MKTG

Virgin Management Ltd.

College of Business and Economics
California State University East Bay, Hayward
 CBE: Marketing Management Case Study: Virgin Management Ltd.

Part 1, Study Questions: Please write short essay answers and/or calculations addressing the following:
(Hint: Is anything relevant in your textbook? If so, cite it.)

1. Current marketing strategy

Customers: The virgin customers are enthusiastic and excitement seeker. They are successful
with high self esteem, and are upward mobile and achievers. Virgin’s corporate customers find
immense value and service in brand to be successful. Virgin’s ultimate customers are value,
service, and quality conscious and pays premium price. They are fun loving, adventurous and
rebel. They are global and they belong to middle-middle to upper-upper class. Customer base
varies according to product/services and stage of the cycle but it is reasonable to assume base to
be 200 million. They want value, service, and quality and fun. Network externalities, cool and
buying experience are motivators. Customer experiences that they are special in every stage of
buying process. Brand awareness, brand knowledge and brand promise help customer immensely.

Product: Virgin, an umbrella brand, has diverse products, serviced by 3,000 brands from mobile
telephony to transportation, travel, financial services, media, music and fitness. Virgin has
product that are in different product life cycles - introduction, growth, maturity and decline.
Virgin Atlantic is in mature stage, and Virgin Green is in introduction stage. Products have high
degree of differentiation and perceived to provide unique brand promise of quality, service and
oomph. Simple, useful and upscale product and service is Virgin’s specialty. Customer loyalty
and relationship propels repurchase. Packaging, customer service enforces brand loyalty.
Innovative product and service introduction is frequent. Products in different stages of life cycle
have customer centric approach. Brand extension and failure of some endeavor has recently
dented brand image.

Price: Virgin products and service command premium price, cost-plus because Virgin has
substantial market power. The brand recognition, brand knowledge and brand promise of quality
and service brings premium but competitive price. It is safe to assume that they promote channel
discount. Free shipping in certain product for example cell phone is frequent.
Placement (Distribution): Virgin product and services are diverse and they have diverse
placement dependent on the industry and area of operation. They use direct, online, mail order
and distributor channels. It is reasonable to assume that they pay premium price to channels.
Being global Virgin is mindful of cultural sensitivity. Megastore in big international cities acts as
store and marketing promotion as well where lot of international tourists gather. Logistics is
handled efficiently to keep the brand promise.

Promotion or Integrated Marketing Communications (IMC):

Overall positioning: Highly differentiated brand positioning using competitive frame of
reference, points of difference and points of parity, and straddle positioning to assure customer
gets more than promised. Delivering value pricing, high quality, fun, great customer service, and
innovation, and being authentic, people-oriented, hip, and associated with Virgin founder Sir
Richard Branson and his personal charisma.
Advertising: Buzz and brand awareness is generated by lifestyle and activities of Richard
Branson.
Mega stores, billboards and TV shows and magazines.
Publicity: Use of social network sites such as Facebook, Twitter and blogs is implemented to
promote publicity. Richard Branson is covered doing heroic adventurous acts and seen with the
presidents, politicians, diplomats and movie stars.
Direct Marketing: All Virgin services are marketed directly as well.

Page 2 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

Sales force: No direct mention has been made of a sales force but it is reasonable to assume that
the company employs a highly efficient sales force to ensure remarkable product /service
placement.

Reasons for the popularity of firm's brand:

Brand awareness, brand knowledge and brand promise is the main reason of Virgin’s popularity.
This brand’s ability to capture customer’s imagination is mostly based on the maverick, dare-
devil and rebel nature of Sir Richard Branson’s image and media exposure. Virgin product and
service provides value, service and extracts premium price because of market power. Ease and
unique shopping experience, network externality and feeling special promote repurchase
popularity.

