The Innovation Station
MarketI'm another title
Value Propositions
To highlight the uniqueness in Virgin Galactics' offering, and in order to effectively critique their innovation we have decided to conduct indirect competitor analysis by outlining Ryanairs' contrasting business model. We believe this will show the differentiation between two service providers, of whom set alternate standards for customer experience.
With regards to value proposition, which can be defined as “the additional benefits the customer receives from a product/ service not offered by other competitors; a combination of the product and/or service and the price charged” there are specific differences which can be identified between Virgin Galactic and Ryanair. Firstly, Ryan Air offer a cheap, ‘no frills’ travel experience; their main focus and strategy is in terms of offering as much value to the customer as possible which comes in the form of cheap travel. Customers simply want to get from A-B and perceive value completely differently to Virgin Galactic customers. Contrasting this, Virgin Galactic focuses on offering a unique, once in a life time experience, where the real value lies in the overall customer experience. This is reflected in the price. The price for the Virgin Galactic experience is $250,000, whereas the average price for a Ryan air flight is £10. Although both offering a travel experience, we can see that it is clear that the overall value proposition is very different and that the two operate in different market segments.
In terms of markets, Virgin Galactic operates in a very niche market; wealthy people who have high levels of disposable income e.g. celebrities and CEO’s. Comparing this, Ryan Air operates within the mass market, targeting consumers looking for a cheap, no frills experience. The two businesses are operating at very different ends of the market.
Both Virgin Galactic and Ryan Air are using an existing product and marketing it to a new market. The spaceship is not a new concept to us, but the idea of ‘normal’ human beings paying to travel to space has never been on offer previously and the airplane is not a new concept; however, offering a low cost model was a completely new concept to the market. Both businesses have created a first mover advantage within completely different markets and have created a competitive advantage for themselves because of this.
A value network is “a set of connections between organizations and/or individuals interacting with each other to benefit the entire group”. As Virgin Galactic is situated underneath the Virgin ‘Umbrella’ of other established and high quality products and services, it has managed to create a great value network due to establishing strong customer relationships and trust with suppliers. On the other hand, it is difficult for Ryan Air to create a strong value network as the only value it offers to its customer is cheap flights. With no added extras and all of the hidden extra costs, it makes it hard for customers to perceive any other value. Contrasting this, the Virgin Galactic experience, although $250,000 includes several added extras such as a three night stay in a luxurious hotel, transport to the airfield and meals to this so that the customer perceives additional value for money.
Competative Strategy
