Virgin Group Brand Equity - Essay Example

Assignment ref: Virgin Virgin Group The Virgin brand equity The importance of brand to a product has been universally recognised. For any business, the market place is the ultimate testing ground of success or failure. It is the sum total of customers, who make choices of available offerings to satisfy a real or perceived need. For a businessman, the market place is a playground with innumerable possibilities to put his wits on line and reap the results good, bad or indifferent. No wonder, the management books are full of sporting terms like targets, goals, team spirit, etc. Sir Richard Branson (Branson), creator of the Virgin Group, has invested his ventures with that unique brand power which has no parallel anywhere – not even Microsoft and Bill Gates. The uniqueness lies in the extension of the persona of Branson into his products. Starting with the very name of his first business venture in 1972 and the people associated with it, he chose to play the game in an unconventional way. ‘Inexperience in business’ was not a handicap; instead it was turned into a brand name ‘Virgin’ with the abandon of a veteran. Youth and enjoyment was the platform that led him to the music business; brashness and self-confidence led him to retain music rights, in contrast to the established practice, and, adventure so typical of youth, led to his foray into aviation. Virgin’s metamorphosis from a mere record selling stores to a top-level music and movie production company took a mere decade and in the process the group made handsome profits. Surprising everyone and shocking the giant commercial airlines, Branson pioneered the revolution in air travel when he set up the Virgin Atlantic Airways, a quality air travel alternative across the Atlantic, at highly competitive prices! The same spirit of youthful adventure and innovative thinking made Virgin a brand to recon with in a variety of Virgin 2 consumer products across the globe. From his interview to the Forbes magazine (Feb. 1, 1997) one gets a glimpse of Branson’s philosophy on business diversification, “…And it is so great being in so many different businesses. That is the fun of it.” He thoroughly enjoyed doing what he did – with the enthusiasm of an evergreen hero, age notwithstanding. However, the success of so many of his ventures reveals a highly competent and mature business mind behind the façade of reckless adventurism and showmanship. The major criticism of Virgin group and by implication, Branson has been about brand dilution. Management pundits find it difficult to accept the fact that one brand can be extended successfully to give value and sales power to so many diverse products and services. Since Branson controls majority interest in most of his ventures and since many of them are not publicly listed, performance of individual businesses can not be precisely judged. This gives rise to the doubts that losses of some ventures were being covered by the profits of other ventures, and that the diluted Virgin brand was not a story of undiluted success as the company PR managers were making it out to be. The other criticism of Branson has been his inability to accept opposition/defeat in grace. Virgin planned to challenge the Australian media baron, Rupert Murdoch’s dominance in the print and electronic media business by acquiring a stake in ITV, a broadcasting company, through his own NTL, a cable company; NTL’s offer was rejected but Rupert Murdoch, sensing Branson’s plan, quickly moved to acquire 17.9% of ITV stake through his own BSkyB by making a higher bid (case study). Robert Barr of Associated Press reported Branson as saying, “A week ago there was a lot of warmth from ITV. A week later a rejection. The only thing thats taken place in the last week thats different is Murdoch’s acquisition of nearly 20 percent of the Virgin 3 company." (Barr, 2006) Subsequent statements of Branson and NTL leave a taste of bitterness in one’s mouth. In view of the interest of so many stakeholders even in a closely held group like Virgin, the criticisms are well founded. Branson’s style does not behove a world-class business magnet with aspirations to move his group to top spot within the next decade. Virgin brand today and tomorrow – Situation / SWOT / PEST Analysis / Marketing Plan i.) Situation analysis: Today, Virgin is a bag of mixed fortunes. Its businesses in cola drinks, financial services and vodka are all in the red. Its rail services have been termed as ‘a national disgrace’ by the British Dy. Prime Minister (case study). The dependence of the Group’s financial survival upon a single brand name and that too with Branson’s singular approach to doing business is akin to pushing one’s luck too far. However, it is not same thing as saying that Virgin is on the decline. Branson’s vision to make Virgin the number one brand in the world is inspiring in itself. His statement that a ‘brand’ need not be a single product phenomenon and that a brand can have many successful products, as is already happening in groups like Mitsubishi, Yamaha, Hitachi or Tata, has merit. Many analysts have positively welcomed the move to appoint well-known marketing specialist Ashley Stockwell, as Virgin’s Brand Marketing Director. ii.) SWOT Analysis: Virgin’s strength lies in its footprint spanning all the five continents and the universal recognition of its brand. Its foray into many diversified businesses and the critical mass it has acquired over the past 3 decades should now give it the opportunity to look forward to the next stage of its evolution as the world’s number one multi-product brand on the one hand, and, for Branson to distance himself from his ventures in a professional manner since Virgin 4 his successors may not have the same panache that he has to take success or failure in their stride. Appointment of Stockwell is a pointer in this direction, one can assume. iii.) PEST Analysis: So many geographic locations (Virgin.com) and so many product lines will sooner or later invite intense competition and external environmental (political or social) pressures. These are to be planned and overcome, mostly by localising the businesses and tuning the offerings to the specific needs of each major market area. Advertising and brand managers have long since realised the importance of ‘localising’ without which there are no takers for the products. The failure of many of Virgin ventures can be attributed not to the dilution of the brand but to the inadequacies of management in diverse cultures. iv.) Marketing plan for future: Two options suggest themselves for carrying forward the legacy of Virgin brand – one, to regroup the businesses into about a dozen or so ethnically similar regions, and two, to regroup the product offerings into major identifiable groups such as travel & related, food and beverages, entertainment & related, communications, etc. The best option would be an ideal combination of the two options with regional division at the top controlling business-wise subgroups in the next rung of management. This would allow for appropriate management of local environment, localising the offerings and to adopt technological up gradation in each area to suit local conditions. In addition, performance accountability gets more widely dispersed into regional headquarters and further into product / group subdivisions, enhancing development of depth in management talent. Conclusion In a little over 3 decades of its existence, Virgin Group has succeeded in no small measure as a global brand. This was largely made possible by the youthful adventurism of its Virgin 5 founder Sir Richard Branson backed by his astute business mind. Going forward, Branson should display the same aggression to quickly reorganise his empire into professional regional outfits, operating under the Virgin brand umbrella, and then to club related business lines into subgroups with a view to give a local flavour to his international business thus successfully meeting pressures from local vested interests and also, with a view to fine tune product offerings to specific market needs. This would also foster accountability and development of management talent across the organisation. Reference List Barr, R. (2006), ITV rejects $8.9B takeover bid from NTL, Associated Press, retrieved December 5, 2006 from http://www.forbes.com/feeds/ap/2006/11/21/ap3194395.html Clothier, J.(2006) Branson, Murdoch square off in media war, CNN, retrieved December 4, 2006 from http://edition.cnn.com/2006/BUSINESS/11/21/branson.murdoch/index.html Virgin – Brand extension or brand dilution? A case study www.virgin.com Read More