2. Change analysis

2a. The most important changes that require Virgin company

Change in brand image and threat of brand dilution

Virgin has been successful to extend its brand identity and is associated with the continuous use of
the brand name Virgin for every product and services. Corporate branding strategy is one of the most
important to Virgin group. Corporate branding has made it possible for Virgin to compete its brand
values with its highly established and reputed competitors. However, with the diverse portfolio and
having one new venture almost every year, it seems that Virgin could be losing control of its key
brand factors and profitability. For example, Virgin Railway is inefficiencies in the system,
unionized staff problem, increased customer complaints. Virgin cola and vodka could not sustain the
high competition among major soft drinks companies. Virgin financial services lacks of enough
funds. Virgin is unable to predict a proper financial standing on a whole. Virgin needs to create value
continually to target customers. Avoid getting into newer ventures which are remote from current
main industry and be very cautious when providing brand name to a venture without thorough
scrutiny. Recently, the group jumped into another new sector, named as Virgin Healthcare. The
healthcare sector with stability and safety has some possibilities dilute its brand image because
Virgin Company is related to ‘challenge, young and innovation’. New structure that aids consumers’
choice and company efficiency is required.

Change in Corporate Social Responsibility of Virgin

Another change which the Virgin Group needs to consider is the Corporate Social Responsibilities
(CSR). Virgin Green Fund invested in renewable energy and resource efficiency sectors which have
long term positive impact on the society. One example is the investment in $14.5 million in
GreenRoad Technologies which aims to help reduce car accident, reduce fuel consumption and lower
the harmful emission. In his blog in 2010, Branson stated ‘Virgin Atlantic and our foundation Virgin
Unite, have been liaising with organizations working on the relief effort with the Disasters
Emergency Committee (DEC) to help deliver much-needed aid to the region.’ In this ways, Virgin
Group has been able to prove themselves as a good corporate citizen. With this Branson can grow the
Virgin group much bigger in a smarter way extending their technical and operational resources. In
his recent interview with Newsweek, he also mentioned interests in global climate change and
Carbon dioxide emission. What Virgin can do is to find out critical issues which can be met by their
resources thus creating a shared value. With abundant financial resources, Virgin can practice CSR in

Page 3 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

a way to identify the unmet social needs and issues. Because Airline and Railroad businesses which
are directly related to environmental issue are major areas in Virgin group, this helps to create a great
opportunity for innovation. Virgin will gain more competitive advantage if they are able to address
those unmet social needs and social concerns.

Change in consumer confidence due to the failure of some businesses

On June 14, 2009 in New York, the last Virgin Megastore chain in North America was closed. To an
extent the closings are a result of the overall drop in music sales. Virgin started to lose its luster a
long time ago, of course, becoming more like a shopping mall than a record-geek haven. . As CD
sales declined, the Megastores remained profitable by offering T-shirts, DVDs and other items. Now,
Virgin Megastores are currently only open in France, Greece, Australia and the Middle East and Gulf
countries. When we recall that Richard Branson had begun his career selling records out of the trunk
of his car, losing the Virgin`s origin is sad. However, stagnant music business is not just only Virgin`s
problem. We know why people do not buy music from stores the way they used to: online purchasing
for those laggards who still crave albums in physical form, legal and illegal downloading for
everyone else. Most of us can't even recall the last time we bought a CD from a retail store. If Virgin
really wants to continue its music business, it is time to seriously consider of the next step. Virgin
can sell digital CDs directly from its website. As a result, Virgin may save costs of managing its
retail stores and consumers directly download the CDs to their iPods. To attract customers to Virgin
website not other downloading sites, Virgin needs to develop special edition downloads based on its
affluent music assets. Making Virgin`s unique online albums is more profitable in the long run than
just cutting downloading prices.

2b. If Virgin group does not change its marketing strategy in response to what we recommend based
on SWAT analysis, the company`s brand may lose its strong image after Richard Branson steps
down from his company. Thoughtless diversification will lead to lose its competitiveness and profits
in the existing industries due to insufficient supports. Also, in this decade, Corporate Social
Responsibility will be the most important thing to be considered. If Virgin group does not take care
of CSR seriously, it can be criticized by the society as a company which is only interested in making
profit.

