Businessmodel of Verizon

Customer Segments

Verizon has a segmented market business model, with customers who have slightly different needs. Its customer segments are consumers, businesses, carriers, and the government.

Value Proposition

Verizon offers three primary value propositions: performance, innovation, and brand/status.

The company frequently touts the high reliability of its coverage. Its main network technology platforms are 3G Code Division Multiple Access (CDMA) and 4G LTE. 4G LTE operates in the 700 MHz spectrum, which offers better propagation than the high-frequency wireless deployments of other carriers, resulting in a high-quality experience. Moreover, it supports faster download/upload rates and lower latency than competitors‘ 3G technology. Other benefits of 4G LTE include stronger security, better multipath mobility, and superior simultaneous use support.

The company has made a priority of introducing innovations on a regular basis, with notable offerings including 4G wireless and FiOS. It maintains “Innovation Labs” where it develops new wireless technology advances. It also operates “Innovation Centers”, facilities that showcase cutting-edge products and visionary ideas still in progress to guests such as investors and the media.

The company’s brand has been burnished by its massive success. It is the largest wireless service provider in the United States in terms of revenues ($91.7 billion in 2015) and retail connections (112.1 million in 2015). Its 4G LTE network is accessible to more than 98% of the country’s population, covering over 500 markets. Lastly, it has won numerous prestigious honors, including recognition as the “Fastest Mobile Network” (PC Magazine) and as the #1 U.S. Telecommunications Network in terms of speed, reliability, data, and call network performance (Rootmetrics).

Channels

Verizon’s main channel is its network of retail stores, called “Verizon Destination Stores”, through which it acquires consumers and business customers. The company also relies heavily on sales through its website and through phone calls handled by its telemarketing sales staff. Beyond these direct channels, Verizon maintains exclusive selling arrangements with agents who sell its products and services through the Internet and at various retail locations. Further, Verizon distributes its offerings in major chains such as Wal-Mart, Best Buy, Target, and Dollar General. Verizon promotes its solutions using the print, TV, radio, Internet, outdoor signage, and point-of-sale channels.

Customer Relationships

Verizon’s customer relationship is primarily of a self-service nature. Customers utilize the firm’s products and service while having limited interaction with employees. Its website has a “Support” section with detailed answers for common questions. It also offers chat support from an automated “Virtual Assistant.” That said, there is a community component in the form of a forum where advice can be sought from peers. In addition, there is a personal assistance element in the form of phone support and in-store workshops where customers can receive hands-on training from an expert.

Key Activities

Verizon’s business model entails designing and developing its services and their associated plans for customers. The products it offers (devices and accessories) are manufactured by third parties, which include Apple, Blackberry, LG Electronics, HTC, Motorola Mobility, and Samsung.

Key Partners

Verizon’s key partners are the resellers who purchase products from the company wholesale and then sell them through their own outlets. Other key partners are companies that join the Verizon Innovation Program. The initiative enables members to collaborate with industry experts to produce innovative wireless devices, services, and applications. Specific partners include Alcatel-Lucent, Cisco, Ericsson, Qualcomm, and Samsung, all of whom helped found the program.

Key Resources

Verizon’s main resource is its Innovation Centers, where it comes up with ideas for its products and services. The company also relies heavily on human resources in the form of its industry experts, sales/marketing employees, and customer service staff.

Cost Structure

Verizon has a value-driven structure, aiming to provide a premium proposition through the constant introduction of new and innovative services. Its biggest cost driver is selling/administrative expenses, a fixed cost. Other major drivers are cost of services and wireless cost of equipment (both variable expenses).

Revenue Streams

Verizon has three revenue streams:

Product Sales – Revenues generated from the sales of devices and accessories such as phones, tablets, and headsets.

Subscription Sales – Revenues generated from the sales of service subscription plans.

Advertising Sales – Revenues generated from the sale of display and search advertising options to third parties. Advertising occurs on the company’s website and its devices.