Magazine article Marketing

Can Branson Stretch to US?

Magazine article Marketing

Can Branson Stretch to US?

Article excerpt

Richard Branson's Virgin is one of the most powerful brands in the UK. As he waits to take on the US, Harriet Marsh asks how well Virgin - and Branson - will travel

As 'the land of the free and the home of the brave' the US would seem ideally suited to Richard Branson.

But the news that the UK's most fun loving and daredevil businessman has targeted the US as the next market for expansion poses serious questions about how truly transatlantic the Virgin brand can become.

The North American market has proved a surprisingly difficult one to conquer, even for companies as successful as Marks & Spencer and Next. The seemingly unstoppable might of the Virgin Group may even find it a hard nut to crack.

"The main issue for a British retailer or brand going into the US is that it must be a long-term commitment as you certainly won't secure success overnight," says Adrian Hodges, spokesman for The Body Shop, which after six years and a slightly sticky start, has managed to establish a chain of 286 outlets.

In recent years Virgin has started to spread its tentacles, making inroads into markets including Australia, Japan and Canada. But the US market remains relatively Virgin-free. While the airline claims around 20% of transatlantic airline traffic its other interests are limited to seven Virgin Megastores and a test market for Virgin Cola in Philadelphia.

Plans to change this include the national roll-out of Virgin Cola, the doubling of flights on Virgin Atlantic's US routes, the opening of an another 43 Virgin Megastores and the launch of its record label, V2.

With these core, youth-targeted brands, Branson is setting his sights on an affluent, city-based target market, which is likely to be the most receptive to the company's brand values.

The focus on US expansion is seen as a tacit admission that the Virgin brand, which encompasses products as diverse as railways and financial services, is stretched to its limit in the UK. But the group's long-term survival depends on further growth, and the US market offers vast opportunities: even with 50 Virgin Megastores planned by the year 2000, the company estimates it will win a mere 7% of the US music retail market.

But while the group's marketing technique - a heavy reliance on Branson's natural talent for self-publicity - has captured the imagination of the British public, it may find US consumers less receptive.

Branson? Who's Branson?

In the US, the little awareness Branson has is of an eccentric multimillionaire UK businessman set on winning a world record in ballooning.

"Asking what people think of Richard Branson in the US is sort of like the joke about what people think of Canada," says Mike Wilke, a journalist for US trade magazine Advertising Age. "They say 'huh?'. It would be fair to say that in the US Branson has a fairly low recognition rate, only slightly exceeded by that of his company."

According to Wilke, the people who know the Virgin name tend to be either young music buyers or people who regularly fly across the Atlantic. "If England is not on your itinerary, then the chances are you're not that familiar with Virgin," he says.

In the UK, Branson has become synonymous with the Virgin brand, espousing the same fundamental brand values: innovation, fun, caring and good value.

Branson's public 'personality' was created to keep marketing budgets down: even last year the combined ad spend on all its products in the UK amounted to just [pounds]17m. …

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