3. Current marketing budget

3a. Estimating Virgin’s marketing expenditures should not be limited to the parent firm only but
should include other portfolio firms; this is because each Virgin firm budgets a different amount
for its marketing – some more than others. Moreover, marketing expenditure should not be limited
to just marketing communications and selling costs but should include because logistics, product
distribution centers, field support, market research, prime retail location premiums, costs for
opening and closing stores, and quality programs. This is because “brands are not built by
advertising alone” instead brand contracts are created and brand equity is built through many
avenues such as clubs and consumer communities, event marketing, trade shows, social cause
marketing, etc. (Kotler & Keller, 13th edition)

New product introductions cost should not be included because the Virgin Group’s strategy is to
improve existing products and challenge dominant players in industries where the consumer is not
getting value for their money. Only a small portion of the marketing expenditure could be assigned
for Richard Branson’s publicity stunts because although these stunts deliver brand reinforcement

Page 4 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

(since Richard is synonymous with Virgin) and brand revitalization, a CEO’s in-person
appearances does not have to be funded from the marketing budget.

3b. Marketing dollars can be estimated by searching databases (such as the CSUEB online
database) that have information on certain private companies. Online articles and trade
publications can be researched to find some financial information too.
Furthermore, reasonable estimates of some of the group’s larger businesses such as Virgin
Atlantic, Virgin Media and Virgin Mobile can be obtained by benchmarking other publicly traded
companies in similar industries. The marketing expenditure can be estimated by calculating it as a
percentage of sales for each entity.

3c. In an article dated November 8, 2010, The Times (London) reported that “Virgin has decided
to concentrate on a smaller number of large businesses, including Virgin Atlantic, Active, Media,
Money and Trains. With this in mind, we will estimate the annual dollars amount spent on
marketing for the industries that the above specified companies come under.

Airline
Virgin Atlantic Airways is a top player in Sir Richard Branson's Virgin Group collection of
branded companies; with a fleet of almost 40 aircraft, the airline serves about 30 destinations
around the world. Based on the information obtained from Hoover’s database, the company’s 2009
sales was approximately $3 billion.
Virgin America, another airline in the Virgin portfolio, is reported to have a marketing budget of
$10 million as reported by Porter Gale, VP Marketing of Virgin America. (Maksymiw, 2010). This
figure can be used to estimate the marketing expenditure of the other smaller Virgin Airlines such
as Virgin Blue and Virgin Australia each.
In our research for marketing expenditures in the airline industry, we found Emirates (a privately
owned airline) spent approximately 2.7% in marketing and communications in 2009. (Wikipedia)
The article also noted that this was on the higher side, so we will take 2% to calculate the
marketing expenditure for Virgin Atlantic.

Therefore, total marketing expenditure in dollars for Virgin Airline is:

Virgin Atlantic + Virgin America + Virgin Blue + Virgin Australia = Virgin Airline
$3 billion x 2% + $10 million + $10 million + $10 million = $ 90 million

Lifestyle
Virgin Active clubs located in the UK, with other European clubs in Italy, Spain, and Portugal,
spent approximately $1.6 million on its first brand campaign in 2009 introducing the strapline
“More pleasure. Less pain” (Ramsay, 2009). The 2009 group sales reported on its website
virginactive.co.uk, is approximately $606 million. Therefore, the marketing expenditure for Virgin
Active is 0.3%.

$1.6 million / $606 million = 0.3%

Media and Mobile

Virgin Media Inc. is a "quadruple-play" communications services provider, offering cable TV,
Internet, fixed-line voice, and mobile services primarily to consumers. It reported revenue of $6
billion in 2009 with $205.6 million spent on marketing. (Sweney, 2010)
Therefore its marketing expenditure can be calculated as:

Page 5 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

$205.6 million / $6 million = 3.4%

Furthermore, according to the article, Virgin media is looking to increase its marketing spend by
“about 30%” in 2010.

Money
Virgin Money, a financial company in the Virgin Group has over the years moved its customer
base from telephone to its website virginmoney.com. Using the tools that Web 2.0 offers, the
company is able to communicate its product range and brand more effectively.
For estimating the marketing expenditure for Virgin Money, we will benchmark it against
American Express.
In an article dated Jan 21st 2010, American Express’s spending on marketing and promotion was
reported as $713 million while its revenue was reported as $6.49 billion. (Eichenbaum, 2010)
Therefore the marketing expenditure percentage of sales is:

$713 million / $ 6.49 billion = 11%

Although Virgin Money is not as big as American Express, the company needs to spend
considerably on promoting its brand because of the recent financial crisis and also due to its late
entrance in the financial sector.

