also known as CBA (government owned until 1996), Westpac, and Australia and New Zealand Banking Group, or ANZ. These banks are dealing within a number of different types of financial products such as debit card, credit card, insurance, consumer finance, long term and short term loans and so on. In the context of Credit card industry also, Virgin money is required to face competition provided by these banks quite intensively.

            In addition to this, there are some other important financial institutions operating within Australian market which are catering some significant portion of country’s credit card industry. Among such player different foreign banks such as Barclays PLC, HSBC Holdings plc, Lloyds Banking Group plc, and JPMorgan Chase are some of the prominent institutions that are registering some crucial problems for the position of the country within the existing market place. These players have been getting themselves established within the market quite prominently for many years. In such conditions, Virgin Money that has launched low rate credit cards in such highly competitive and tough market place, is required to face some crucial competitive problems within the market (Tumbarello and Takáts 2009).

Answer (c) SWOT Analysis of Virgin’s low rate credit card:

            In order to get established within the market place, the company has launch low rate credit cards. For the purpose of analyzing the compatibility of this new product within the market, SWOT analysis framework will be the most suitable strategic tool.

Strength: the primary strength of the product is the brand name associated with the product. Virgin is considered as highly reputed brand within Australia. There are different business industries in which, Virgin Group has registered significant success. This experience, reputation and trust of consumers on the group, make the brand strong among its competitors. In addition to this, low prices, low maintenance charges, and 0% interest rate in starting 3 months of launching are some of the prominent factors that provide strength to the product within the competitive market place (Virgin Low Rate Credit Card 2012).

Weakness: Along with strengths, there are some weaknesses also associated with the product. The first and foremost weakness of the product is the brand personality of Virgin groups and its product. Traditionally, the group has articulated the personality of the brand as fun loving, unconventional, rule breaker and feisty person. For business personal, sometimes becomes quite hard to believe and accept such personality extremes. In addition to this, as the product is recently launched in the market, the reach of the product within the market is quite low which is a major weakness of this product of the organization.

Opportunities: In the market of Australia, Virgin group is having some of intensive opportunities for its low rate credit cards. For instance, the economic conditions of the country are pretty good and purchasing power of people of country has also been increased quite intensively in recent period of time. In addition to this, the scenario related with E-commerce within the country has also been advanced as awareness and usage of plastic money such as debt card and credits cards by people have also been enhance quite significantly within the market place. These all the conditions are providing some crucial opportunities for the organization within the market (Virgin Money Low Rate Visa Credit Card 2012).

Threats: in the market of Australia, the product is also required to face some critical threats. For instance, intensive competition provided by different pre established banks and other financial institutions such as NAB (National Bank of Australia), HSBC, Barclays and so on can affect the business of the organization. In addition to increasing rate of E-commerce related crimes and frauds, can be proved as a reason behind negative attitude towards credit cards in the long run.

Answer (d) Segmentation:

            Before designing a marketing campaign, it is quite essential to have proper segmentation process through which, a specific target segment can be undertaken. For the purpose of segmenting the target population, different criteria, such as demographic and psychographic characteristics can be taken into consideration. On the basis of such criteria three important segments for the company can be divided.

(1)   Middle income group families

(2)   Businessmen who travel for their business

(3)   Students class who take credit cards as a status symbol

 These target segments are quite attractive for Virgin group. The rationale behind the attractiveness of classified segments is discussed as below:

Middle income group families: This segment can be proved quite important and effective segment for targeting. It is due to the reason that income of this segment is not quite enough for accomplishing their needs. In this context, credit cards can be an attractive option for them. Moreover low rate charged on the card is also a factor that can prompt the customers from this segment towards the purchasing of the card (Akpan 2008).

Businessmen: The Company can also target this segment as the card can be able to fulfill their requirements. As potential customers from this segment class are businessmen who are required to go on tours quite frequently. Owing to this reason, it is not quite feasible for them to carry cash and lots of debit card. Along with generally credits cards charges high interest rate. In context this, low interest rate credit cards can be a good option for them as they need to pay low interest rates on such cards (Leonard 2011).

Students: Students class can also be targeted as an attractive segment class because nowadays having different credits cards have been started to be counted as status symbol. In context to this, students are quite prompting towards having credit cards. Along with this, as high interest rate charged on credit card is the major problem faced by this class. In context to this, the low rate credit cards can be a good and promoting option for them.

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