Strategic Thinking

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Personal Insight

The unique and interesting thing about the Virgin brand was that very early on in Virgin's history we learned how to look at new markets in a very different way. Richard Branson came up with the brand name in the late 1960s, with the idea of Virgin being a name that could be transferred to other areas: and he had this idea in his mind. I remember finding an interview that he'd done in 1968 for Vogue magazine—a piece entitled People of Tomorrow, where at the age of 18 he talked about how we had called this company Virgin because we're not experienced in business, but we think there are lots of different things we could do for young people in different areas. That idea, by an 18 year old, is one of the marketing foundations of Virgin—the concept of looking at new markets and looking at them differently.

The brand has based its reputation in this area on one big market move it made to look at a niche market where it felt which was the airline industry. Sir Freddie Laker had run an airline in the 1970s, which had introduced low cost, long haul travel for the first time to the British public—in fact low cost travel at all—and it was cheaper to fly to New York on Laker in 1981 than it was to fly on BA to Paris. In 1982 that company was bankrupted by a combination of airlines coming together, operating a cartel and they undercut the airline on price. Because the quality of the service wasn't very good, Sir Freddie's airline went down. Richard Branson bought that license from the government in late 1983 to launch another airline and he was always very mindful of what Freddie Laker had experienced.

He realized that we had to look at the market to see how the consumer was being badly served and how they could be better served in the future. He based his idea for that new airline, called Virgin Atlantic, on these simple precepts that Freddie Laker had come out with: if you're going to enter a new market you've got to have a strong brand name because the public have got to recognize the brand, they've also got to recognize you as an individual because this a government-dominated area of business where the government can make rules and changes, and you've got to lobby on your behalf and on the consumers' behalf. He also said that you've got to have lots of different price points.You must not just try to be a low cost airline like Freddie Laker because the business market is very important on long haul routes. Also, people on long haul routes tend to fly much more seasonally, so you need to have the different types of marketplace. So, you've got to have a business class, which he didn't have on his airline and you've got to be prepared to face a price war from a cartel of airlines and have a better quality of service.

If you're going to enter a new market, you've got to have a good quality of service but if you can find a way to do these things, then the sky is the limit. It doesn't matter if your brand's come out of the music business and is going into the airline business, as long as we've got the approach to the marketplace right, the brand can transfer into anything. As long as we were giving the consumer those perceptions of value, quality and innovation, we could then transfer the brand from place to place.