Trains
Virgin Trains transports passengers over more than 400 miles of track between London and
Glasgow, running through Birmingham, Liverpool, Manchester, North Wales, and Preston. The
company is a joint venture between Sir Richard Branson's Virgin Group, which owns 51%, and
UK bus and train operator Stagecoach Group, which owns 49%. (Hoover’s Database). In
estimating, Virgin trains marketing budget, we will use the percentage of revenue for Amtrak. For
the fiscal year 2010, Amtrak earned $1.74 billion in revenues. (WMA, 2010). Amtrak’s marketing
budget for 2010 was $77.2 million. (AMTRAK, 2010)
Therefore, the marketing expenditure as percentage of sales is:

$77.2 million / $1.74 billion = 4.4%

As noted on the company website, “Global branded revenues in 2009 exceeded £11.5 billion
(approx. US$18 billion)” and therefore we will use this figure to arrive to a dollar amount.
To conclude, the estimated marketing dollars spent on the above industries can be summarized as
follow.

Industries %age of global revenue Dollar amounts

Airline 0.5% 90 million
Lifestyle 0.3% 54 million
Media and Mobile 3.4% 612 million
Money 11% 1.9 billion
Trains 4.4% 792 million
Total estimated marketing budget 3.4 billion

4. Proposed marketing budget

Page 6 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

4a. Virgin Management Limited (VML) is an umbrella company managing diverse products and
services cover a wide range of industries-from Travel and Tourism (Limousines, Vacations, etc.),
Leisure and Pleasure (i.e. Spa, Games, etc.), Social and Environment (i.e. Green Fund, Virgin Earth),
Beverages (i.e. wines and soft drinks), Media and Telecommunications (i.e. Radio, Broadband,
Mobile, etc), Books, Clothing, Finance and Money, and Health (i.e. Health Bank, Life Care), in
geographically diverse markets. Virgin has a strong brand value, associated with adventure seeking
successful, hip customers and businesses. Virgin Management Ltd (VML) provides advisory and
managerial support to all of the different Virgin companies and specialist Sector teams around the
world. VML manages Virgin's interests, financial assets across the whole of the Virgin Group, and
work on maximizing the value of Virgin brand. VML works on creating new companies provide
initial support needed them to become full-fledged businesses.

Virgin has been involved in more brand extensions than any other major brand in the past 20 years.
Not all of them were successful. The brand strategy can be described as the individual businesses that
are focused and develop as autonomous enterprises under a single unified brand name. Virgin brand's
strength is built less on price and more on differentiation.

Key Marketing objectives:

1. Brand Positioning/repositioning - Identify core target audience, develop marketing strategy to

reach out to them and how to expand the core target audience.

2. Market Penetraion with proven/profitable businesses - Not all the businesses are profitable.
Identify profitable and proven businesses and for each of the business identify target penetration
markets and build a strategy.

3. Focus on product innovation - This is a huge advantage for the company like Virgin. Explore other
potential opportunities like Virgin Galactic.

Airline - Increase reach of the airline to all the major destinations in all continents, to increase
passenger capacity by 20% every year. Become the best airline in terms of passenger experience, in-
flight services.

Lifestyle - Make Virgin Active membership a cool thing to have.

Media and Mobile - Provide best available bandwidth and best available technology at the best
price. Be first to bring the next generation technologies to the market.

Money - Expand to all the countries where Virgin has presence.

Trains - Explore leasing profitable corridors in US.

Some of the specific high level recommendations can be:

1. Expand the customer base in each of the products and services markets.
Try to reach to non-niche market segments while keeping the focus on the niche market.
Virgin Atlantic has only 40 planes; it can increase the routes and capacity on each route.

Page 7 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

2. Continue to look for new opportunities by expanding into new products and services. Virgin can
probably look into starting or acquiring a production house to produce content for various media -
movies, television, online etc.

