VIRGIN GROUP
Flamboyant iconoclast Richard Branson roared onto the British stage in the 1970s with his innovative Virgin Records. He signed unknown artists that no one would touch and began a marathon of publicity that continues to this day. He has since sold Virgin Records (to Thorn-EMI for nearly $1 billion in 1992), but he has created over 200 companies worldwide whose combined revenues exceed $5 billion. The Virgin name-the third most respected brand in Britain-and the Branson personality cement the 200 companies. The Virgin name appears on diverse products and services such as planes, trains, finance, soft drinks, music, mobile phones.cars, wines, publishing, even bridal wear.
Despite the diversity, all connote value for money, quality, innovation, fun, and a sense of competitive challenge. The Virgin Group looks for new opportunities in markets with underserved, overcharged customers and complacent competition. Branson called these customer-hostile competitors "big bad wolves." "Wherever we find them, there is a clear opportunity area for Virgin to do a much better job than the competition. We introduce trust, innovation and customer friendliness where they don't exist," Branson said. For example, Branson launched Virgin Atlantic Airways to take on stodgy, overpriced British Airways. A master of the strategic publicity stunt, Branson announced the new airline in a way guaranteed to gain free advertising. Wearing World War l-era flying gear, he announced the formation of Virgin Atlantic Airways on February 29,1984. The first Virgin flight, on June 22,1984, took off laden with celebrities and media. The flight came equipped with a brass band, waiters from Maxim's in white tie and tails, and free-flowing champagne.
The airborne party enjoyed international press coverage and millions of dollars' worth of free publicity. Branson knew that photographers have a job to do and they'd turn up at his events if he gave them a good reason. Similarly, when Branson launched Virgin Cola in the United States in 1998, he steered an army tank down Fifth Avenue in New York, garnering interviews on each of the network morning TV shows as a result. In 2002, he plunged into Times Square connected to a crane to announce his mobile phone business. In 2004, when introducing a line of hip techie gadgets called Virgin Pulse, Branson again took center stage, this time at a nightclub in New York City. He arrived wearing a pair of flesh-colored tights and a portable CD player to cover the family jewels. The Virgin Group evolves with each new business venture. "The brand is regenerated, rather than extended in the conventional sense, by each business we become involved in," Branson said. "We are in essence an unusual venture capital organization: a branded one." Rather than simply offering financial backing, the Virgin Group offers powerful branding and management resources to stagnant organizations that Branson acquires.
Branson usually retains 51 percent control of all Virgin-branded businesses, but he insists on a highly decentralized and flat management structure so that employees are empowered to make decisions. Although Branson avoids traditional market research for a "screw it, let's do it" attitude, he stays in touch through constant customer contact. When he first set up Virgin Atlantic, he called 50 customers every month to chat and get their feedback. He appeared in airports to rub elbows with customers, and if a plane was delayed, he handed out gift certificates to a Virgin Megastore or discounts on future travel. Virgin's marketing campaigns include press and radio ads, direct mail, and point-of-sale material. Virgin Mobile, for example, rolled out a postcard advertising campaign offering consumers discounts on new phones. 1. Jack Neff and Lisa Sanders," 'It's Broken'," Advertising Age, February 16, 2004, pp. 1, 30. 2. Ellen Neuborne, "Ads That Actually Sell Stuff," Business 2.0, June 2004, p. 78 3. Russell H. Colley, Defining Advertising Goals for Measured Advertising Results (New York: Association of National Advertisers, 1961). 4. William L. Wilkie and Paul W. Farris, "Comparison Advertising: Problem and Potential," Journal of Marketing (October 1975): 7-15. 5. Randall L. Rose, Paul W. Milliard, Michael J. Barone, Kenneth C. Manning, and Brian D. Till, "When Persuasion Goes Undetected: The Case of Comparative Advertising," Journal of Marketing Research (August 1993): 315-330; Sanjay Putrevu and Kenneth R. Lord, "Comparative and Noncomparative Advertising:
Attitudinal Effects under Cognitive and Affective Involvement Conditions," Journal of Advertising (June 1994): 77-91; Dhruv Grewal, Sukumar Kavanoor, and James Barnes, "Comparative versus Noncomparative Advertising: A MetaAnalysis," Journal of Marketing (October 1997): 1-15; Dhruv Grewal, Kent B. Monroe, and P. Krishnan, "The Effects of PriceComparison Advertising on Buyers' Perceptions of Acquisition Value, Transaction Value, and Behavioral Intentions," Journal of Marketing (April 1998): 46-59. 6. For a good discussion, see David A. Aaker and James M. Carman, "Are You Overadvertising?" Journal of Advertising Research (August-September 1982): 57-70. 7. Donald E. Schultz, Dennis Martin, and William P. Brown, Strategic Advertising Campaigns (Chicago: Crain Books, 1984), pp. 192-197. To identify where listeners to Virgin's Web-based Virgin Radio reside, the company created a VIP club. Listeners join the club by giving their postal code, which then lets Virgin Radio target promotions and advertising to specific locations, just as a local radio station would. Once known as the "hippie capitalist," now knighted by the Queen of England, Sir Richard Branson continues to look for new businesses and generate publicity in his characteristic charismatic style. Remembering the advice of his friend about publicity-"If you don't give them a photograph that will get them on the front page, they won't turn up at your next event"-Branson always gives them a reason.
Discussion Questions
1. What have been the key success factors for Virgin?
2. Where is Virgin vulnerable? What should it watch out for?
3. What recommendations would you make to Virgin's senior marketing executives going forward? What should they be sure to do with their marketing?