The Innovation Station

Advantages: 

Virgin is the first of its kind to offer space travel to the general public, thus creating a first mover advantage. Dong-Sung Cho et al (1998) state that early movers are in the best position to gain a competitive advantage, thus creating high barriers to entry for latecomers.  Part of their competitive advantage could include creating brand loyalty (Ries and Trout, 1986) as they are adding another innovation to the Virgin ‘eco-system’, a brand which is established and recognised by consumers as being high quality.  Further, another first mover advantage for Virgin could be for them to ‘learn by doing’ thus allowing them to gain experience and knowledge from consumers enabling them to add value to the service being sold. As they are the first in the market they can undertake high volume of market research gathering information about what their customer base wants and tailoring their service to best meet the target markets’ needs. At present, Virgin Galactic have no direct competition; they have spotted a niche in the market, have spent a large amount of capital investing in research and development thus dismissing any direct competition. 

 

Disadvantages:

Although Virgin Galactic have established a first mover advantage, this may pose some disadvantages. Firstly, due to the high cost of the experience (£250,000) for a 2 hour journey, this has automatically segregated the service into an exclusive, high end market which has been endorsed by high paid celebrities. Due to this, Virgin have excluded such a large percentage of the experience market, where there could be high demand. This could reside in the high expenditure on R&D being wasted and the innovation being a failure due to being unable to diffuse to the early majority.  Moreover, Virgin Galactic being an early mover may entice late movers to “free ride” on the investments made in R&D and infrastructure development (M, B. Lieberman, D, B. Montgomery (1987). It could further enable late movers to assess the mistakes made by the first mover. For example, a potential competitor of Virgin Galactic called World View offering a similar experience using a different medium may notice that Virgin are not targeting the mass market and thus may offer a cheaper alternative which appeals to the early majority.