3. Expand to new markets - leverage strong brand name of Virgin to expand businesses in emerging
markets.
Open Virgin Active franchises in China, India.
Company can look for train services in USA, Canada. Partner with Amtrak in profitable corridors
where Virgin can bring in investments, technology and expertise.

4. Cross promotion of products - like for example:

Virgin finance can offer zero percent financing on other virgin products
Virgin Airlines can provide double reward points if you buy virgin products using virgin credit
cards
Virgin mobile can offer free global calls made on its network.
Virgin business and first class passengers get free access to Virgin Active for the duration of their
stay in the cities where the clubs are present.

4b. There are two aspects of the marketing expenditure.

I) The 200+ companies have their own marketing budgets, since most of them are private; attempting
to estimate number for total marketing budget is a daunting task. Each type of industry spends a
different proportion on marketing activities. And recommendations for each may potentially be
different, for example recommendation for Virgin Galactic may be different from Virgin Active.
These individual companies, by altering their marketing budget will have an impact on the overall
brand image of Virgin. For the five businesses we are focusing the recommendations

1. Airline - In order to meet the set objective of reaching serving every major destination on all the
continents, we recommend heavy investments and acquisition additional aircraft including a few
A380s, which will generate a lot of publicity.

We recommend double the marketing budget to $180 million. For an increased spending of $90
million, at a conservative estimate of 2% marketing budget, sales needs to increase by 90/.02 =
$4500 million, i.e. $4.5 billion. Looking at the market potential, this is quite an achievable target.

2. Lifestyle - We recommend increasing the current estimated budget of 1.6 million to increase 10
fold to 16 million. Aggressively start product placements cross promotions by offering free
memberships to customers who spend on virgin products. Expand to new markets in Europe and Asia.
Instead of spending 0.3% on marketing, increase the percentage to 2%. So at 2% marketing budget,
the annual sales should be 16/.02 = $800 million. Increased visibility and expanded markets are sure
to bring in additional revenues of $200 million to match this estimate and likely to increase the
revenues even further.

3. Media and Mobile - In the United States, this is becoming a highly competitive market with all
the major players AT&T, Verizon, Comcast offering all the services where Virgin is trying to
establish. Virgin Media is offering similar services in UK. In order to reach out to additional markets
in Europe and Asia, we recommend increasing the marketing expenditure by 10 times, to $60
million. At 3.4% of sales budget allocated to marketing, the total sales should be 60/.034 = 1,765
million ($1.7 billion).

Page 8 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

4. Money - US Insurance is a multi hundred billion dollar market. We recommend doubling the
marketing budget and doubling sales volume is achievable target.

5. Trains - We recommend doubling the marketing budget and partner with Amtrak to take over
some key routes in the USA. Virgin can leverage its expertise in running trains UK.

II) VML itself, as a business entity incurs expenditures in market research for the new business
ideas, promoting the new business ideas in the target markets. VML needs to make sure Virgin
remains a strong brand.
The company should try to co-ordinate marketing expenditures by all the group companies and
explore the possibility of cross leveraging each other to expand the reach of its products and services.
Without increasing the budget, this effort will help make the dollars spent more effective.

4c. Given the diverse nature of the businesses, it is difficult to give specific allocations in marketing
budget as it is likely to be different for each type of business. Like for example, Virgin Galactic may
have a separate distribution compared to Virgin Active.

For VML, we would like to recommend the following:

VML should focus on cross promotion and allocate 25% of overall marketing budget. This will help
build overall brand loyalty and incentivize customers. Develop innovative customer loyalty programs
to retain existing customers and create incentives for them to buy new products and become
customers of new Virgin businesses.

Product Innovation – Look for green technologies, online games, media, and global tourism. We
recommend spending 15% of their marketing budget.

There is huge potential in Virgin’s current businesses like developing new routes for their airlines,
continue focus on core customer base. Hence we recommend spending 30%.

Field support – Supporting specialist sector teams to provide guidance and help individual businesses
need is very crucial for the success of the business. We recommend spending 10% of the budget on
this.

Maintaining existing brand equity is critical to the success of Virgin brand. Industry specific
marketing budget needs to be allocated which is in line with general industry standards. At VML, we
recommend spending 30% of the marketing budget for this.

