JOUR 823 Case Study #3

Sept. 17, 2004

Bob Deck

Case Study: The Virgin Group

In his book “Brand Aid” author Brad VanAuken writes that “It is important to pursue
brand extensions in a very methodical order so that each extension builds upon the
previous one. Know where you ultimately want to take the brand, but do it in steps that
build upon one another.” (pg.199) VanAuken wants us to make sure that there is a
“transferable core-brand association” that makes an extension possible (an example being
how Crayola went from making crayons to markers, pens and paints). It must be more
than just a new application of the brand’s identity, otherwise you risk destroying the
integrity of the initial brand.

Richard Branson, the irreverent, thrill-seeking founder and world-record-breaking

adrenaline junkie (he has broken records crossing the Atlantic Ocean by both boat and
hot air balloon) has placed the Virgin brand on many seemingly disparate business units
while maintaining the core brand visual identity. The Virgin Group has always stretched
the limits of brand extension - from its beginnings as a small student magazine in the
1970s to airline to the winery to the financial companies to the barely known hot air
balloon flight company among many others. “With over 200 businesses comprising the
Virgin Group brand, at the end of 2003, one-year revenue growth was 7.7 percent.”
writes Alicia de Maysa in an article titled “How Far Can a Brand Stretch?” published
Feb. 23, 2004, on brandchannel.com. This figure tells us that the companies are
successful, but how does it work? What is the “transferable core-brand association” that
VanAuken writes about that connects these very different businesses? In the same article,
Courtney Reeser, managing director of the branding firm Landor, offers an explanation:
“The Virgin brand is built around an idea, and in general, brands that have a strong idea
like that are ultimately more elastic. Even though they offer a lot of different things, they
don’t really stray away from their core audience.”

In his book “A New Brand World: 8 Principals for Achieving Brand Leadership in the
21st Century” author Scott Bedbury says that both Branson and Nike founder Phil Knight
built their companies in many ways as a reflection of themselves. Both are considered
“insanely creative, consumer-focused” companies that value authenticity as their highest
brand value. He says that this often happens when founders “stay with a company and
guide it personally through its trials and tribulations.” (pg.169) This is similar to, but not
exactly the case with, Apple co-founder Steve Jobs who left Apple only to return as the
brand began to lose market share. Jobs successfully brought the company back to its
former perch as the most innovative company in the computer industry. Had he not
returned, would Apple have been able to refresh the brand and restore its core identity? I
would bet not.

When asked “What would you say are the key things that entrepreneurs need to make a
successful business?” by an interviewer on the virgin.com web site, Branson responded:
“I think one of the reasons for our success is the core values which Virgin aspires to…
like providing quality service. However, we also promise value for money, and we try to
do things in an innovative way, in areas where consumers are often ripped-off, or not
getting the most for their money. I believe we should do what we do with a sense of fun
and without taking ourselves too seriously, too! If Virgin stands for anything, it should be
for not being afraid to try out new ideas in new areas.” It’s this attitude that links the
many companies together…the attitude of Richard Branson, who is always looking for a
new challenge.

In addition to recognizing the importance of branding, Branson also attributes “luck” to

the mix. “We were lucky to get hold of the Sex Pistols in 1977. We've also been lucky
that people liked Virgin Atlantic's unique airline service across the Atlantic, and I was
lucky to survive all my balloon and boat trips!”