% of
PROGAM Budget
Customer Loyalty programs 25
Product Innovation 15
Research Competitive Advantage in Existing Industries 20
Field Support 10
Existing Brand Equity 30

Page 9 of 14
CBE: Marketing Management Case Study: Virgin Management Ltd.

Page 10 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

Case Memo: Virgin Management Ltd.

Strengths: The Virgin Group's strength is a strong brand name. Brand promise of value, quality and fun is modeled
on the charismatic leader Richard Branson's image. Business model of providing branding service to its company,
partner and franchise works as safety valve. Virgin’s post MNS/TNC flat organizational structure gives it flexibility
and culture of innovation. High brand value gives Virgin market power. Branding strategy and marketing technique
to capture target market, keep them and grow is skillfully used. Virgin has expertise to introducing new products in a
competitive marketing environment globally. Virgin’s related diverse services spread the risk. Virgin has assets to
handsomely pay employees, innovators and deliver and maintain quality.
Weaknesses: Brand because it draws strength based on one man, Richard Branson’s image. Change in image of a
rebel to a collaborator. Brand dilution caused by unsuccessful business ventures. High risk and capital intensive
business venture, lack of expertise in one product / service , difficulty to replicate profit making venture like Virgin
Atlantic, not substantial presence in developing and emerging market, dependence on developed economy reeling
under economic upheaval, lack of transparency
Opportunities: Rebrand the spirit of Virgin to match changing times and make it distant from Richard Branson for
future brand value. To become market leader in emerging markets. Penetrate the developed market like New
Zealand, South Africa and Australia. The company has tremendous brand recognition; it should use this strength
explore the market segment in emerging economies like BRIC and GET.
Threats: The great threat Virgin faces is what happens to brand value in absence of Richard Branson because the
brand is a shadow of him. Diversity brings the brand dilution. Affect on brand image of failure of company
anywhere in the world, high risk and capital intensive investment, changing psychographic preference of customers,
new market entrant, terrorism and war, lingering economic recovery, Presence only in developed economy in
meaningful way are other threats.

Customers: Virgin’s corporate customers find immense value and service in brand to be successful. Virgin’s
ultimate customers are value, service, and quality conscious and pays premium price. They are fun loving,
adventurous and rebel. The virgin customers are enthusiastic and excitement seeker. They are successful with high
self esteem, and are upward mobile and achievers.

Product: Virgin, an umbrella brand, has diverse products, serviced by 3,000 brands from mobile telephony to
transportation, travel, financial services, media, music and fitness. Virgin has product that are in different product
life cycles - introduction, growth, maturity and decline. Virgin Atlantic is in mature stage, and Virgin Green is in
introduction stage. Products have high degree of differentiation and perceived to provide unique brand promise of
quality, service and oomph.
Price: Virgin products and service command premium price because Virgin has substantial market power. The
brand recognition, brand knowledge and brand promise of quality and service brings premium but competitive price.
Placement (Distribution): Virgin product and services are diverse and they have diverse placement dependent on the
industry and area of operation. They use direct, online, mail order and distributor channels. It is reasonable to
assume that they pay premium price to channels.

Promotion or Integrated Marketing Communications (IMC):

Overall positioning: Highly differentiated brand positioning using competitive frame of reference, points of
difference and points of parity, and straddle positioning to assure customer gets more than promised. Delivering
value pricing, high quality, fun, great customer service, and innovation, and being authentic, people-oriented, hip,
and associated with Virgin founder Sir Richard Branson and his personal charisma.
Advertising: Buzz and brand awareness is generated by lifestyle and activities of Richard Branson.
Mega stores, billboards and TV shows and magazines.
Publicity: Use of social network sites such as Face book, Twitter and blogs is implemented to promote publicity.
Richard Branson is covered doing heroic adventurous acts and seen with the presidents, politicians, diplomats and
movie stars.
Direct Marketing: All Virgin services are marketed directly as well.
Sales force: No direct mention has been made of a sales force but it is reasonable to assume that the company
employs a highly efficient sales force to ensure remarkable product /service placement.

Page 11 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

Recommendations

1a) FIRSTLY, CREATE A VIRGIN PLUS CARD FOR CUSTOMERS, WHICH CAN BE USED ACROSS ALL
VIRGIN BUSINESSES
1b) Because of the diverse portfolio that Virgin has, the company should have a customer loyalty card to maintain
and strengthen its relationship with its customers. This Virgin Card will help in deepening the brand loyalty as
customers would benefit greatly by using the card to purchase or experience other Virgin products and services. For
example, American Express has partnered with Costco to launch the Costco American Express which can be used
across a range of retailers. This card not acts as an identity for Costco members but helps them earn cash back for
every dollar spent.
1c) Virgin can use this card to cross-promote and up-sell some of its lower end (not-so-profitable) businesses. This
would offer the smaller businesses a chance to leverage Virgin’s brand equity. For example, the Virgin Card can
enable the business and first class passengers travelling with Virgin Airlines to get free access to Virgin Active for
the duration of their stay in the cities where the clubs are present.
1d) Furthermore, the card can also act as a data mining tool for Virgin and help the company acquire more
information about its customers and gain quicker insights into latest consumer trends.

2a) SECONDLY, REPOSITION THE BRAND AND START SEPARATING VIRGIN BRAND AND MR.
BRANSON PROGRESSIVELY AS SOON AS POSSIBLE
2b) Because of change in demographics- the millennial and net generation will have the most money to spend and
Virgin should reposition to capture their mind now and also because the image of a rebel and antiestablishment has
been damaged and it does not sit well with gen Y & Z and because Virgin is over dependent on Mr. Branson and
Virgin should be worried about what happens after him
2c) Mr. Branson should accompany one icon from each generation and should be behind them in the advertisement,
public appearance, and adventurous acts etc.
Mr. Branson has to start a big global program that serves the purpose of common good and be very good at that and
the his position of greatness would enhance the Virgin brand (similar to what Mr. Bill gates of Microsoft is doing)
2d) This approach will highlight the generational continuum and break at the same time, should be coordinated with
thoughtful brand extension, would benefit Virgin brand as the message o f collaboration and finding new solutions
in tandem. Virgin would benefit greatly by Mr. Branson’s association with great global program and can leverage
the absence of Mr. Branson to showcase same spirit of innovation and fun.

3a) THIRDLY, VIRGIN SHOULD INCREASE MARKET PENETRATION GLOBALLY, ESPECIALLY IN

EMERGING MARKETS.
3b) Because the brand has become abstract and transferrable that it could be applied to any category of product and
service but the profitable ventures can be counted on one hand therefore to feed the process of abstraction Virgin
needs to have ventures that are profitable.
3c) Penetrate the developed market and emerging markets with proven offerings e.g. Virgin Atlantic etc
3d) This will enlarge customer base and make the ventures profitable and it will help Virgin brand to occupy bigger
brand space.

What we learned: The Virgin brand revolves around delivering value pricing, high quality, fun, great customer
service, and innovation, and being authentic, people-oriented, hip, and associated with Virgin founder Sir Richard
Branson and his personal reputation. We learned the immense power of unique brand marketing strategy by Virgin
Management. They created brand space by propagating brand knowledge and adding meaning and emotion rather
than functionality of diverse category of product. The brand has become so abstract and transferrable that it could be
applied to even products that are of different category. This warrants the acute understanding of psychographics of
customer globally and placing the brand at the juncture of pop culture and deep human needs and desires. Use of Sir
Richard Branson's persona, new media, and cross celebrity marketing is breathtaking.

Page 12 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

References:

1. Argenti, P. A., & Duckenmiller, B. (2004, January 01). Reputation and the Corporate
Brand . http://www.ingentaconnect.com. Retrieved February 07, 2011, from
http://www.ingentaconnect.com.proxylib.csueastbay.edu/content/pal/crr/2004/00000006/0000000
4/art00005
2. AMTRAK. (2010). Operating, Capital Programs and Debt Service expense Budget. National
Railroad Passenger Corporation. HYPERLINK "http://www.amtrak.com" www.amtrak.com
3. Berthon, P., Holbrook, M. B., & Hulbert, J. M. (2003, January 15). Understanding and Managing
the Brand Space.http://sloanreview.mit.edu. Retrieved February 07, 2011, from
http://sloanreview.mit.edu.proxylib.csueastbay.edu/the-
magazine/articles/2003/winter/4426/understanding-and-managing-the-brand-space/
4. The brand licensing workshop http://www.brandingstrategyinsider.com/brand_extension/
5. Branson counts cost of island paradise loss; The Times (London); November 8, 2010 Monday;
Edition 2; National Edition (lexis nexis database)
6. Brand strategy case study – “Virgin Inc” - http://www.docstoc.com/docs/9100266/Brand-
Strategy-Case-Study--%E2%80%9CVirgin-Inc%E2%80%9D
7. Eichenbaum, P. (2010, January 21). American Express Profit Surges as Spending Rebounds .
Bloomberg Businessweek . HYPERLINK "http://www.businessweek.com/news/2010-01-
21/american-express-quarterly-profit-surges-as-spending-rebounds.html"
http://www.businessweek.com/news/2010-01-21/american-express-quarterly-profit-surges-as-
spending-rebounds.html
8. Hogan, S. (2007, August 28). Positioning a Brand in the Marketplace. http://www.lippincott.com.
Retrieved February 7, 2011, from http://www.lippincott.com/insights/a_hogan01.shtml
9. Kim, C. K ., & Lavack, A. M. (1996). Vertical brand extensions: current research and managerial
implications. JOURNAL OF PRODUCT & BRAND MANAGEMENT . 24-37. Retrieved February
07, 2011, from http://www.emeraldinsight.com.proxylib.csueastbay.edu/journals.htm?issn=1061-
0421&volume=5&issue=6&articleid=857616&show=html&PHPSESSID=5jqms92jiuirpbqn9694
gi1n70
10.Kotler, P., & Keller, K. L. (13th edition). Marketing Management. New Jersey: Pearson
Education.
11. Maksymiw, A. (2010, March 26). A Virgin Approach to Branding. OpenView venture partners .
HYPERLINK "http://blog.openviewpartners.com/blog/the-open-marketer/a-virgin-approach-to-
branding-part-1" http://blog.openviewpartners.com/blog/the-open-marketer/a-virgin-approach-to-
branding-part-1
12. Sharon Begley,The interview issue, Richard Branson,
http://www.newsweek.com/2010/12/24/richard-branson-s-climate-change-agenda.html
13. Ramsay, F. (2009, September 2). Virgin Active's £1m campaign shifts focus from price to brand.
Marketing Magazine .
14. Sawhney, M., Wolcott, R. C., & Arroniz, I. The 12 Different Ways for Companies to
Innovate. http://leonardopublic.innovation.si/. Retrieved February 07, 2011, from
http://leonardopublic.innovation.si/1.Introduction/The%2012%20different%20ways%20for
%20companies%20to%20innovate.pdf
15. Sweney, M. (2010, May 4). Virgin Media boosts ad spend to £170m. Guardian . HYPERLINK
"http://www.guardian.co.uk/media/2010/may/04/virgin-media-advertising-broadband"
http://www.guardian.co.uk/media/2010/may/04/virgin-media-advertising-broadband
16. Virgin Group Ltd. (1 February). Hoover's Company Records,41676. Retrieved February 4,
2011, from Hoover's Company Records. (Document ID: 168195671)
17. Virgingreenfund . Available from: http://www.virgingreenfund.com

Page 13 of 14
 CBE: Marketing Management Case Study: Virgin Management Ltd.

18. Joy Press, Like a Virgin megastore, shut for the very last time,
http://www.salon.com/news/brand_graveyard/feature/2009/03/12/virgin
19.WMA. (2010, January 26). Amtrak's 2010 revenue and ridership. DC Area Transit Zone .
HYPERLINK "http://forums.dctransit.info/index.php?topic=1840.0"
http://forums.dctransit.info/index.php?topic=1840.0
20.Wikipedia. (n.d.). Emirates Airline. HYPERLINK
"http://en.wikipedia.org/wiki/Emirates_(airline)" http://en.wikipedia.org/wiki/Emirates_(airline)

Page 14 of 14